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Ad spend in India to increase by US$3 bn between 2015 & 18: ZO study

ZenithOptimedia predicts global ad expenditure will grow 4.7% in 2016, reaching US$579 billion by the end of the year. This will be a 0.8 percentage point improvement on 2015: 2016 is a ‘quadrennial’ year, when ad expenditure is boosted by the Summer Olympics, the US presidential election and the UEFA football championship in Europe.

The global ad market has enjoyed stable growth since 2011, with growth rates ranging between 4% and 5% a year, and we expect it to maintain this pace for the rest of the forecast period.

Television is currently the dominant advertising medium, with a 38% share of total adspend in 2015. In 2018, however, we expect the internet to overtake television to become the largest single advertising medium. However, one of the reasons for television’s loss of share is the rapid growth of paid search, which is essentially a direct response channel (together with classified), while television is the pre-eminent brand awareness channel – and we expect it to remain so for many years to come.

Audiovisual advertising as a whole – television plus online video – is gaining share of display advertising. Television offers unparalleled capacity to build reach, while online video offers pinpoint targeting and personalisation of marketing messages. Both are powerful tools for establishing brand awareness and associations. We estimate that audiovisual advertising will account for a record 48.4% of display advertising in 2015, up from 44.1% in 2010, and expect its share to reach 48.9% in 2018.

Also, in 2018 mobile advertising will overtake desktop and account for 50.2% of all internet advertising. Programmatic advertising will account for more than half of digital display advertising (53%) for the first time this year, and will increase its share to 60% in 2016. We expect programmatic advertising to grow another 34% in 2016 and 26% in 2017, at which point two thirds of global display will be programmatic.

At region wise level, Fast-track Asia (China, India, Indonesia, Malaysia, Pakistan, Philippines, Taiwan, Thailand and Vietnam) economies are growing extremely rapidly as they adopt Western technology and practices, while benefiting from the rapid inflow of funds from investors hoping to tap into this growth. China accounts for 74% of adspend in Fast-track Asia, so its slowdown naturally has a large effect on the region as a whole. We expect ad expenditure in Fast-track Asia to grow 8.9% in 2015, and at an average rate of 8.4% a year between 2015 and 2018, down from 14.7% a year between 2009 and 2014.

Adspend growth is slowing down in three out of the four BRIC markets that were responsible for much of last decade’s ad market expansion. India – the only BRIC market - continues to combine rapid growth and large scale, making it a distinct hot-spot of adspend growth. The market is benefiting from sustained, healthy economic growth and strengthening personal consumption. With adspends growing at double-digit annual rates here, we expect the market to expand by US$3 bn between 2015 and 2018.

Elaborating further on India, Anupriya Acharya, Group CEO, ZenithOptimedia India says "It’s been over eighteen months of the new government led by Prime Minister Narendra Modi. Last year this time it had captured the collective consciousness of the country and we entered 2015 with a strongly positive consumer and business sentiment. This irrational exuberance has tempered down to a more rational optimism and all the current economic and sentiment indicators suggest that the forward view remains positive. Our growth forecast for India Ad- expenditures for 2016 holds at 13%. TV largely fuels this at 15% and Print - newspapers - at 10%. Digital is expected to grow upwards of 20% while all other media are expected to grow at 5-10%. E-commerce, Telecom, Mobile phones expected to have the maximum growth followed by Auomobiles and FMCGs."

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