Digital may face challenges around measurement of data & authenticity: Karan Taurani
Adgully is back with a new edition of its annual feature – TRENDING NOW – where we present the strategies and views of a cross-section of industry leaders as they go about reclaiming lost time and market opportunities and build for a stronger future, armed with the lessons of the pandemic period.
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Over the next few weeks, Trending Now will bring insights from industry leaders on how their organisations are gearing up to seize the opportunities in 2022, break through the Covid disruptions and find growth and remain resilient.
In conversation with Adgully, Karan Taurani, SVP - Research Analyst (Media & Consumer Discretionary), Elara Capital, speaks about his expectations for the advertising and Digital media sector in 2022, as well as the challenges and opportunities in the year ahead.
What are the trends that you expect to dominate in your sector in 2022?
Digital is pivotal to comprehensive growth across all media segments. Ad spends in India rely heavily on digital ad spend budgets so as to ensure an overall medium-term CAGR of ~10% as a large portion of incremental ad spends emanate from digital (~80% of incremental spends). This growth in the digital medium has been propelled by:
1) Emergence of new platforms (influencers, e-commerce, metaverses)
2) Increased penetration (expansion into Tier 2/3 cities)
3) Advent of large consumer-centric brands (Internet companies) that spend a big portion of their revenues on advertising.
Enabling a proper measurement system, improving trust in online payments and better customer engagement can further grow digital ad spends. Many traditional media segments – TV, print and radio – may need to reinvent businesses in alignment with digital if they are to leverage this trend.
On content consumption, too, Digital is the only segment which continues to attract: 1) big budgets for content creation, and 2) new eyeballs with increasing audience willingness to experiment. Most linear broadcasters are now innovating only in the digital space. We believe it is crucial to sustain ongoing efforts in the segment so as to ensure growth at a faster clip.
What are the challenges and new opportunities that you see emerging in the year ahead?
1) Digital may face challenges around measurement of data and authenticity over medium to long term
2) Regulation and censorship can be a challenge that can negatively impact growth of OTT in India
3) NTO 2.0 will have a negative impact on broadcasters’ ad and subscriber revenues as consumers will move towards selective viewing
4) Ad spends for Radio and Print media will struggle to grow over medium term after breaching pre-Covid levels due to constant shift to digital media
1) SVOD will be a very big opportunity with improved willingness of consumers to pay for content online
2) Digital content consumption to penetrate deeper into Tier 2 and Tier 3 markets
3) Dubbed content is expected to be the next big thing as Indian audience opens up to experimentation
4) Acceleration of digital consumption due to Covid; most of this growth is here to stay
5) Metaverse, new tech, crypto will improve digital media consumption and brands around these segments will also drive ad spends
6) Return of cinemas will be big helped by release of multiple large budget films
How will the turnout be in this sector in 2022, compared to the last two years? How strong will the recovery be?
This year’s turnout will be better for other traditional mediums like print, radio and OOH as they are expected to come back to pre-Covid levels. A big growth in local advertising will be a big factor for recovery of these traditional mediums. Further, digital media is expected to maintain its growth trajectory of 25%-30%YoY backed by 1) shift to SVOD due to ARPU convergence, 2) advertising budgets heavily skewed towards digital, and 3) increase in penetration.
We expect overall advertising to breach the pre-Covid levels in CY22, backed by healthy growth in all digital and traditional mediums. In terms of changes, we expect more attention towards regional content as global giants focus more on providing original web series in the regional genre and other local regional OTTs, too, will scale up their content offerings. We expect the bidding war for sports to intensify as this segment remains to be a key focus for driving scale on OTT offering.
How strong will this sector’s growth be compared to the last two years as well as the pre-Covid period?
We expect a 10%-12% higher growth vis-a-vis the pre-COVID level, backed by a pent up demand and a sharp recovery in local advertising benefitting all mediums of media.