India’s adex to grow 12% in 2018: IPG Mediabrands Magna report
India has waned through the lingering impact of currency exchange in November 2016 and passed through effect of unified tax structure in July this year. Transitory costs for introducing bold structural reforms have been paid and upswing in economic activity is strengthening. The bank recapitalisation plan, coupled with insolvency and bankruptcy code 2016, has revived the sector and this will boost private investment. Revival in rural economy and growing middle class will boost economic growth. GDP in real terms is expected to grow +6.7 per cent, a speck slower than the earlier projected +7.17 per cent. In 2018, the IMF report predicts growth of +7.4 per cent.
According to the IPG Mediabrands Magna Adex Prediction 2018, advertising revenue will grow at CAGR of +12.1 per cent in the next five years to touch Rs 1.07 trillion. Growth will be led by digital with +21.6 per cent. Television will still rule the top as the largest media in 2022 with a market share of 41 per cent. Digital and Print will have equal share of 25 per cent. Mobile will displace desktop as the 3rd largest category by 2020.
The United States and China contribute close to 50 per cent of the incremental ad dollars between 2018 and 2022, while India ranks third with a 6 per cent contribution. The traditional categories like Print are so strong and growing YOY in India that over 60 per cent of this incremental dollars is coming from traditional categories.
2017 estimated Adex growth rate of +11.5 per cent earlier in June has been revised marginally downwards to +11.1 per cent. In 2018, IPM expects the ad spends to grow +12.1 per cent. Categories driving up spends next year will be:
Auto enjoys a strong domestic demand due to rising income, rising middle class and a young population. Demand for commercial vehicles due to heightened infrastructure activity and government’s focus on electric vehicles to meet emission targets are some of the growth drivers.
FMCG penetration will increase with modern trade growing faster in Tier2 and 3 cities. Raising disposable income among rural consumers, e-commerce strengthening their offering with daily products, evolving consumer lifestyle and government FDI policy is infusing growth.
Banking demand will go up, thanks to increase in working population. Housing and personal finance are key drivers. Government’s financial inclusion plan is expanding the reach of banking services and insurance coverage to rural segment.
Consumer durables demand will grow with rural electrification and e-commerce expansion.
E-commerce growth is propelled by increasing smartphone penetration, digital literacy combined with affordable data costs. GST will help e-commerce players to streamline supply chain and eliminate dual taxes. The sector is attracting more users from Tier 2 and 3 cities.