Tokyo Olympics 2020 to contribute Rs 150 cr in incremental ad spend: GroupM

In the last decade, overall AdEx in India has grown by 3x at 12 per cent CAGR. TV ad spend has increased by 3x at 13 per cent CAGR and digital ad spend has grown by almost 18x at 38 per cent CAGR. This was revealed in GroupM’s biannual report ‘This Year Next Year’ (TYNY) released yesterday (February 5, 2020). The report was presented by Prashanth Kumar, CEO, GroupM South Asia; Tushar Vyas, President - Growth and Transformation, GroupM South Asia; Sidharth Parashar, President - Investments and Pricing; and Ashwin Padmanabhan, President - Partnerships and Trading.

The TYNY report forecasts AdEx growth in 2020 and key trends for the coming decade. As per the report, India has bucked the global trend, where digital has eaten into traditional media. Traditional media in India still accounts for one-third of the incremental ad spend in 2019. Digital, which grew to Rs 22,000 crore in 2019, is estimated to add Rs 6,000 crore in incremental ad spend this year.

Globally, while digital accounts for roughly half of the overall ad market, in India it has only just touched 27 per cent. 2019 was a landmark year, where digital surpassed print for the first time as 2nd highest share of AdEx. Share of digital is expected to reach 30 per cent by end of 2020, according to the report.

National advertisers are experimenting with digital, but that’s not the case with local advertisers, who show a strong affinity for traditional media. The growth drivers of consumption will be video, voice, vernacular. However, with data costs up as much as 40 per cent, there will be an impact on content consumption compared to the previous year. That’s why this year digital’s growth is forecast is estimated at 26 per cent CAGR compared to previous year’s 28 per cent.

TV witnessed a muted growth last year, but is expected to pick up the pace contributing Rs 38,000 crore to the estimated overall AdEx of Rs 91,641 crore this year.

GroupM TYNY 2019 had predicted a strong 14 per cent AdEx growth in 2019 on the back of the General Elections 2019 and ICC World Cup 2019, however, they revised it down to 9 per cent after the slowdown in the economy, which can be attributed to dip in private demand, sluggish consumption in rural sector, struggling auto sector and contraction in jobs.

The effects of macro-economic trends will continue to impact the advertising business this year, and the agency expects growth to be moderate in the first half and revive in H2 2020 on the back of a longer festive season and marquee events like Tokyo Olympics 2020, ICC T20 Women’s World Cup and local elections. Tokyo Olympics are expected to contribute Rs 150 crore in incremental spend to overall AdEx in India, a GroupM official told Adgully.

GroupM’s GDP estimation for India is at 6.2 per cent. Seeing how GDP estimates correlate with AdEx growth the agency is optimistic that this conservative forecast is still a good indicator of consumption. In 2020, AdEx growth is forecasted to be approximately 1.7X of the estimated GDP.

Auto, handset and e-commerce categories will be growth drivers for advertising this year. Rural economy will be critical for the revival of FMCG sector and GroupM is optimistic that Government of India schemes such as PM-Kisan (Pradhan Mantri Kisan Samman Nidhi) and MGNREGA (Mahatma Gandhi National Rural Employment) will infuse Rs 135,000 crore investment and rejig consumption. Consumption at lower income levels expected to gain a boost from income tax bracket reforms which will save up to Rs 40,000 crore.

From a global perspective, AdEx is expected to touch $630 billion in 2020 from $ ~600 billion. The US Presidential elections will be a big factor driving this year’s AdEx growth and as per the agency’s estimates, will contribute to 1 per cent incremental spend to the overall AdEx ($63 billion).

Advertising
@adgully

News in the domain of Advertising, Marketing, Media and Business of Entertainment