Indian adspend set for further growth

18 March 2010

NEW DELHI: Advertising expenditure will continue to rise in India over the next few years, as part of a broader boom across the media and entertainment sector as a whole.

According to a report by FICCI, the trade body, and KPMG, the consultancy, the media and entertainment market in the country will post a compound annual growth rate of 13% from 2010 to 2014.

By this latter date, it will be worth $24.1 billion (€17.5bn; £15.7bn), as the category picks up pace following the more modest uptick of 1.4% recorded in 2009, when it had a value of $12.9bn.

More specifically, advertising expenditure levels, which were static last year after three years of double-digit expansions, will register a CAGR of 14% over the forecast period.

Within this, TV, which is responsible for the major share of media budgets at present, will see adspend leap by 15.6% a year, with subscriptions witnessing a similar improvement during this timeframe.

Broader trends at work in this segment at present include the rise of entertainment channels, which saw ad sales increase by 29% in 2009, when the volume of spots shown on regional stations also rose by 12%.

Total television revenues, covering advertising and subscriptions, will double from $5.71bn to $11.58bn by 2014, while print returns will climb from $3.88bn to $5.97bn.

The film industry will see its overall figures jump from $1.98bn to $3.09bn, with radio's numbers improving from $173m to $364m.

Out-of-home media experienced a contraction of 15% last year, to $302m, but will enjoy a CAGR of 12%, to $530m, in the next five years.

The funds which advertisers allocate to the internet, which takes around $185m at present, should also increase by 30% annually as more brands turn to this channel.

"If advertisement revenues on TV, radio and print have seen de-growth in the last twelve-to-fourteen months, advertisers have flocked to the internet," said Rajesh Jain, executive director and head, media and entertainment practice, at KPMG.

The factors contributing to the overall positive momentum in India will include digitisation and media convergence, as well as rising penetration levels and a heightened emphasis on innovation.

"The media and entertainment industry represents the face of consumers in India," added Amit Mitra, the secretary general of FICCI.

"Despite the challenging last year, I'm excited by the potential of the industry to perhaps grow beyond 13% per annum over the next few years."

Data sourced from Economic Times/Business Standard; additional content by Warc staff