India the most dynamic economy among the BRICs is set to become the 7th biggest ad market by 2020
Global Overview
In its latest report on the global advertising marketplace, MAGNA GLOBAL estimates that media owner advertising revenues grew by +3.2% in 2015 to $503 billion. This is lower than the previous forecast (+3.9% in June 2015) and represents a slowdown compared to the 2014 growth (+4.9%).
In 2016, advertising revenues will be boosted by economic stabilization and the incremental spending generated around non-recurring even-year events (US Presidential and General elections, UEFA Football championship in Europe, Summer Olympics in Brazil). MAGNA GLOBAL is thus predicting ad sales to grow by +4.6%, marginally less than our previous forecast. Neutralizing the impact of non-recurring events (NREs) in 2014, 2015 and 2016 (generating approximately 0.9% of extra growth in even-numbered years), the global ad market would have grown by +4.1% in 2015 and +3.7% in 2016, which suggest no real 2016 acceleration in the underlying ad demand, beyond the cyclical drivers.
In terms of geographies, Asia-Pacific was the most dynamic region (+6.5%). Latin America and Central and Eastern Europe, once the fastest-growing regions, are both suffering from dramatic economic slowdown reflected in ad spend cuts (-3% in CEE, +3.8% in Latam). Meanwhile, Western Europe continues its recovery (+2.9%), while North America is slowing down (+2.0%).
Of the 73 countries analyzed by MAGNA GLOBAL in this update, 62 experienced ad revenue growth this year and eleven (incl. Russia, Finland, France, Greece, Peru, Singapore) suffered a decrease. The biggest contributors to the 2015 slowdown are the two BRICs countries affected by severe economic difficulties: Russia, where ad revenues are now expected to decrease by -12% (previously -11%), and Brazil (+4.4%, unchanged). On the other hand we have increased the 2015 growth estimate for China, India and the US. For 2016 we only expect four markets to remain in the red while 69 (including Russia) will experience some level of growth.
Asia-Pacific: this year +5.6%, Next Year +5.2%
Media owners ad revenues increased by an estimated +5.6% in 2015 to $146bn, making APAC the second largest region with nearly 30% of global spend. This is down slightly from previous expectations of +6.3%, despite the fact that growth was slightly stronger than expected in two of the region’s biggest markets (China +9.9%, India +16.3%).
Growth in 2016 is expected to be slightly weaker, at +5.2%, due to continuing slowing of the region’s economy. APAC is now the second largest global region, behind North America, having passed EMEA, with 29% of global ad revenues generated in the region. Given the high growth rates expected in APAC going forward compared to EMEA, the region will become increasingly critical to global advertising spend growth. APAC’s GDP growth is expected to be +6.5% in 2015 according to the IMF, down from +6.8% in 2014. Economicgrowth will again slowdown slightly in 2016 to +6.3% as China continues to transition to a consumer economy while India accelerates. Despite concerns about APAC growth weakness and the spillover to the global economy, it’s important to keep in perspective that it’s only modest slowdown and APAC growth remains significantly ahead of most of the western world.
As China is slowing down (slightly), India has become the most dynamic economy among BRICs and among all the large nations monitored by MAGNA. Real DGP grew by +7.3% in 2015 and will grow again by +7.5% in 2016 according to the IMF, with consumer price inflation at around 6% per year. In that context advertising spending grew by +16.3% in 2015 to 487 billion rupees (approx. $8 billion) allowing India to become the 12th biggest ad market in the world at the expense of Russia.
India: this year +16.3%, Next Year +18.4%
Advertising revenue increases by INR 68 billion to touch INR 487 billion in 2015.
Television revenue on the back of increased volume will add +18.5% (Dec 2014 +11.9%) to reach INR 200 billion.
While television market share is up by a percentage point (41%) Print goes down from 41% to 38% to touch INR 183 billion (growth of +7.7%). In 2016 Television is estimated to grow +15.1% and Print +8.2%.
Digital formats continue to grow the maximum at +49% to touch 57 billion rupees and thereby increase its market share to 12%. Ad sales generated from Video and Social increasingly will be through mobile impressions while Desktop in the near future will still be the domain for Search and Display. Share of mobile from 32% will be close to half the pie in 2016. Programmatic outside of Search will grow +5.7%.
Newer formats and revenue streams (Twitter and Instagram opening up new advertising and influencer management platforms), bandwidth expansion through 4G launch and traditional advertisers increasing their digital budgets will contribute to the growth of +67.3% in 2016.
Radio with a market share of 4% will grow +14% in 2015. Through the expansion of foot print and there by volume is estimated to add +16% in 2016. OOH will grow +11.9% in 2015 and by another +10.4% in 2016.
Magna Global estimates total advertising revenue to touch 576 billion rupees in 2016.
T20 World Cup, encouraging response from Audience to non-cricketing leagues, state elections, 4G launch are some of the drivers for the advertising economy in 2016. E-commerce will continue to pursue GMV’s, most action will be seen in the telecom sector followed by Auto and FMCG advertising.
Digital television and expansion of the measurement panel will allow advertisers to reach more consumers and broadcaster to better monetize their audience in 2016. While so far India is bucking the global trend of declining spends on Print by growing at a high single digit rate, Digital market shares are projected to equal Print by 2020.
Hope 2016 round of data will get the currency out of the data dark period and aid the category to fight market share erosion. Second round of the Phase III auction, commissioning of the new stations won in the first round of bidding will keep radio top of mind.
