Advertising expenditure in India is expected to increase by 11.6 percent in 2014 owing to factors like the ensuing general elections, growth in retail and FMCG, automobiles, telecom and financial services sectors, a top media investment planning conglomerate said here Monday.
While digital media will show maximum growth with 35 percent, electronic media (TV) is next at 12 percent, a drop from 14.6 percent last year, while cinema will maintain a constant growth of 12 percent even this year.
This is the finding of GroupM in its annual estimated advertising report titled 'This Year, Next Year' and mTrends, a list of the biggest media and communication trends in India this year.
The print medium will display an increase of 8.5 percent against the estimated 4.6 percent last year, mainly owing to growth in vernacular print publications across the country, GroupM said.
"We are cautiously optimistic about the media industry in 2014. Sectors like FMCG, auto, retail will continue a stable increase in ad spends and we shall see an increase in rural spending by FMCG and telecom," said the GroupM South Asia CEO, C.V.L. Srinivas, releasing the report.
Srinivas added that the first half of 2014 will continue to be uncertain in view of the general economic and political environment and ambiguity surrounding the measurement system.
But advertising by political parties is expected to give a boost to AdEx by up to 2.5 percent, with a stronger second half with an an upsurge in ad spending, he said.
This is mainly due to the general elections and five state assemblies polls this year which will see increased spending by the government and political parties, adding significantly to the AdEx of all media.
The FMCG sector with volume growth following a good monsoon, coupled with good rural incomes and rising raw material prices, will see increased ad spending with higher disposable incomes arising out of election spending.
With more players getting into the F&B segment, e-commerce making inroads into small towns and regional players entering the national arena will spur growth in retail AdEx, GroupM said.
On the automobile front, despite slowdown in the four-wheeler segment, two-wheelers' continued focus on small towns and rural area will lead to more launches by existing players and hence more ad spending.
The telecom sector marked by increasing Smartphone penetration, cellular phone services notching growth in revenue, service providers slashing prices for 3G schemes are leading to increased competition and hence higher ad spends.
Recent RBI policies leading to a more favourable business environment, the proposed new banking licences, better market sentiments helping the IPO markets, and revival expected out of likely rate reductions - all will push the AdEx spends in the financial sector.