Ad spend in India to grow at 15.5% in 2016, says GroupM

This will be the highest rate of growth in six years

The country's largest media agency GroupM has forecast a buoyant outlook for advertising expenditure (adex) in India, saying it will grow 15.5 per cent in 2016, touching Rs 57,486 crore.

This growth is higher than the 14.2 per cent that was reported by GroupM in 2015, implying it will be the highest rate of growth in six years.

"India remains the fastest-growing ad market among all key markets in the world. The year 2015 saw the best in terms of adex growth for India in five years. But if 2016 does see the rate of growth that we have forecast, then it tops 2015 numbers," C V L Srinivas, chief operating officer, GroupM South Asia, said.

GroupM typically revises its January forecast in June-July to estimate whether numbers predicted at the start of the year will be achieved.

Srinivas said higher spending by fast-moving consumer goods, e-commerce and automobile companies would be key drivers of ad growth in 2016, backed by retail, telecom, banking and finance, and government.

FMCG, automobiles, e-commerce, retail and telecom will contribute 28 per cent, 8.2 per cent, 8.1 per cent, 7.6 per cent and six per cent, respectively, to advertising expenditure in 2016.

"The T20 World Cup will happen in India this year, plus there is the IPL and state Assembly elections, which will give a further boost to ad spends," Srinivas said.

In terms of media mix, television will remain the largest contributor to adex, estimated to touch Rs 27,074 crore this year versus Rs 23,022 crore last year. The rate of growth would be 17.6 per cent, GroupM said, lower than the 18.6 per cent seen last year.

Newspapers will come next, led by a surge in e-commerce ads, touching Rs 17,099 crore this year versus Rs 16,125 crore last year. The rate of growth of newspaper advertising will be six per cent versus 5.2 per cent last year, while digital will be the third-largest contributor to adex, touching Rs 7,300 crore versus Rs 4,950 crore last year.

Digital's rate of growth would be the highest at 47.5 per cent this year, higher than the 45.5 per cent seen last year, GroupM said.

Interestingly, cinema advertising, GroupM said, would continue to see an upswing, led by brand investments in this medium.

While cinema advertising is small, contributing to less than one per cent of total advertising in India, its rate of growth is second to digital at 25 per cent. Last year, the rate of growth of cinema advertising was 20 per cent, GroupM said.

The only medium that would decline was magazines, at 14.8 per cent, GroupM said, while radio and out-of-home would grow at the rates of 9.9 per cent and 5.8 per cent, respectively.