Advertisement industry set to see growth rate decline

OUTLOOK 2009

Television and print media are expected to lose up to 10 per cent of their cumulative market share to new and emerging mediums like radio, digital and out-of-home (OOH) in 2009, as the overall growth rate of the advertising industry is set to decline in the new year, analysts tracking the sector said.

TV and print account for 90 per cent of the overall advertising industry revenues, while the balance is shared by OOH (6 per cent), radio (3 per cent) and online or digital advertising.

Smita Jha, associate director (entertainment & media practice), PricewatershouseCoopers (PwC) estimates, "In 2009, the overall industry growth will slow down and TV and print mediums will lose 10 per cent of their cumulative market share to new and emerging mediums."

Though sectors like fast moving consumer goods (FMCG), telecom and insurance companies, which are the highest media spenders, are still advertising, other sectors such as auto, tourism, realty, financial services and mutual funds are seeing reduced spends.

"Sectors like mutual funds and reality have taken a dip of 80 and 50 per cent each, respectively," says Chandradeep Mitra, president, Mudra Max (the media buying arm of Mudra).

“As a result of reduced advertising spends, the advertising industry growth rate will reduce from 18 per cent in 2008 to 8-9 per cent in 2009," says Ravi Kiran, chief executive officer, Starcom, South East & South Asia.

However, new segments like direct to home (DTH) that did not exist a year ago are now seeing huge investments with players like Tata Sky, Reliance Big TV, Bharti Airtel DTH and Dish TV all looking at creating and expanding their market share.

"This particular sector can see investments to the tune of Rs 400-500 crore this year," Kiran said. He feels the ad industry could also bank on government revenues in an election year.