India's ad growth rate to be the fastest in 2016: Report

Advertisers in India spend more on brand promotions, says media agency Carat

The urge of marketers in India to promote their goods and services is expected to propel the country’s advertising growth rate by a significant margin in 2016. According to media agency Carat, which is part of the Dentsu Aegis Network, India’s 2016 advertising growth rate will be the fastest at 12 per cent, ahead of the global average of 4.5 per cent. It will also better India’s performance last year, when the advertising growth rate was 11 per cent.

In a report on Monday, Carat says India’s ad growth rate will also be ahead of most other markets including the US (4.7 per cent), the UK (6.2 per cent), Russia (0.2 per cent), China (5.8 per cent), Japan (1.8 per cent), and Brazil (6.8 per cent).

It needs to be mentioned that the size of India’s advertising market, vis-a-vis global majors, is small at Rs 50,000 crore. So, while a higher rate of growth is in part due to a small base, Carat notes that advertisers in India in general are spending more on brand promotions as they seek to induce top-of-mind recall in a competitive market.

Also, the burgeoning e-commerce and start-up ecosystem in India has ensured that the number of advertisers in India is growing, experts tracking the market said, fuelling the country’s domestic rate of growth.

Carat expects India’s ad growth rate to gain steam next year, touching 13.9 per cent. If this is achieved, it will effectively make it the third straight year of double-digit growth rate for India from an advertising point of view. This will imply that advertisers will remain optimistic of business growth and will likely spend more on ads.

Indian companies across key categories such as fast-moving consumer goods (FMCG) have benefited from lower commodity prices, the gains of which have been ploughed into brand-building and advertising, said experts tracking the market. This is also pushing up growth rates.

Other key categories such as auto, handsets, retail and real estate continue to see a flurry of launches, prompting high brand spends, while telecom would also see higher ad spends led by 4G, experts said.

While India’s ad market is skewed towards traditional media such as television and print, which remain dominant advertising vehicles here, digital is growing, Carat says, with online video expected to act as a key catalyst of growth. India’s growing mobile phone base (it is already the second-largest smartphone market in the world after China) is expected to fuel digital advertising, led in part by the growth in 4G services, experts said.

TV advertising, says Carat, is expected to grow at 12.3 per cent this calendar year, while print advertising is projected to grow at 10.5 per cent. The primary contributors to this growth in TV and print will include e-commerce, FMCG, auto, retail and state government spending notably around the elections this year.