Digital media fast eating into traditional media ad-spend

Over the past few years digital media has seen the fastest growing ad-spend and the trend is likely to continue as the Internet user base expands at a brisk pace, but there is no "immediate" threat to Print and Television advertising, experts say.
According to a research report by IIFL Institutional Equities', in the medium term, TV and print should dominate ad budgets whereas digital would play a complementary role. But digital advertising is fast gaining traction.
Digital media now accounts for 7 per cent of the total ad spend, compared with 1 per cent in 2003, the report said.

Emergence of digital would materially harm the print industry in the medium to long term and the English print medium is at a higher risk compared with regional print, the IIFL report said.
Print media ad spends growth decelerated sharply from 16 per cent CAGR during 2003 to 2007 to a meagre 4.5 per cent CAGR in the past three years. The slowdown in English was more pronounced than in vernacular languages.
IIFL added: "However, India still is behind developed markets in terms of mobile technology and Internet connectivity, hence there is no immediate threat to Print and Television advertising from the digital media ad spends."

TV would however, continue to be the mainstay for advertisers, due to a larger audience base and diversified viewer profile.

According to IIFL Institutional Equities' Bijal Shah and Jaykumar Doshi, the impact of the Internet on television would be lower as compared with print.
"An analysis of ad spends for the past ten years reveals that print ad spend is more sensitive to economic growth. These factors make television ad spend more resilient," they said.
Following the general elections, government ad spend, a key tailwind for print media in FY14, would taper. Thus, print media ad-spend growth could remain lacklustre in FY15 unless GDP growth picks up.

According to a separate research report of Angel Broking, the expectations of improvement in GDP and formation of a stable government post elections are likely to spur growth in advertising revenues of print media companies.
The saturation of consumption in urban markets has forced FMCG companies to aggressively push its products in tier 2/3 towns to achieve significant volume growth, and as a result this will benefit regional print media.
KPMG estimates cumulative growth in advertising revenues of print media sector at 11.2 per cent for 2015, compared to 9.8 per cent in 2014.