The Indian advertising market is forecast to grow by 16 per cent and hit USD 11.2 billion (Rs 89,324 crore) in 2022 with digital ad space growing twice as fast as ad spending through television.
While America will be the top ad spend region at USD 329.6 billion and the most dynamic with the spending increasing by 13.1 per cent, India will stay ahead of the US at 12.8 per cent and Brazil at 9 per cent as the fastest growing market in terms of growth, a report by Dentsu titled ‘Global Ad Spend Forecasts’ said.
The ad spending in the Asia Pacific is anticipated to reach USD 250 billion with China advertising market witnessing a likely further growth of 5.6 per cent in 2022 to reach USD 130.2 billion.
The global ad spend in 2022 is set to be USD 738.5 billion despite the reigning economic uncertainty and inflation worries. “The latest Dentsu ad spend forecast points to a continued recovery despite economic uncertainty, with APAC 2022 ad spend of USD 250 billion, based on a growth forecast at 5.1 per cent,” as media reports quote Prerna Mehrotra, CEO, media, Asia-Pacific (APAC), Dentsu International.
India is also expected the lead the advertising spend wave over the next two years with the growth rate pegged at 15.2 per cent in 2023 and 15.7 per cent in 2024, the highest for any market. Forecasted spending on advertising in China is expected to rise by 4 per cent in 2023 and 5.4 per cent the following year, the agency added.
According to a new forecast from Forrester, a leading market research company, global marketing spend will increase by 7 per cent annually to USD 4.7 trillion in 2025, with China and India among the markets exceeding the global average. While the adverting market is expected to grow by 12.7 per cent in India, China’s growth rate has been pegged at 13.4 per cent between 2021 and 2025.
In 2021, the Indian advertising market grew by 21.8 per cent and reached USD 9.6 billion.
Another market research company IMARC Group expects it to reach INR 1,272 Billion by 2027, exhibiting a growth rate of 11.3 per cent during 2022-2027.
THE DRIVERS
The growth of the advertising industry is highly dependent on the penetration of various media platforms. And India’s growth rate can be attributed to the rapid penetration of smartphones and the internet in the country, which facilitates the use of digital advertising. Increasing population and favourable government regulations are some other growth driving factors.
According to Dentsu’s annual report on global, the advertising market in India will primarily be led by digital advertising which is likely to grow by 31.6 per cent and television ads which are expected to increase by 14.5 per cent. “Digital, at a 33.4 per cent share of spend, will be the key medium for digital-first brands and consumer tech companies in 2022. TV continues to garner a 41.8 per cent share in 2022 and has recovered fully, boosted by the airing of new content and sports events such as the Indian Premier League,” it said.
Significant growth has been forecast in over-the-top (OTT) platforms, connected TV, online gaming, and e-commerce. With lockdown restrictions having been lifted, categories such as travel and hospitality, which avoided spendings during the pandemic, have opened up. Ed-tech, fintech, gaming and cryptocurrency have also shown growth in the OTT platform category, the July 2022 report added.
TAKING THE MOMENTUM FORWARD
According to PwC’s Global Entertainment & Media Outlook 2022-2026, the out-of-home (OOH) advertising market in India is demonstrating one of the strongest comebacks globally and is predicted to grow at 12.57 per cent compound annual growth rate (CAGR) to reach Rs. 5,562 crore in 2026.
While OOH revenue recovered by 63.4 per cent in 2021 from the steepest downturns the year before, the momentum of this rebound is expected to carry over to 2022, and by year-end, the market will be at the value Rs 4,084 crore, the PwC’s 23rd annual analysis and forecast said.
India’s TV advertising market, which was hit by the COVID-19 recession in 2020, has also grown by 16.9 per cent to Rs 32,374 crore. It is expected to expand further at a 6.3 per cent CAGR to reach Rs 43,410 crore by 2026, becoming the fifth-largest TV advertising market globally, after the US, Japan, China and the UK, the report added.
ADVERTISING FOLLOWS THE ECONOMY
The increasing ad spend has a four-pronged economic contribution namely, direct, indirect, induced, and wider effects. In addition, advertising is an enabler of the digital business model.
Companies, which want a share of the growing economic pie, use advertising to attract new customers and the growing demand for personnel boosts recruitment advertising, according to a study published in the Journal of Media Economics.
Even small changes in the ratio of advertising expenditures to economic revenues can mean billions of dollars difference in advertising budgets and thus have a considerable impact on media organisations, it said, adding that there is a natural tendency for advertising expenditures to be larger in larger economies.
And during times of economic contraction, the first budgets to be cut are advertising and marketing. This was the case during the 2020 COVID-19 recession when global advertising revenue declined 4.2 per cent. As the economy came roaring back in 2021 ad spend followed suit and reached a record high of USD 710 billion.
According to an independent study by Deloitte, advertising contributes to the wider economy through its ability to support competitiveness, provide consumers with information on products and services, and help to increase their choice of goods and services. This, in turn, drives innovation by incentivising businesses to create differentiated products and services, allowing them to out-compete their competitors.
It creates employment opportunities with people being engaged directly in the production of advertisements and sales jobs to roles supporting the ad business in the hospitality industry, besides those in media and online businesses funded by advertising.
Advertising expenditures correlate with macroeconomic growth. The Principle of Relative Constancy (PRC) asserts that the pattern of economic support for ad spend is approximately constant relative to the general economy, meaning it gets a proportionate pie of the economic growth.