Advertising and Marketing Industry in India

India's purchasing power has seen a marked improvement over the past decade. More than ever before, customers are selective about the products they purchase, and marketers are constantly trying to provide the best deals to their current and potential customers.

As per McKinsey Global Institute (MGI), India's consumer markets will witness exponential growth during the period 2005-2025. Also, during this period, the country's total consumption is projected to increase fourfold, making it the fifth largest consumer market globally by 2025. MGI also anticipates India's real gross domestic product (GDP) to increase at 7.3 per cent per annum through to 2025.

The Indian government has given continuous backing to the advertising and marketing industry. Advertising expenditure is likely to increase in the financial sector, driven by Reserve Bank of India (RBI) policies which could result in a more favourable business environment. Also, proposed licences for new banks and better market sentiments render the advertising and marketing industry in India a fertile space.

Market size

The online advertising market in India will touch Rs 3,575 crore (578.13 million) by March 2015, a 30 per cent rise from Rs 2,750 crore (US$ 444.72 million) in March 2014, as per a joint study by the Internet and Mobile Association of India (IAMAI) and IMRB International. Of the current Rs 2,750 crore (US$ 444.72 million) digital advertisement market, search and display contribute the most - search advertisements constitute 38 per cent of total advertisement spends followed by display advertisement at 29 per cent, as per the study.

The Internet's share in total advertising revenue is anticipated to grow twofold from eight per cent in 2013 to 16 per cent in 2018, as per a joint report by Confederation of Indian Industry (CII) and PricewaterhouseCoopers (PwC). Online advertising, which was estimated at Rs 2,900 crore (US$ 468.97 million) in 2013, could jump threefold to Rs 10,000 crore (US$ 1.61 billion) in five years, increasing at a compound annual rate of 28 per cent.

Also, according to the report, Indians paid Rs 25,200 crore (US$ 4.07 billion) to access the Internet in 2013, a figure greater than the Rs 22,300 crore (US$ 3.6 billion) the print medium garnered in subscription and advertising.

Investments

MPS North America Llc, the US subsidiary of Bengaluru-based publishing solutions provider MPS Ltd, has acquired Electronic Publishing Services Inc (EPS), a New York-based firm with interests in content creation, art rendering, design and production. This deal will enable MPS to reinforce its foothold in the North American continent.

IT services company Cognizant has purchased Pennsylvania-based Cadient Group - a full-service digital marketing agency which focuses on biotechnology, pharmaceutical, consumer health and medical device industries. Cadient will bring with it around 100 digital specialists to Cognizant.

India's mobile-ad impression volume grew 260 per cent since July 2013 making the country the single most powerful driver of the Asia-Pacific market, as per the State of Mobile Advertising report from Opera Mediaworks. This growth is driven primarily by the shift from feature phones to smart phones.

Facebook has signed a partnership with WPP's media agency conglomerate GroupM, its first deal with an advertising agency in India. The collaboration will facilitate better rates for GroupM clients on Facebook, enhanced data and consumer insights, to go with combined research reports.

Europe-based RheinBrucke IT Consulting has announced the launch of its India Development Centre (IDC) in Chennai. RheinBrucke will also establish a migration factory for software products developer Epicor's EMEA consulting organisation.

The annual Cannes Ad Fest 2014 saw India taking home 27 metals, six less than the 33 it won in the previous year. J Walter Thompson (JWT) won the most awards, followed by McCann, with Ogilvy & Mather (O&M) also winning some honours.

The Gurgaon Rapid Metro opened its stations to brands in 2014, with the Cybercity station now named IndusInd Bank Cybercity. Other metro lines which have followed suit include Micromax Moulsari Avenue, Vodafone Belvedre Towers and Airtel Phase 3.

E-commerce companies Quikr, Flipkart, Snapdeal and Jabong, among others, are now looking to focus on 360-degree advertising and not merely digital marketing. "We have already launched a new television campaign. This is because digital advertising is silent advertising; it can't do brand story-telling for us. Also, television brings credibility to the brand," as per Mr Piyush Bansal, Founder and CEO, Lenskart.

Amazon.com plans to spend about Rs 100-150 crore (US$ 16.17-24.25 million) on advertising in FY15, in India. Flipkart is also looking to similarly provide a major push in its fashion lifestyle category.

Government Initiatives

The Governments of India and Canada have signed an audio-visual co-production deal which facilitates producers from both countries to harness their collective artistic, technical, financial and marketing resources, and encourage exchange of culture and art between the two countries. The agreement is also likely to lead to better promotion of Indian locales for shooting films. "The agreement will also lead to the transparent funding of film production and boost export of Indian films into the Canadian market," as per the agreement.

India and Poland are seeking to enhance cooperation in the digitisation and restoration of film archives. This was decided in a meeting between Mr Bimal Julka, Secretary of Information and Broadcasting, India, and a delegation from Poland led by Ms Malgorzata Omilanowska, Secretary of State. The two countries will form a joint working group that will help improve cooperation in fields such as student exchange programmes, animation, films and digitisation, among others.

Road Ahead

The advertising and marketing sector in India is expected to enjoy a good run. Growth is expected in retail advertisement, on the back of factors such as several players entering the food and beverages segment, e-commerce gaining more popularity in the country, and domestic companies testing out the waters. The rural region is a potentially profitable target. For instance, in the automobiles sector, the focus of two-wheelers on rural areas could mean more launches and more advertising spends. The telecom sector could see growth as well, driven by better smartphone penetration and service providers cutting down on prices.

Rate Used: INR 1= US$ 0.016 as on November 27, 2014

References:Media Reports, Press Releases, McKinsey Report

Source: ibef.org