Last year around this time, the Pitch Madison Advertising Report (PMAR) had pinned its hopes on a 16% AdEx growth in 2023. This year, the results are finally out, and it does not live up to the expectations. According to PMAR 2024, AdEx in 2023 grew by only 10%, which is 6% shy of what was predicted. This surprising turn of events comes at a time when experts have lauded the Indian market as the country’s GDP is expected to grow at 7.3%. The worrying factor here is that the 2023 growth percentage is the worst in the last six years (except for the COVID-19 period). AdEx closed at INR 99038cr.
A few factors may have contributed to this weak performance. According to the report, an increase in the price of raw materials in the first half of 2023 may have forced advertisers to become cautious with advertising spends. A second factor here is that the Russia-Ukraine war and the bloody conflict between Palestine and Hamas have managed to spread panic of a global recession. Yet another factor listed by the report is inflation and rising prices. The report points to the fact that there has been only a marginal or no increase in income, adding pressure on the lower middle-class population of the country. Naturally, it affected their ability to spend on consumer goods. Unfortunately, the growth in spending by the well-heeled has not compensated for the drop in spend by the middle class. Finally, 2023 saw the startup funding winter, which forced many startups to set aside their advertising plans, which included a reduction in the budget for Performance Marketing.
The unveiling of Pitch Madison Advertising Report 2024 was commenced by Sam Balsara, Chairman, Madison World giving us a glimpse of AdEx 2023, and showing us what 2024 holds for Indian AdEx.
During his speech, Balsara shared that the report intends to show a “perspective on what happened, why it happened, and what to expect from the coming year”. He further said, “AdeEx continues to surprise us year-over-year either positively or negatively. COVID-19 is behind us, but the global political situation, uncertainties, dull round of winter funding, and more uncertainties have accounted for the slow growth of AdEx 2023 by 10%, against our forecast of 16%. Despite the Indian GDP projected to grow by 7.3%, this is the lowest Indian AdEx has grown in the last 6 years (apart from the pandemic years)”.
The Indian AdEx
He highlighted the slow growth trajectory across mediums and shared that there was a huge slowdown, “The Digital medium only grew by 15% against our projected growth of 25%, a slew from the growth rate of 35% in 2022 and 50% in 2021. Traditional AdEx is still growing in India with a slow growth rate y-o-y, it grew only by 7%. Television grew at 7%, below our forecast of 9%. Print, the 2nd largest traditional medium has registered a single-digit growth of only 4%, Radio grew by 12%, maintaining its share of 2.3%, and has almost matched the pre-Covid level of 2019. Outdoor ADEX reached a 13% increase over the previous year and has crossed its pre-Covid level”.
He further mentioned that the growth rate of Global AdEx makes Indian AdEx look good though. “The Global AdEx is estimated to be at 971 Bn USD in 2023 with a growth rate of 5%, as opposed to the Indian AdEx growth rate of 16%. Digital dominates the Global AdEx with a share of 73%. India is a part of the top 11 nations of AdEx that contribute to 63% of the Global AdEx with a share of 1.2%”.
Balsara also said that the AdEx numbers may be in dissonance with financial year reports of companies, as TV only grew by 7%, Print by 4%, Radio by 12%, and OOH by 13%. “TV stays behind Digital, Print is losing its share y-o-y and contributes 19% of overall AdEx”.
For traditional media, FMCG continues to be the largest contributor with a 33% Share and added almost INR 1500cr. in the year 2023. E-commerce continues to be the 2nd largest category, with a share of 11.3%. Education with a spend of INR 2,610cr. has dropped by 33%, mainly because of the drop in Edtech. The automobile sector is the 3rd largest AdEx category.
Growth Forecast For 2024
Balsara also stressed upon the global uncertainty and the negativity of the western world. He said that these factors “will have some predicament for the Indian AdEx. The growth forecast for 2024 is 12%, close to the global forecast of 8.3%. “ The Indian AdEx for 2024 is estimated to be INR 111110cr.
Balsara further said, “The T20 World Cup, heavy spends by political parties, and aggressive reforms to stimulate the economy show optimism, but global uncertainties such as war, and funding winter will likely to continue. We expect no medium to de-grow, while digital will continue to be a key driver, TV will continue to grow, as large advertisers believe in the power of brand building on TV”.
Advice For Marketers
He closed his speech by emphasizing the urgent need in the industry for advertisers to establish a common measurement system for multimedia campaigns. “We cannot expect multimedia owners to conflict upon a common methodology,” he concluded.
India’s AdEx Growth in 2023 – a detailed study
When compared to the global AdEx numbers, India certainly seems to have done a lot better. While the global AdEx saw only a 5% growth, India registered a 10% growth.
Digital – Speaking of individual mediums, Digital witnessed a slowdown, and could not live up to the expectations. Digital AdEx grew by 15 percent in 2023, ten percent lower than predicted in the previous year’s report. The Digital AdEx trend seems to be moving towards a degrowth with each passing year. In 2021, Digital grew by 50%, and that fell to 35% in 2022. Now, 2023 witnessed a further decline. However, Digital has managed to increase its AdEx share to 40 percent, despite the slowdown. Then again, in the global context, Digital AdEx accounts for 73% of the total AdEx.
Digital’s Q1 and Q2 growth were quite low, at only 4% and 6% respectively. But in Q4, it saw a boom, registering a 27% growth rate. The report suggests that video is the largest category in Digital, contributing 33% share. This is followed by Social Spends with a 21% share. E-commerce stands with a share of 17% in Digital AdEx, ahead of Search Spends at 15% share, and Display & App spends at 14%.
The prices of analogue TV sets are at an all-time low, and with the availability of broadband at low prices, the CTV population in India has increased. Advertisers are therefore looking at this medium more seriously. Therefore, Connected TV advertising has increased from INR 450cr. to around INR1000cr in 2023. The report lists a combination of increased digital penetration, Sports Content, OTT Content, targeted Advertising capabilities, and Interactive formats, contributing to this rise in expenditure.
Television – Television AdEx continues to disappoint, the second year in a row. In 2023, TV AdEx managed to grow only by 7%, which is 2% less than the previous year’s. In absolute terms, TV ADEX has moved up and is now at Rs. 32886cr., but its share is steadily declining from a high of 42% in 2020 to 33% in 2023. It is important to note here that Television continues to be preferred by serious and seasoned brand builders. According to the report, the dismal performance of TV in 2023 may be attributed to intense competition on the back of the ownership split of IPL TV and Digital rights, and then Jio’s masterstroke of allowing free streaming of the IPL. This led to a fair amount of TV money going into Digital. Sports came to rescue TV, with the Asia Cup in September, followed by the India versus Australia series, the Asian Games and finally the ICC Cricket World Cup in October/ November. According to the report, TV AdEx would have grown only 4% without sporting events. FMCG advertisers, however, have been loyal patrons of TV, increasing spend from INR 13725cr to INR INR 15353cr, which is an increase of 12%. This resulted in an increase in their category contribution from 45% to 47% in TV ADEX.
Print – Print could manage only a 4% growth in AdEx, with a 19% overall contribution to AdEx in 2023. Interestingly, the overall contribution to AdEx globally is only 4%. The larger picture here is quite troubling if you note that the contribution of Print to AdEx has dropped from 41% in 2014 to a mere 19% in 2023. Print has been rescued by Auto, FMCG, Education, Retail, and Real Estate businesses. These categories contributed 50% to the Print AdEx. Auto is leading in this regard with a 14% share. In terms of languages, Hindi and English lead with over 64% of the total Print Advertising space in India. This is followed by Marathi.
OOH – With Digital advancements in OOH, there is much to talk about in this medium. OOH has surpassed both TV and Print to register a growth of 13%. The PMAR 2024 report has noted that 2023 saw OOH contribute to INR 4140cr., maintaining its 4% share in the Indian AdEx. The development of airports and metro rails in many Tier I and Tier II cities is one of the main reasons for its growth, apart from rapid advancements in technology. The use of Anamorphic, 3D, and CGI has increased the impact of OOH to a great degree. Looking at OOH AdEx by category, Real Estate and Construction Materials maintained its lead with a 19% share. FMCG which has moved up in share to 13% in 2022 rolled back to a 11% share. Organized Retail maintained its 13% share. Telecom, which at one time was the largest contributor to OOH ADEX now has a share of just 5%.
Radio – Radio saw a silver lining in 2023 as Radio AdEx reached pre-pandemic levels. In 2023, Radio contributed INR 2272cr to the total AdEx in India. However, Radio’s share remained at 2%, the same as 2022. Advertisers have devised a way to sell airtime bundled with Digital, other media channels, ground events, and branded content, aiding Radio’s growth. The report also observes that there is an 18% increase in advertising time compared to a 12% increase in value, indicating an erosion in rates. Coming to the categories that contributed to the Radio, the largest share is held by Real Estate at 16%, followed by FMCG at 12%, Auto at 11%, and BFSI at 9%.
Cinema – Despite hits such as Pathaan, Gadar 2, and Jaawan (that collected more than INR 500cr at the box office) to name a few, Cinema AdEx grew by only 36% on a very low base as against projected growth of 75%. Indian AdEx only received a less than 1% contribution from Cinema. To put it in perspective, Cinema AdEx before COVID-19 was INR 1045cr. (2019). In 2023, it is only INR 776cr. The report points out that OTT is perhaps the most significant reason for the decline in cinema advertising.
Forecast for 2024
The Pitch Madison Report 2024 forecasts a 12.2% growth for AdEx in India, while WARC’s global AdEx forecast stands at 8.3% growth. According to the report, growth in H1 and H2 will be very different and post-elections, when the Modi government most likely returns to power with an even greater majority, optimism will run very high in India Inc. and the government will announce a lot of measures or reforms to stimulate the economy. Let us now take a look at individual mediums, and how they might fare in 2024.
Digital – Digital AdEx is expected to close at INR 46565cr. adding about INR 7000cr. during the year, contributed majorly by video and e-commerce. While WARC estimates the global Digital AdEx will contribute 75% to the total AdEx, the PMAR report estimates a 42% Digital AdEx share. Digital’s growth is expected to be a modest 17%.
Factors that may aid the growth of Digital AdEx –
- A focus on short-term results
- Dramatic rise in CTV and OTT penetration in the country
- IPL on Digital at a flat cost per 10 seconds basis
Factors that may hurt Advertisers’ ROI are –
- Privacy concerns voiced by the government
- Need for a measurement system for Digital
- Google’s decision to create a cookie-less world
Television – The PMAR report expects TV to add another INR 2700cr. and grow by 8% in 2024 to reach a total of Rs. 35575cr. With this growth, however, TV will again lose 1% share, and settle at 32%. Global AdEx for TV is expected to be only 15.5%.
Positive Factors that may aid the growth of TV AdEx are –
- Belief in the brand-building power of TV
- Cricket tournaments IPL and ICC Men’s T-20 Cricket World Cup
- General Elections
- FMCG to increase TV spends over last year to drive volume growth
Negative Factors that may stunt its growth –
- Growing realisation that the lower middle-class cohort is under economic pressure, forcing them to consume less
- Reluctant startups shying away from sponsoring expensive large-format shows
Print – Print is expected to grow by 7% in 2024, while the Global AdEx growth estimate for Print is a degrowth at -4%. The report further suggests that Print will continue to hold its market share of 19% in 2024 if the projection comes true.
Factors that may aid the growth of Print AdEx –
- Print is the first port of call for conservative family-managed businesses, and the retail sector
- Print is seen as a favourite of politicians and political parties for the upcoming General Elections
Radio – The report projects Radio to grow by another 12% on the back of 12% growth in 2023, taking Radio ADEX to Rs. 2,549 crores, adding Rs. 277 crores during the year.
Factors that may aid the growth of Radio AdEx –
- Radio is a popular medium with politicians and political parties and this may allow its growth during the General Election
- Digital expansion of Radio that allows advertisers with newer avenues for targeted engagement and brand integration
Cinema – Cinema has been recording a good growth rate post-COVID despite having the smallest share of AdEx in the total AdEx of India. The report expects Cinema AdEx to register a 35% growth in 2024. The total Cinema AdEx should be INR 1047cr.
Factors that may aid the growth of Cinema AdEx –
- The release of highly anticipated movies
- Return of audiences to theatres
OOH – The report expects more brands to use Out-of-Home advertising as they are convinced about the impact it creates on consumers’ minds. OOH is expected to achieve a 15% growth, taking Outdoor share to 4.3%. In the global market, Outdoor’s share is expected to be 3.4% of the total global AdEx.
Factors that may aid the growth of OOH AdEx –
- OOH is yet another favourite medium for politicians and political parties
- The availability of Digital screens both on roads and indoors (hotels, clubs, commercial or residential buildings, etc.)
- The number of small screens in hotels, clubs, restaurants, commercial and residential building foyers, etc. should also go up from 60,000 in 2023 to 90,000 in 2024
