With a surge in growth to 14.2 per cent last year and a prediction of 15.5 per cent for 2016, the good times are finally here for the A&M industry. FMCG and e-commerce have buoyed the sector by spending beyond expectations, while digital is another lucrative opportunity lurking just around the corner, says GroupM South Asia CEO CVL Srinivas as he talks about the This Year Next Year (TYNY) report for 2016 with Pradyuman Maheshwari
With a 15.5 per cent growth forecast for 2016, would you say it’s ‘achche din’ for the industry now?
It’s definitely good; in fact it’s been good since last year. Last year, we grew at 14.2 per cent as an industry in 2015, over 2014. This year we are seeing it go up to 15.5 per cent.
Your prediction at around this time last year, was 12.7 per cent. So what led to the 14.2 per cent growth?
There were two or three sectors that spent much more than projected. The first was e-commerce. While most studies did predict that e-comm will be a top contributor to growth, across the board there was an underestimation of what the quantum of spend would be. The other was FMCG. Don’t forget, today,  FMCG is supposed to be 30 per cent of the adex, and an increase of a couple of points here or there, leads to quite a swing in terms of the overall number. Despite all the pressures we were going through in 2015, FMCG as a sector continued to invest overall in brand-building through the year.
The adex percentage for e-commerce is just 8.1. Does that mean it wasn’t as much as we all thought it would be given the large number of jacket and television ads?
But don’t forget an 8.1 per cent contribution from almost zero two or three years ago, is a phenomenal jump in the overall adspend. Today it is a number comparable to other established and mature categories like auto, In fact, e-commerce is probably the third biggest category today, after FMCG and auto, in terms of overall spend. Not counting the government sector, of course.
The government and the media sector account for almost 20 per cent, so that’s significant…
The government sector, we believe, is going to contribute quite a bit in 2016 because of all the schemes that are being announced, and a lot of activity is happening both at the Centre as well as the states. There are going to be five Assembly elections in 2016, with related advertising spend in the regional media, making the government a big contributor this year. With media companies, there is competition today, with new shows and players looking to build their brands in Tier II and III markets.
While mobile advertising is what will be the future. But the real numbers are still not significant enough…
We are still growing from a relatively smaller base when it comes to overall digital and mobile advertising. It was close to 10 per cent in the price area in 2015, and in 2016, overall digital will be close to 13 per cent, month-end onwards, but we believe a lion’s share of it is going to come from mobile. The base is smaller, but given that it is growing between 45 and 50 per cent year on year, very soon we will see mobile becoming the second-biggest medium after television in terms of ad spends.
When do you expect that to happen?
It will take a few years, because in terms of absolute amounts, print as a medium is still pretty big. It contributes about 20 per cent to growth in terms of adex. There is still a lot of headroom for growth in certain clusters, and among certain audiences and markets. There are categories that are undergoing a phase of evolution where they will need print. So while it’s not going to happen in the next one or two years, we are definitely headed in that direction. Also, all the media players – whether TV or print — are establishing their own mobile platforms and becoming content providers across multiple platforms. We will have to start looking at some of these studies a little differently, going forward.
Are there anxieties about media segments or any other categories that you think people should watch out for?
I think overall the mood is still cautiously optimistic although we think it is slightly more optimistic than cautious at the moment and at an overall levelI think every medium has challenges when it is going through an evolution in its measurement system — whether it’s expansion, or loss of viewership or leadership to digital — and I think it all depends on how each of the players’ deal with the challenges.
The prediction is that magazines are going to de-grow 14.8 per cent. That’s huge…
Magazines have been under pressure for a while, and we have seen advertising money shift from them to digital. I think this sends out a larger message that [if you have content that is] available on the go, 24×7, consumers would rather have it in a format or device they are comfortable with. There has been quite a shift in consumer behavior and consumption of content, and whomsoever we advise, we suggest they transform themselves into digital entities, because many of them are strong brands with loyal readership bases. They have great content so the sooner they transition, the better.
What is your prediction about how the various genres of television will do?
We don’t put up those numbers because these are estimates and projections. But within different genres, it’s going to be a good year for sports with the ICC World T20 to be played in India in February and March, and with the IPL coming in after that.
I think regional language channels would do extremely well. Regional clusters and GEC channels are continuing to do well because it is like carbohydrate for any media plan; they provide stability to the mass brand which is present in the market. Generally speaking, across the board it will be a good year for TV. In fact, TV had close to a 19 per cent growth last year, and we see much the same in 2016.
You are saying today that the growth is 15.5 per cent. Could it be more, a lot more?
We will review this in the middle of the year, and take stock in July. We will have actual data from about three months [by then] so we will have a better idea.
This interview first appeared in dna of brands dated January 25, 2016