FMCGs, telecom, cars/jeeps and real estate continue to drive spends in advertising while travel and tourism moves in the top 15 slot for the first time. The housing boom results in significant spends increase by advertising for property and real estate.
With the Indian economy growing at over eight percent, advertising spends in the media too have registered a growth of 21.7 percent in 2006. This saw increased spends by marketers on advertising primarily in FMCG, automobiles, two-wheelers and durables. The booming realty market, which saw many IPOs and private educational institutions also spent aggressively on advertising. While increase in marcomm spends was visible across the sectors, the FMCG category contributed a hefty 13.2 percent of the overall advertising spend in the media. This was followed by automobiles with 6.3 per cent and telecom with 5.2 per cent for the overall ad spends in 2006.
The Rs 69,000-crore FMCG sector saw heavy spends due to increased activity by players like HLL and P&G. The $34-billion auto industry which grew at a CAGR of 14 percent in 06 with total vehicle sales of nine million vehicles thereby also contributing 6.3 to total ad spends. Analysts believe the industry will close FY06 with around 22-23 percent growth, against just 16 percent in FY05. With the launch of the new Zen Estilo, Indica Xeta, New Ford Fusion, Hyundai Verna, Honda’s New Accord the Chevrolet Aveo U-VA etc, the industry is expected to maintain its growth momentum through the remaining three months. In the fastest moving mobile segment, an average of 6.5 million subscribers have been added in each of the past three months thus spurring ad spends. In the life insurance segment, key private players such as ICICI Prudential, Bajaj Allianz, Birla Sunlife, ICICI Lombard and Tata AIG been spending aggressively last year and with good results too.
The toilet soap category contributed to four percent of the total ad spends and led the way in 2006 up from the second rank in 2005 when they contributed 3.2 percent. Automobiles comprising cars and jeeps slid from the No 1 position with 3.3 percent of spends in 2005 to the second position in 2006 with spends of 3.5 percent which is a 0.2 percent increase from the previous year. The third-largest spenders were the cellular service providers at 3 per cent which raised the ranking from number four position in 2005 with 2.9 percent spends. At the fourth position were two-wheelers with 2.8 percent of spends up by 0.1 percent spends and in the 5th position in 2005.
Corporate brand building and shampoos were in the 5th and 6th positions respectively with ad spends contributing to 2.8 percent each. Interestingly, corporate/brand spends in 2005 were 2.6 percent placing this category in the sixth position in 2005 and shampoos were in the 3rd position in 2005 with spends at 3 percent. This indicates that the slide in ad spends by shampoos category in the media is leading to more indirect marketing efforts by the marketers. Toothpastes were in the 7th positon at 2.4 percent up from the 9th position in 2005 at 2.1 percent. The housing boom with new parks and malls pushed the properties and real estate sector from the 13 position in 2005 with spends at 1.6 percent to the 8th position in 2006 with 2.3 percent.
Cellular phone marketers at 2.2 per cent inched up from the 10th position in 2005 to the 9th position in 2006 thereby registering a increase of 0.3 percent. Educational institutes, on the other hand, slid from the seventh position in 2005 at 2.4 percent to the 10th position in 2006 with ad spends comprising 2.2 percent. There was also a decline in ad spends in the detergents category comprising washing powders and liquids. This sector slid to the 11th position with spends of 2.1 per cent from the eighth position in 2005 at 2.2 percent. A decline in the ad spends was also seen in the soft drinks, aerated sector which which slipped marginally from the 11th position in 2005 to the 12th position with spends at 1.9 percent.
With the rise in shopping malls and independent franchisees, independent retailers inched up to the 13th position at 1.8 percent from the 14th position in 2005 at 1.5 percent. In 2006, travel and tourism sector moved into the top 15 list for the first time at 14th position and contributing 1.4 percent. Despited the entry of foreign insurance players, the life insurance sector remained steady at the 15th position with ad spends at 1.3 percent.
Our readers will know that this survey was pioneered by Pitch first in the year 2004 and has since then become a benchmark for estimates of the state of Indian media and advertising industry. What separates this survey is the fact that the advertising expenditure estimates are calculated with intense real-market data by a leading media investment management company Madison Media. Later, industry associations and key players are also roped in to validate the results. Pitch editorial team ensures that the numbers are analyzed and presented accurately.
We started this year’s process by reviewing the findings of our Survey last year. While keeping the mass media measurement coverage same, we decided to expand our coverage to include non-mass media communication channels.
Once the broad contours were frozen, a crack team at Madison Media started collating the media consumption and media advertising volume data from research agencies, particularly, TAM India. To arrive at the ad revenue estimates, Madison Media team allocated ‘average market-rates’ for each media option and computed the total ad spend for each media separately. The sum total of all mass media estimates (TV, Press, Outdoor, Radio & Internet) were collated to arrive at total media and advertising industry size. When compared with last year’s sizes, we were able to calculate percentage growths. Looking at the economy and industry forecast for the year 2007, and the past three years’ trend from earlier Ad Outlook reports, the Outlook Forecast for 2007 was arrived at.
This yearâ€™s Pitch-Madison Advertising Outlook makes a new trend as well. We have expanded our coverage to include non-mass media communication channels like DM, Public Relations, Events, Branded-Entertainment and Mobile advertising.