Fourth quarter financials of top advertisers in the FMCG and auto sectors have energized the Indian media industry which is expecting a strong double-digit growth in overall advertising expenditure (AdEx) in the current fiscal. While digital and TV are expected to drive the AdEx growth, print and radio are also expected to grow due to aggressive spending by advertisers across categories, experts say. 

The Indian ad market was facing headwinds in the last fiscal year ended March. Advertisers had tightened their purse strings due to a range of reasons, including high inflation, funding winters in the startup ecosystem and Russia-Ukraine war. But initial reports suggest that the advertising market is in revival mode in the first quarter. 

“FMCG, auto and financial services are seeing increased spends and that will continue keeping in mind the buoyant economic situation in the country,” senior executives from media industry confirm. 

It is noteworthy that leading FMCG brands like Nestle, Dabur and top car makers like Maruti Suzuki and Tata motors have declared their last quarter and annual results. All of them have posted positive growth in their revenue. 

FMCG and auto are the two most dominant sectors contributing to India's advertising expenditure that touched Rs 89,800 Cr in 2022. TV, Digital, Print and Radio media got 34 percent, 38 percent and 21 percent and 2 percent share respectively in the total AdEx, according to the Pitch Madison Annual Report. Outdoor and Cinema occupied the rest 5 percent. 

Maruti Suzuki has posted its highest-ever volumes, exports, turnover, and profits in FY23. The company’s net profit in FY23 doubled, crossing Rs 8,000 Cr from Rs 3,766 Cr in FY22 and revenue from operations surged 20% YoY to Rs 32,000 crore,  according to the company filings. 

Company’s senior executive director (Marketing and Sales) Shashank Srivastava told e4m that the carmaker would spend more than Rs 1,200 cr in the current fiscal on marketing and promotion, a whopping 33 percent up compared to Rs 800 Cr a year ago. 

Similarly, Dabur India, which spent Rs 640 cr in marketing and promotions in FY23, marked down value from the previous year, is likely to have strong double digit growth in spends in the current fiscal. 

TV media has already started witnessing "achhe din", quips Ashish Sehgal, Chief Growth Officer – Ad Revenue, ZEEL. 

“November to February were particularly bad for the media industry in terms of ad revenue. Things started moving in March onwards. April was better than March and May first week is even further better, thanks to higher ad spends by FMCG, Auto and BFSI companies,” he shares.

Sehgal noted that revival has largely come from advertisements of icecreams and beverages that will further rise in June as untimely rains have delayed the summers across many states.  

“Real estate, auto, BFSI and consumer durable brands are spending aggressively on print media,” an executive from a print media house said, who speculated that the graph will be upward until the festive season. 

“My speculation is based on the premise that there won’t be any major disruption in the Indian economy in the next few months. Though global slowdown remains a key concern for media platforms,” he added. 

Meanwhile, VC and PE investors have also announced 26 funds worth more than $2 Bn to support Indian startups at various stages in this calendar year, as per a media report. This means more ad growth this year, a media planner said.

Rajiv Dubey, Media Head, Dabur India, says, “Advertising influences the purchase decision, that led by stable pricing and value offering will lead to demand generation. Strong results from FMCGs and auto industry for the last quarter is a good sign and for the upcoming quarters, likely easing of margin pressures will help drive volume growth. Strong advertising support will come in handy for the same.”

TV and Digital both

While digital AdEx surpassed TV spend in 2022, the year 2023 could turn the table as experts are seeing a strong resurgence in both TV and digital media. 

“With IPL delivering phenomenal numbers for Star Sports, it is a comeback of sorts for sports on television and it has reaffirmed faith back into television. We see a strong comeback for TV lead by sports, news lead by election year and variety of offerings from entertainment genres. Digital ecosystem, led by 100 Million strong influencers, are helping the creator economy and driving short format video consumption.  A good Monsoon should further help drive FMCGs, Auto industry, Tractor sales etc.,” Dubey noted. 

"Bharat will drive AdEx"

Sandeep Goyal, MD of Rediffusion, opines that a good monsoon will be the deciding factor for the ad sector growth. He adds that Q2 is always crucial for driving the demand and AdEx both. 

“Most of the economic growth is expected from Bharat where people have more disposable income compared to their urban counterparts who have to spend more on housing and transportation. The Bharat population also has more time to spend on media. Hence, Tier 2 and Tier 3 will drive the AdEx as well.”

FMCG companies had hiked their prices to sustain high inflation that rocked the country in the first three quarters of FY23. Since inflation has come down, demand will pick up, he said. 

Goyal feels that the FMCG companies will penetrate deeper in Bharat and likely to launch more brands to appease the populace.