 "Pitch Madison review lowers ad growth forecast by 3.6%")
In its mid-year advertising report released recently, Pitch Madison revised its ad-spend projections for the current year, downgrading the total projected growth numbers by 3.6 per cent. Television is the cause of the downward revision of growth numbers with the ad spends for the medium falling short by nine per cent.
In its report released February this year, the agency had projected ad-spends to grow at 16.8 per cent in calendar year 2016 to reach Rs 51,365 crore. TV was expected to lead this growth, with ad-spends on the medium expected to grow at 20 per cent in 2016. However, in its mid-year report, Pitch Madison has revised this expectation to 11 per cent, presumably basing its estimates on the performance of the medium in the first half of the year. All the other media categories are expected to retain the projections in the February report.
According to the report, in the first half of the calendar year 2016, the TV advertising industry grew at 11 per cent. And despite the onset of the festive season, the report believes that the growth in the second half will remain flat at 11 per cent. In 2015, TV advertising grew at 22 per cent, with the first half clocking 35 per cent growth on the back of substantial increase in e-commerce spends and the ICC Cricket World Cup which took place in the Indian sub-continent last year.
The first half of 2016 has had its share of popular sports events - the ICC T-20 World Cup and the annual T-20 extravaganza - Vivo Indian Premiere League (IPL). Both events attracted a bevy of advertisers, with Sony Pictures Network India (SPN), the official broadcaster of the IPL, making nearly Rs 1,200 crore in on-air advertising and sponsorship revenue. Still the numbers for TV spends is down indicating that the slump in e-commerce spends is too big to be offset by any increases otherwise.
Vikram Sakhuja, CEO, Madison Media and OOH said in the report, "The drop in growth rates in TV is led by a lower contribution of e-commerce which is a category known to pick and choose high priced inventory and impact programmes and substituted by FMCG users who resort to everyday advertising and seek high value for money."
Snapdeal, for example, did not launch any major campaign during the IPL. Grofers has switched off its marketing campaign and is trying to reign in its cash burn. Sam Balsara, chairman, Madison World said, "The drop in growth rate of TV advertising does not augur well for the economy as generally a spurt in ad spends leads to higher GDP growth."
E-commerce spends in the first half of 2016 dropped 37 per cent when compared to the same period in 2015. The problem here say experts is that e-commerce companies advertising spends are synchronised closely with their fund-raising efforts. It is not tied to festive seasons or to special events as much as categories such as FMCG and offline retail are. Another category to reduce spends significantly is travel and tourism (-26 per cent) followed by clothing and fashion jewellery (-22 per cent). The highest growth in advertising spends on TV has been in the alcoholic beverages category. The category's spends grew more than 50 per cent from a low base of Rs 96 crore in the first half of 2015 to Rs 150 crore for the first half of this year.
In its report released February this year, the agency had projected ad-spends to grow at 16.8 per cent in calendar year 2016 to reach Rs 51,365 crore. TV was expected to lead this growth, with ad-spends on the medium expected to grow at 20 per cent in 2016. However, in its mid-year report, Pitch Madison has revised this expectation to 11 per cent, presumably basing its estimates on the performance of the medium in the first half of the year. All the other media categories are expected to retain the projections in the February report.
According to the report, in the first half of the calendar year 2016, the TV advertising industry grew at 11 per cent. And despite the onset of the festive season, the report believes that the growth in the second half will remain flat at 11 per cent. In 2015, TV advertising grew at 22 per cent, with the first half clocking 35 per cent growth on the back of substantial increase in e-commerce spends and the ICC Cricket World Cup which took place in the Indian sub-continent last year.
The first half of 2016 has had its share of popular sports events - the ICC T-20 World Cup and the annual T-20 extravaganza - Vivo Indian Premiere League (IPL). Both events attracted a bevy of advertisers, with Sony Pictures Network India (SPN), the official broadcaster of the IPL, making nearly Rs 1,200 crore in on-air advertising and sponsorship revenue. Still the numbers for TV spends is down indicating that the slump in e-commerce spends is too big to be offset by any increases otherwise.
Vikram Sakhuja, CEO, Madison Media and OOH said in the report, "The drop in growth rates in TV is led by a lower contribution of e-commerce which is a category known to pick and choose high priced inventory and impact programmes and substituted by FMCG users who resort to everyday advertising and seek high value for money."
Snapdeal, for example, did not launch any major campaign during the IPL. Grofers has switched off its marketing campaign and is trying to reign in its cash burn. Sam Balsara, chairman, Madison World said, "The drop in growth rate of TV advertising does not augur well for the economy as generally a spurt in ad spends leads to higher GDP growth."
E-commerce spends in the first half of 2016 dropped 37 per cent when compared to the same period in 2015. The problem here say experts is that e-commerce companies advertising spends are synchronised closely with their fund-raising efforts. It is not tied to festive seasons or to special events as much as categories such as FMCG and offline retail are. Another category to reduce spends significantly is travel and tourism (-26 per cent) followed by clothing and fashion jewellery (-22 per cent). The highest growth in advertising spends on TV has been in the alcoholic beverages category. The category's spends grew more than 50 per cent from a low base of Rs 96 crore in the first half of 2015 to Rs 150 crore for the first half of this year.