TV(39%) Vs Digital(27%) growth story

Decoding the DAN Indian Digital Advertising Report 2020

Indian economy witnessed a slowdown in 2019 and the advertising industry felt the tremors. “The Indian advertising industry currently stands at Rs. 68,475 crores and has grown by 9.4% over 2018,” revealed the DAN’s Digital Advertising Report 2020. According to the report, the industry will grow by 10.9% to reach Rs. 75,952 crore by the end of 2020.

TV’s 39% growth story

Given television’s unprecedented reach the medium still owns the largest pie at 39% followed by Print at 39% and Digital at 20%.

Television has an unparalleled reach in the Indian media market and has the largest share of media spends in 2019 at 39% (Rs. 26,869 crores). This is followed by spends on Print media (31%, Rs. 19,389 crores)

While TV’s reach has increased to 96% of the total audience but the time spent has reduced by 21% leading to an average of 11 hours spent per week on TV. And hence it is one of the reasons why it has seen slower growth in 2019 over the last year with its share shrinking from 40% in 2018 to 39% in 2019. The same holds true for print in India – the medium has seen a slower growth with its media spends share declining from 31% in 2018 to 29% in 2019.

Look closely even though TV was having a share of 40% but the growth has been stagnant from 2016 -18 and post that the medium has started seeing a dip. Though the dip isn’t a big one, unlike print as a medium has seen a continuous percentage dip from 2016.

And on the other side, we have the rising star digital which has shown continuous growth even though the percentage of growth isn’t anywhere close to the TV. Maybe in the next five years, it will be neck to neck to TV.

FMCG sector spends the highest share on advertisements, contributing 30% (Rs. 20,182 crores) to the industry. Followed by E-Commerce, contributing 10% (Rs. 6,915 crores) and Automotive sector, making a contribution of 8% (Rs. 5,797 crores) to the advertising pie. The ad spends by the E-Commerce segment has seen the highest growth of 25% over 2018. Followed by Media & Entertainment (12%) and Consumer durables (10%) segments.

FMCG spends the largest share of its media budget on Television (61%) because of its widest reach. It is followed by spends on digital and print. Auto and retail spend the maximum on print and E-Commerce, BFSI and consumer durables spend the maximum on digital.

Digital’s 27% growth story

Digital is the medium that is going to witness the strongest growth of 27% in 2019 -2020. And hence the medium is the poster boy. The report shared by the end of 2019, the digital advertising industry stood at Rs. 13,683 crores, up at a rate of 26% from Rs. 10,859 crore in 2018.

If you see the above graph the medium has seen a dip from 32% in 2018 to 26% in 2019. Thereafter the projection shows that the medium picks up but the growth percentage is crawling.

Advertising spends on Digital Media is led by Social Media with the highest share of 28%, contributing Rs. 3,835 crore to the Indian digital advertising pie. This is followed by spends on Paid Search (23%), Online Video (22%) and Display Media (21%). Display Media, Online Video and Social Media are expected to have the fastest growth in 2020. The share of Paid Search is expected to reduce from 25% to 23% by the end of 2020.

The above chart shows how the spending on video has grown continuously over the years with social media and search spends being more constant. The Indian consumer has been hooked to video over the last few years and hence we have more than 30 OTT players.

“66% of the men are watching videos online, against 50% of women at the monthly level. 18-24-year-olds are the highest video consuming segments, with a 77% monthly net reach of online video.”

With 22% spends FMCG happens to be the largest contributor in digital advertising but it is nowhere close to the spending that it invests on TV. Video (36%) happens to be the highest spending medium for the industry. Ecommerce with 19% spends heavily on paid search(44%) followed by social media(25%).

 

Spends on both devices – desktop(53%) and mobile(47%) don’t have a big gap. However, the estimates forecast that from 2020 the gap will widen with mobile leading.

Is digital really the poster boy?

TV has the reach but the growth has been consistent and on the other hand, digital is showing the growth but it will take another 5 years for it to stand neck to neck to TV. Also as mentioned earlier the growth of digital had taken a dip and moving forward the growth is slow.

FMCG is leading investments on TV and digital but on TV the spending is 61% and on digital it has limited itself to a mere 19%. Retail and auto heavily invest in print.

So the short answer is that digital has the growth potential but TV and print still rule the Indian advertising industry even though the growth has been stagnant or diminishing. For that matter, the growth of digital isn’t encouraging.

Think of your business objective, where the consumer is present and then burn your money on advertising. Don’t just blindly follow trends, mediums and growth stories.

Meanwhile, let’s also hope the economy to revive.

“The Indian economy indeed has experienced an abrupt slowdown in 2019. We had to revise our growth projections, downwards to 4% for last year. We are expecting 5.8%(growth rate) in 2020 and then an upward trajectory to 6.5% in 2021,” Monetary Fund(IMF) Managing Director Kristalina Georgieva has said.