Traditional mediums to bear the brunt of digital's growth in 2021, 22: dentsu-e4m report

The report also noted that television has the largest share in the Indian advertising market at 41%, thanks to strong audience loyalty

by exchange4media Staff
Published: Feb 8, 2021 7:51 AM | 5 min read

The Indian advertising industry is expected to grow with a CAGR of 11.59% to reach Rs 70,343 crore by 2022, according to Dentsu India and exchange4media.com report 'Digital Advertising in India 2021'. The advertising industry is expected to make a comeback and will grow by 10.8% to reach Rs 62,577 crore by the end of the year 2021.

Barring digital, the report forecasts that TV is expected to see a decline in its advertising share in 2021 and 2022. From its current share of 41% in 2020, television's share is expected to fall to 40% in 2021 and 39% in 2021. The print will continue to decline with its share forecast to drop to 23% in 2021 and 21% in 2022. The share of FM radio, OOH, and cinema in the total advertising is expected to remain stagnant at 3%, 3%, and 1% respectively in 2021 and 2022.

Digital's share of advertising is expected to jump from 28% in 2020 to 30% in 2021 and 34% in 2022. The digital advertising industry has witnessed growth in market size from Rs. 13,683 crore by 2019 to Rs. 15,782 crore by 2020, growing by 15.3% from the previous year. Digital media will grow at 20% to reach a market size of Rs. 18,938 crore by 2021 and with a CAGR of 22.47% to reach Rs. 23,673 crore by 2022.

The Indian advertising industry currently stands at Rs 56,490 crore and it has witnessed a de-growth of 17.5% over 2019 due to the pandemic. Television contributes the largest share (41%, Rs. 23,201 crore) to the Indian advertising market. This is followed by digital (28%, Rs 15,782 crore) and print (25%, Rs 13,970 crore).

"Television’s reach is unprecedented and accounts for a majority share of advertising spends in India. It has been a leader in terms of media spends thanks to strong audience loyalty," the report stated.

According to the report, there has been a huge positive shift in the time audiences spend on digital due to the pandemic. The advertising spends on digital have increased from 20% in 2019 to a whopping 28% in 2020. This shift has impacted print, resulting in slower growth with its media share declining from 29% in 2019 to 25% in 2020. There is a drop in the readership of the print due to the availability of content on digital platforms.

It further stated that out-of-home (OOH), radio, and cinema have also witnessed the media ad spend share decline compared to 2019. The festive season combined with IPL and business activities in the economy post lockdown allowed brands to liquidate their OOH inventory and reasonable proportions of spends came into this medium.

The lines between print, digital, pay-TV, OTT, and traditional media are blurring with the rapid digitization of media. At an overall level, digital advertising in India is expected to grow at a consistent rate in the coming years. It is furthermore expected to have a CAGR of 22.47% to reach a spend share of 34% by the end of 2022.

The reach of print declined due to the lockdown and shift in news consumption by readers. Middle-aged readers preferred digital over print during the lockdown. They preferred to consume news on news websites, mobile news applications, social media, etc.

The lockdown has had a severe impact on the businesses and it certainly affected the reach of print, OOH, and cinema. Measures were taken to contain the pandemic and people were confined to their homes. There were no footfalls in the cinema halls in the initial lockdown phase.

Print readers preferred to consume news online rather than print due to the fear of COVID-19, which resulted in a change in consumption habits. This resulted in the contraction of the media spends share for print, OOH, and cinema compared to 2019. Print, OOH, radio and cinema are expected to maintain the same market spends share like that in the year 2020. Online audio-streaming services have begun to give stiff competition to radio.

Media spends across industry verticals

The report noted that the FMCG segment spends the highest share on advertisements, contributing 21% (Rs. 11,554 crore) to the industry. This is closely followed by e-commerce with a contribution of 17% (Rs. 9,788 crore) and the consumer durables segment with a contribution of 10% (Rs. 5,751 crore) to the advertising pie. Telecom segment contributes 9% (Rs. 5,121 crore) to the ad expenditures followed by automotive (7%, Rs. 4,092 crore) and BFSI segments (5%, Rs. 2,836 crore).

FMCG spends the largest share of its media budget on television (64%) as the medium has the widest reach. This is followed by spends on digital (19%) and print (11%). The automobile sector spends the majority of its media budgets on print (39%) followed by television and digital. The share of digital spends by the automobile sector has increased from 16% in 2019 to 25% in 2020. The E-commerce sector spends the highest share of its media budget on television (45%) followed by digital (39%). The retail segment spends the maximum budget on print followed by digital.

The telecom segment spends the largest share of its media budget on television (50%), followed by digital (40%). The telecom segment’s advertising expenditure share on digital increased from 35% in 2019 to 40% in 2020. This is mainly because Vodafone-Idea (Vi) launched its new branding campaign and other telecom companies were heavily active with new launches during the second quarter.

BFSI segment spends the largest share of its budget on digital (57%) followed by print (19%). From 2019, the BFSI segment’s spend share on digital has increased from 42% to 57% in 2020. The media & entertainment segment spends most of its budget on print (37%) followed by digital (32%). The segment has increased its share of spends on digital from 23% in 2019 to 32% in 2020. Consumer durables spend the majority of their shares on digital (45%) followed by television (35%).