Advertising spends to soar in India
October 30, 2012

Fueling the consumer boom in India, the media and entertainment industries together are expected to grow at a compounded annual growth rate of 17 percent between 2012 and 2016 to touch Rs.1.75 trillion, according to a report – ‘Indian Entertainment & Media Outlook 2012’ report by Confederation of Indian Industry (CII) and Pricewaterhouse Coopers (PwC). The Indian entertainment and media industry has been identified as the fastest growing, followed by China (14 per cent), Russia (12 per cent) and Brazil (11 per cent).

At current spends, India is the 14th largest entertainment and media market in the world, with advertising expenditure of 0.3 percent or 0.4 percent of gross domestic product (GDP). The developed markets spend between 1.2 percent and 1.45 percent of their GDP in advertising.
For India to be counted among the top five markets in the world, it will have to increase advertising and consumer spending on the media and entertainment sector, as well as focus on policy and improving infrastructure. Currently, companies in India spend between 3 percent and 4 percent of their revenue on advertising. “This needs to go up to 5 percent to 6 percent,” leader, entertainment and media practice at PwC, Smita Jha told Mint.
Simultaneously consumer spending also needs to rise. Consumers primarily spend on television subscription, film admissions and print circulation, the study noted. However, the average annual spend per capita in India is just US$7, while it is US$22 in China and US$65 in Brazil, according to the report. These figures, again, pale in comparison with that of the UK (US$566), US (US$477) and Japan (US$459).
Burgeoning capitalism, means that both companies as well as consumers need to spend more on advertisements. To touch US$100 billion, the industry will require higher broadband penetration, improved audience measurement mechanisms and stronger regulatory framework. While China is already chasing capitalism, India needs to develop infrastructure and policy support towards better advertisements. The internet, yet at nascent stages in India is seeing rising ad spends as more people consume online goods and services. The print and Tv medium is also expected to see a continued ascent in ad spends, unlike its western counterparts, paving the way for a bright media and entertainment industry in both China and India.

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