FICCI-KPMG-Report-13-FRAMES

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24 The power of a billion: Realizing the Indian dream Advertisement spends were affected as private consumption experienced a protracted slowdown. The 2012-13 advance estimates from the Central Statistics Office indicate a sharp fall in the growth of real private final consumption expenditure (PFCE). At constant (2004-05) prices, the PFCE is estimated at INR 34,730 19 billion in 2012-13, an increase of only 4.1 percent over the previous year. In comparison, the increase in private consumption expenditure was estimated at 6.5 percent in 2011-12 and 8.1 percent in 2010-11 . The absence of a mega sporting event, like a Cricket World Cup in 2011, and a muted advertiser response to season 5 of the IPL contributed to the low television ad spends in 2012. The ten week TAM black-out coincided with the festive season, and the industry is reported to have completed deals during this period on the basis data of the preceding eight to ten weeks. This may have led to niche and fringe broadcasters being unable to achieve the full advantage of the festive season spends. A study of marketing spends of a sample of advertisers suggests that while select large advertisers increased spending on advertisement and promotion in order to revive demand, on an overall basis, advertising spend remained muted. Illustrative analysis of key advertisers “ There was some pressure overall on the industry in the last few months. Advertisers have reduced their campaign size and outlays, which tends to impact smaller channels first. For us, this fiscal year has been good. We are however cautiously optimistic about the next year. “ - Nitin Nadkarni CFO, Multi Screen Media Private Limited This year, growth in the ad market was muted. Leading players came into focus in this year, with their large GRPs and reach. Scan the QR code to hear more from Man Jit “ - Man Jit Singh CEO, Multi Screen Media Private Limited “ Key advertisers Advertisement spend (April to December, INR billion) A&P expenses as share of revenue (April to December) Increase in A&P spends over last year 2012 2011 2010 2012 2011 2010 2012 2011 HUL 24.1 19.7 21.4 12% 12% 14% 22% -8% Colgate Palmolive 2.7 3.2 2.7 12% 16% 16% -15% 19% Bharti Airtel 64.4 52.9 46.0 11% 10% 11% 22% 15% © 2013 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Ideal Cellular 18.7 17.3 13.6 11% 12% 12% 8% 28% Godrej Consumer Products Ltd. Source: Company fillings on BSE Advertising spends are expected to grow at a similar rate in 2013. However, outlook for the Indian television advertising industry remains positive in the medium term with a CAGR of 14 20 percent over 2012-17. 4.6 3.2 2.5 10% 10% 10% 44% 27% Note: A&P expenses refer to Advertisement and Promotion expenses for Hindustan Unilever Ltd. and Colgate Palmolive India Ltd., Sales and Marketing spends for Bharti Airtel Ltd., Advertisement and Publicity for Godrej Consumer Products Ltd. and Subscriber acquisition, Service and Business promotion expenditure for Idea Cellular “ TV is the most undervalued media and continues to get the lowest rates, especially for the kind of reach it delivers, while being an accountable media where brands know exactly how many people watched their commercials. “ - Rohit Gupta President, Multi Screen Media Private Limited On the other hand, subscription revenue for broadcasters is estimated to grow at a CAGR of 26 percent from 2012 to 2017. Increase in the declared subscriber base and aggregation of distribution on behalf of broadcasters is expected to drive up the share of subscription to total broadcaster revenue from 36 percent in 2012 to 48 percent in 2016 21 . 19. Central Statistical Organization 20. Industry discussions conducted by KPMG in India, KPMG in India analysis 21. KPMG in India analysis
The power of a billion: Realizing the Indian dream 25 Broadcasting industry The total number of channels increased from 623 in 2011 to 845 22 in 2012, leading to an increase in advertising inventory. Most of the volume expansion is estimated to have come from other genres while GEC volumes remained stable. Existing GEC broadcasters may have seen a limited increase in free commercial time. TRAI amended the Cable Act in 2012 to specify a maximum of 12 minutes of advertising time during one hour of programming. Stakeholders believe that while it may take 2-3 years for industry wide enforcement of this amendment, it may have led to some extent of self-regulation amongst the leading broadcasters, resulting in restricted growth of commercial time per hour of programming. Source: Industry discussions conducted by KPMG in India, KPMG in India Analysis “ We see our ad to subscription revenue ratio moving from 70:30 to 50:50 over the next 3-4 years. We expect to double our ad revenue over in the next 3-4 years (given India’s low ad to GDP ratio, we believe there is significant potential growth in the ad market). Essentially then, we expect our subscription revenue to quadruple in the same period. “ - Man Jit Singh CEO, Multi Screen Media Private Limited FMCG, personal care and services continued to account for 33 percent of advertising spends The top 10 sectors continued to account for approximately 60 percent of the overall TV advertising volume share during 2012; similar to the past three years. The FMCG sector continued to dominate the advertising space with 9 out of Top 10 advertisers being FMCG players. Personal products (care and hygiene, accessories, hair care, healthcare) accounted for 26 percent of advertising volumes in 2012, up from 25 percent in 2011, and 23 percent in 2009. Bulk buying on account of large FMCG companies maintained the pressure on advertising rates. Hindustan Unilever with the largest portfolio of brands continued to maintain its position as the top advertiser on TV by a wide margin. Top 10 categories advertising on TV Scan the QR code to hear more from Man Jit Increased inventory continued to be the primary growth driver for advertisement revenue growth, while rates remained flat Continuing the trend observed in the past few years, advertisement revenue growth was largely attributable to volume growth. Rates continued to remain flat or even declined in some cases. “ 22. Hindu Business Line, 27 December, 2012 There is huge pricing pressure on ad rates. Improvement in yields, rather than just volumes, is very important for the industry. - Uday Shankar CEO, Star India “ Expansion of volume on the back of expansion of content is acceptable. However, when volume keeps expanding with no additional content coming in, it is an issue. “ - Uday Shankar CEO, Star India “ Top sectors 2012 (% share) 2011 (% share) 2010 (% share) Food & beverages 14 13 14 Personal care/Personal hygiene 12 13 13 Services 7 7 6 Personal accessories 5 5 4 Hair care 5 5 5 Auto 4 4 4 Personal healthcare 4 3 3 Household products 3 3 3 Building, Industrial & Land materials/Equipments Telecom/Internet service providers 3 2 4* 3 3 4 Total 60 59 59 Source: TAM AdEx, Period: Year 2011 and 2012, Medium: TV, Based on analysis of Ad volumes in seconds. Copyright reserved with TAM MEDIA RESEARCH PVT. LTD. Any use of TAM data (or derivative thereof) mentioned herein without express permission of TAM shall be treated as illegal Note: *Refers to Banking/ Finance/ Investment in 2009 and hence may not be exactly comparable © 2013 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
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Music The success of the iTunes mod
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06 Round up of the year that was Th
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FICCI 2013 143 “ The Amendments t
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© 2013 KPMG, an Indian Registered
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09 Outlook for the year The power o
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11 Technology The power of a billio
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Acknowledgement We acknowledge the
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FICCI-KPMG-Report-13-FRAMES

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