Indian ad spends to grow 15.5% in 2023, will rank 8th globally, says GroupM

Domestic advertising expenditure (adex) in the current calendar year will grow at 15.5 per cent to touch Rs 1.46 trillion, according to media agency GroupM’s latest forecast released Tuesday. The double-digit advertising growth will push India to the eighth position globally in terms of ad markets, from ninth last year, underpinning the consistent rise in adex over the last few years, the agency said. Telecom, retail, banking and finance and travel and tourism will be among the key sectors contributing to the advertising growth this calendar year.

“Indian adex will be the fastest growing globally at 15.5 per cent supported by robust macroeconomic conditions,” says Ashwin Padmanabhan, president, investment, trading and partnerships, GroupM. “Digital, at 56 per cent of all advertising spends this year and growing at 20 per cent over last year, is driving the growth of adex,” he said.

Since calendar year 2021, the share of digital advertising has been over 50 per cent of domestic adex, led by the aggressive adoption of the medium during the pandemic period, GroupM says. It is now the largest advertising category, followed by television and print, at 30 per cent and 10 per cent, respectively, of domestic adex, the agency says.

After a sharp decline of 21.5 per cent in overall domestic ad spends in calendar year 2020 due to the Covid-19 pandemic, India’s advertising market had recovered to cross Rs 1 trillion by size in 2021. By 2022, overall domestic ad spends had touched Rs 1.26 trillion, up 15.7 per cent over the previous year, GroupM said, led by digital.

The year 2023 is expected to see domestic adex stay the course, the media agency says, despite geopolitical issues and volatility in the global markets. The International Monetary Fund (IMF), for instance, has retained its economic growth forecast of 6.1 per cent for India in FY23 in its recent World Economic update, from 6.8 per cent in FY22. It said that India’s GDP growth would return to 6.8 per cent in FY24.

“India remains a bright spot.

Together with China, it will account for half of global growth this year, versus just a tenth for the US and euro area combined,” the IMF said in its economic forecast for FY23.

From an advertising perspective, this will reflect in ad spends across categories, says GroupM, all of which are projected to grow versus last year. For instance, television advertising will grow at the rate of 9.2 per cent year-on-year to touch Rs 43,227 crore in 2023, GroupM says. Print advertising will grow 7.4 per cent year-on-year to touch Rs 14,520 crore in 2023. And out-of-home advertising will touch Rs 3,400 crore, a growth of 31 per cent versus the previous year.

Of course, challenges remain for the advertising industry. One of them being the need to adapt quickly to changes in technology.

“As technology redefines interactions between consumers, brands and businesses the ad industry must navigate through this changing environment,” Prashanth Kumar, CEO, South Asia, GrouM, said.

The media agency also anticipates a revival in the rural economy in India as well as improved funding for the start-up ecosystem. This is crucial for the fast-moving consumer goods (FMCG) market as well as the start-up sector, which are important advertising categories in India. In the last one year, both segments have seen a slowdown, say experts, as inflationary pressures in FMCG and investor concerns in the startup world have weighed on them.