Advertising Industry 2014-15

Advertising growth to nearly halve to 9.6% this year

The growth rate of the advertising industry is expected to nearly halve to 9.6 per cent this year at Rs 40,658 crore over the previous year, says a report.

The growth this year will be largely on account of the ongoing Cricket World Cup and spends across sectors, it said.

Driven by the massive election-related spends, the advertising industry grew at an impressive 16.4 per cent in 2014 to Rs 37,104 crore.

"A stable government focused on growth, positive market sentiment, upbeat consumer confidence will be the leading contributors to growth. The overall market is expected to grow by over Rs 3,500 crore to reach Rs 40,658 crore, a growth of 9.6 per cent over 2014," the Pitch-Madison Media Advertising Outlook said.

The report noted that the biggest contributor to growth will be organic spends across sectors and the Cricket World Cup.

The report also observed that in terms of absolute numbers the industry increased by over Rs 5,200 crore in 2014.

Advertising spends by political parties on account of the LokSabha and assembly elections contributed as much as Rs 2,300 crore, it noted.

"It is significant to note that of 16.4 percent growth, 7.2 per cent was on account of elections and 3.6 per cent through e-commerce players. Other categories contributed to only 5.6 percent," the report said.

The report however said the expected growth of 9.6 per cent in 2015 cannot be directly compared to the growth registered in 2014, as political parties contributed a major chunk with the elections.

"The 9.6 per cent growth estimate should be compared with the like-to-like category growth of 5.6 per cent achieved in 2014 and not the overall growth of 16.4 per cent. That is because, though the market grew by 16.4 per cent in 2014, growth was driven by elections and the money accounted from this will diminish in 2015," it said.

PRINT:

The print media is likely to grow 5.3 per cent on the back of increased government spending and advertising by e-commerce players and the size of print ad industry to be close to Rs 16,086 crore, up from Rs 15,274 crore last year.

"Print should continue to be the largest contributor in the overall advertising pie with a share of around 40 per cent," the report said, observing that its share has fallen from 47 per cent in 2008 to 41 per cent in 2014.

TELEVISION:

The share of television space in the overall advertising pie is expected to remain static at 38 per cent and is expected to grow 9.5 per cent to touch Rs 15,500 crore, up from Rs 14,158 crore.

"One of the drivers of growth will be the ongoing the Cricket World Cup, expected to earn revenue of around Rs 1,000 crore, of which around Rs 500 crore is likely to be additional revenue. The balance will be part of organic growth across sectors, mainly banking, financial services and insurance, telecom, consumer durables, auto mobile and others," the report said.

It noted that new channel launches from existing networks will lead to increased inventory supply, which in turn will lead to a hike in advertising revenues.

The phase III of digitization will also lead to increased revenues as most channels sell HD content separately, which will attract premium advertisers.

"With the government extending the deadline for Phase III of the digitization drive to December 2015, the increased penetration of digitization will lead to increased spending on niche, SD and HD channels. HD channels are now being sold separately and the facility of geotargeting ads on TV will attract more premium, local and retail advertisers," the report said.

DIGITAL:

Digital advertising is expected to grow 30 per cent with revenues expected to reach Rs 5,135 crore. "An idea of the phenomenal growth of the sector can be assessed by the fact that the medium which drew revenues of Rs 470 crore in 2008, is expected to cross the Rs 5,000 crore mark in 2015," it said.

Digital's share in the overall advertising pie has also increased from just 2 per cent in 2008 to over 10 per cent in 2014 and in 2015 it is expected to be 12.6 per cent. E-commerce players are expected to be the drivers of growth for the category, the report added.

RADIO:

The radio sector is expected to grow 6 percent to Rs 1,362 crore. "With confidence that the government will finally launch Phase III expansion by September, a large number of stations are expected to open and the new stations should pull in at least Rs 70 crore of additional ad revenue in the last quarter of the year," the report said.

Radio was used extensively by political parties during elections and this is expected to continue in 2015. E-commerce advertisers have also used the radio medium extensively for all their tactical offer-based campaigns and will continue with heavy spends on radio this year also, it noted.

OOH:

It expects the outdoor media to grow 6.2 percent to Rs 2,371 crore. Last year the medium grew by 13 per cent to touch Rs 2,233 crore again driven by the elections.

This year the growth of this medium will depend on spends by e-commerce companies, retailers, telecom, apparel and jewellery marketers handsets mobile manufactures and infrastructure companies."

The report expects a growth of 9.2 percent in cinema space taking the total revenue to over Rs 200 crore. it grew 10 percent in 2014 and contributed 0.5 percent of the ad pie.

It noted the rapid expansion of multiplexes in small towns cities is a big reason for the growth of cinema advertising. "Fuelling the growth of cinema advertising will be digitization. Multiplex screens are expanding across the country and big movie releases playing on the screens are expected to attract a lot of national and local advertisers ," it said.

SOURCE:ET

Online Advertising

Online advertising market to touch over Rs 3,500 crore by March 2015 

Rising marketing spend in sectors like e-Commerce, telecom, FMCG and consumer durables will help the online advertising market in India, which is projected to grow at 30 per cent to touch Rs 3,575 crore by March 2015, a IAMAI-IMRB study today said. 

According to the study, the online advertising market has grown from Rs 1,140 crore in 2010-11 to Rs 2,260 crore in 2012-13 and was estimated to be worth Rs 2,750 crore in 2013-14. 

The online ad segment is expected to grow at a compounded annual growth rate of 25 per cent between FY'2011 to FY'2013. 

The overall ad spend in the country across all media is Rs 38,598 crore as of 2013 with a year-on-year growth rate is 12 per cent, with television accounting for 44 per cent of the spend. 

"The gradual increase in adaptation of Internet has opened the door to the marketers to go online and spend on digital advertisement.With mobile devices becoming a predominant mode of Internet access among the users in India, this number is expected to increase (further) 

"Although traditional media still holds strong ground in the Indian ad space, digital advertising is catching up fast and is expected to overtake traditional media within the next 5-10 years," Internet and Mobile Association of India (IAMAI) and IMRB International said. 

The high growth can also be attributed to increasing advertisement measurability, which is both quick and effective, it added. 

"In addition to the increasing adoption of mobile devices, the increasing connectivity and improvements in broadband infrastructure will lead to increased investments in more content rich advertisements viz video and social media advertisements," it said. 

Digital ad spend on mobile devices stood at 14 per cent, whereas on desktops and laptops at 86 per cent. 

As of June 2014, there were 243 million claimed Internet users in India out of which 192 million are active users (use Internet at least once a month). 

The growth in e-Commerce industry and their ad-spend in digital media is the highest, contributing close to 20 per cent, followed by telecom and FMCG & consumer durables. 

The digital ad spends by the e-Commerce industry has been growing at a CAGR of 59 per cent since 2011 and stood at Rs 495 crore at the end of March 2014. 

Spend by telecom stood at Rs 413 crore, followed by FMCG & consumer durables (Rs 385 crore), BFSI and travel (Rs 303 crore each). 

Currently, search and display contribute 38 per cent of the overall ad spends, followed by display ads (29 per cent) and social media (13 per cent). 

"It is estimated that the proportion of spends on search advertisements will reduce and spends will increase on email, video and mobile ads," it said. 

SOURCE: Economic Times

Banking Sector in India

Indian Banking Sector: Brief Introduction

Existence of an efficient banking system is paramount for achieving economic growth as banks are the mechanisms that channel the savings to investments. They have the capacity to promote economic growth as they allocate savings to those investments which have potential to yield higher returns.

With 86 scheduled commercial banks, 82 regional rural banks, 1,645 urban cooperative banks (53 scheduled cooperative banks) and 95,765 rural cooperative banks, India's banking system is a robust one and has proved its mettle by standing unaffected during the recent global financial turmoil.

Key Statistics

• According to the Reserve Bank of India (RBI)'s 'Quarterly Statistics on Deposits and Credit of Scheduled Commercial Banks', March 2012, Nationalised Banks accounted for 53.0 per cent of the aggregate deposits, while the State Bank of India (SBI) and its Associates accounted for 21.8 per cent. The share of New Private Sector Banks, Old Private Sector Banks, Foreign Banks, and Regional Rural Banks in aggregate deposits was 13.0 per cent, 4.8 per cent, 4.4 per cent and 3.0 per cent, respectively
  Nationalised Banks accounted for the highest share of 52.0 per cent in gross bank credit followed by State Bank of India and its Associates (22.5 per cent) and New Private Sector Banks (13.5 per cent). Foreign Banks, Old Private Sector Banks and Regional Rural Banks had shares of around 4.8 per cent, 4.8 per cent and 2.4 per cent, respectively
• Another statement issued by the RBI revealed that foreign exchange reserves stood at, US$ 294.99 billion for the week ended January 4, 2013 wherein the value of gold reserves was recorded at US$ 27.21 billion and that of foreign currency assets (FCAs) was at US$ 261.06 billion
  The value of special drawing rights (SDRs) was US$ 4.40 billion and the country's reserve position with the IMF was at US$ 2.30 billion
• The number of mobile banking transactions in India has also increased by 6.39 per cent to 47, 20, 871 during November 2012, up from 44, 37, 205 recorded in October 2012, according to the RBI, wherein the total amount transacted showed a boost of 8.3 per cent

Recent Developments

• In order to curb the risk of exchange rate volatility and ensure compatible relations among the banking systems of two countries, the Government of India (GoI) has directed state-run banks to encourage local currency payments for bilateral trade transactions. Under the proposed mechanism, Indian exporters will be allowed to issue invoices and receive payments in Indian rupees while payments for imports will be made by the partner country's bank in its local currency
• The Small Industries Development Bank of India (SIDBI) has partnered with eight regional rural banks (RRBs) and urban co-operative banks in West Bengal. The scope of agreements includes training the staff of RRBs and co-operative banks in project appraisal, monitoring and collection as also providing free access to software on a down-scaling methodology developed for lending to micro enterprises
• Indian Overseas Bank (IOB) has signed a memorandum of understanding (MoU) with Deutsche Bank for using its cross-currency payment solution namely FX4Cash to offer cash management services across 125 local currencies in more than 160 countries. The move would facilitate streamlined automated process for forex dealing and payments to the bank
• In a bid to double its business turnover in the next three years and thereby clock an annual growth rate of 25 per cent to 30 per cent, the Karnataka Bank Ltd has signed an MoU with management consultant KPMG for its business process re-engineering initiative, named as Project Tejas
• Meanwhile, the Export-Import Bank of India (EXIM) has decided to open a representative office in Myanmar in order to increase the bilateral trade between the Northeast India and Myanmar. The opening of the trade link with Myanmar and transit facility with Bangladesh is expected to offer new opportunities for the organic agriculture produce of Northeast India

Government Initiatives

The Indian Government keeps initiating various steps to ensure safe and hassle-free banking in the country. Recently, the RBI has relaxed the mandatory know your customer (KYC) norms for banks in order to make the process of opening a bank account simpler and faster.

• Moreover, both the Houses of the Parliament have passed The Banking Laws (Amendment) Bill 2011. The Bill would strengthen the regulatory powers of the RBI Reserve Bank of India (RBI) and would further develop the banking sector in India. It will also help the nationalised banks to raise capital by issue of preference shares or rights issue or issue of bonus shares while enabling them to increase or decrease the authorised capital with approval from the Government and RBI without being limited by the ceiling of a maximum of Rs. 3000 crore (US$ 558.84 million) 
  Furhermore, the Bill would offer possibilities for new bank licenses by RBI resulting in opening of new banks and branches. This would not only help in achieving the goal of financial inclusion by providing more banking facilities, but would also provide additional employment opportunities to the people at large in the banking sector
• The GoI has also approved the establishment of a Credit Risk Guarantee Fund Trust (CRGFT) for low income housing, with an initial outlay of Rs.1000 crore (US$ 186.28 million). The CRGFT, registered on May 1, 2012 and launched on October 31, 2012 would administer and operate the Scheme, which is demand-driven, as stated by Ajay Maken, Union Minister of Housing & Urban Poverty Alleviation (HUPA) 
  The Minister stated that under the Scheme, the Trust will provide guarantee to lending agencies for housing loans extended by them to persons belonging to the Economically Weaker Sections / Low Income Groups (upto Rs. 5 lakh [US$ 9,313.67]), without any third party guarantee or collateral security

Road Ahead

With the Parliament passing the much awaited Banking Laws Amendment Bill recently, the face of the Indian banking industry is set to get a lift in the coming years as the passage of the bill has paved the way for more banks. This will not only create a healthy competition among the players in the industry, but will also escalate the style of operation and technology.