Group M India Media Forecast Apr 08

This Year, Next Year India Media Forecasts

April 2008

Contents

Contents Summary Newspapers Magazines Television Radio Outdoor Digital Cinema Retail Media

………………………………………………………………………………………. ………………………………………………………………………………………. ………………………………………………………………………………………. ………………………………………………………………………………………. ………………………………………………………………………………………. ………………………………………………………………………………………. ………………………………………………………………………………………. ………………………………………………………………………………………. ………………………………………………………………………………………. ……………………………………………………………………………………….

2 4 6 9 11 14 16 18 20 21

Sources: GroupM Specialist Practices: Trading, mConsult, Dialect, Interaction, ESP GroupM Communications Agencies: MindShare, Maxus, Mediaedge:CIA, Motivator, MediaCom, Kinetic

This Year, Next Year – India Media Forecasts

2

April 2008

This Year, Next Year India Media Forecasts

April 2008

GroupM 201, Peninsula Chambers Ganpatrao Kadam Marg Lower Parel Mumbai – 400013 Maharashtra India

All rights reserved. This publication is protected by copyright. No part of it may be reproduced, stored in a retrieval system, or transmitted in any form, or by any means, electronic, mechanical, photocopying or otherwise, without written permission from the copyright owners. Every effort has been made to ensure the accuracy of the contents, but the publishers and copyright owners cannot accept liability in respect of errors or omissions. Readers will appreciate that the data are as up-to-date only to the extent that their availability, compilation and printing schedules will allow and are subject to change.

This Year, Next Year – India Media Forecasts

3

April 2008

Summary 5,554 502 4,528 240 75 875 -

6,651 552 5,185 300 120 995 45 -

7,856 629 6,051 399 204 1,165 56 150

2007 Actual 9,290 705 7,110 590 390 1,398 75 225

11,774

13,848

16,510

19,782

2004

2005

2006

Newspapers Magazines TV Radio Internet Outdoor Cinema Retail Media

-

20% 10% 15% 25% 60% 14% -

12% 14% 17% 33% 70% 17% 25% -

2007 Actual 18% 13% 18% 48% 91% 20% 34% -

Media Total YoY % Change

-

18%

18%

20%

2004

2005

2006

Newspapers Magazines TV Radio Internet Outdoor Cinema Retail Media

47% 4% 38% 2% 1% 7% -

48% 4% 37% 2% 1% 7% 0.3% -

48% 4% 37% 2% 1% 7% 0.3% 1%

2007 Actual 47% 4% 36% 3% 2% 7% 0.4% 1%

Media Total

100%

100%

100%

100%

2004

2005

2006

Media, Rs. Cr., Net Newspapers Magazines TV Radio Internet Outdoor Cinema Retail Media Media Total Rs. Cr. YoY % Change

% Shares of Media

2004

2005

2006

Newspapers Magazines TV Radio Internet Outdoor Cinema Retail Media

1,389 125 1,132 60 19 219 -

1,663 138 1,296 75 30 249 11 -

1,964 157 1,513 100 51 291 14 38

2007 Actual 2,323 176 1,778 148 98 349 19 56

Media Total USD m

2,944

3,462

4,128

4,946

Media, USD m, Net

This Year, Next Year – India Media Forecasts

4

2008f 10,962 789 8,354 885 624 1,698 98 350 23,760 2008f 18% 12% 17% 50% 60% 22% 30% 56% 20% 2008f 46% 3% 35% 4% 3% 7% 0.4% 1% 100% 2008f 2,741 197 2,089 221 156 425 24 88 5,940

April 2008

Summary The Indian Media market has been on an upswing in the last 5 years and 2007 has been no exception. What is even more heartening is that the estimates in the TYNY 2007 report, which looked very ebullient at the time, have been met. New media have grown at high rates in line with their expected potential. However, traditional media have not been disadvantaged by this, and they have continued to show strong growth, though their share of the total media pie has expectedly shown a slight dip. The main reasons for this are: • Willingness of emerging advertisers to pay for impact • Expansion of traditional media into new markets and formats, which is helping them demand value • A strong business environment that supports this growth • Increase in advertisers’ spends on traditional media to maintain status quo and their willingness to look at new media (which also tend to be cheaper options) to create differentiation and grab attention • Shift in focus from conventional target consumers (Housewife, aged 25-45 years), to include the Male and the Youth, who are the primarily being targeted through new mediums like Mobile and Internet, and Radio and Niche Publications. What remains to be seen is whether recent downtrends at the stock market will moderate media growth.

•

AdEx to GDP ratio has strengthened as expected with these growth numbers

AdEx/ GDP Ratio

This Year, Next Year – India Media Forecasts

2006 0.59%

5

2007 0.65%

2008e 0.75%

April 2008

Newspapers +18%, +18% The Market: The Display advertising component of the Newspaper market in India for calendar year 2007 was valued at Rs.9,290 cr. This is a growth of 18% over calendar 2006 (Rs.7,856 cr.) as against the 17% predicted by us in last years report. Print, despite being the biggest incumbent medium, continued to attract the largest share of advertising spends. The India Print story is in stark contrast to the threat being faced by the medium globally. The major reason for the revenue growth has been the consistent hike in Card Rates of major players, in spite of increased competition in the top 8 Metros and stagnant Average Issue Readership (AIR) numbers. While this has been made possible due to the continued dominance of publications in their home markets, rate hikes in some part have also been imposed to offset their entry into new markets. Rate hikes have taken place at both the premium and the popular ends of the product spectrum. Expensive English print became even more expensive with leading brands making forays into new markets or improving relative readership contribution from smaller markets. On the other hand the local retail market continued to strengthen its media investment in regional publications. Here increased colour options helped publications improve their yield from advertisers. 60% of total volume consumption in 2007 was in colour as against 52% the year before. Publications are also actively looking at ways to tap into the local advertising market with “Go Local” drives by way of new Supplements. With restrictions on OOH medium usage in some cities, publications are increasingly targeting retailers and cashing in on their diverted OOH spends. Leading publications are also creating new avenues for growth through forays into other languages and formats. Publications are using e-paper versions by targeting NRI population, which gives them over 75% of the total hits. However, it would take some time before this avenue begins to generate real value. Publications which promoted their Classifieds portals as separate entities have succeeded in penetrating segments like Matrimonials, Real Estate and Jobs. The Players: Within each language there are one or two players that have seen over 25% growth and others which are closer to 10% levels. Typically the big players have got bigger. While some players have grown on the back of increased offerings and entry into new markets, others have done so on the back of Rate Hikes and improved Colour to B/W ratios. The Product:

•

•

•

•

Death of the Front Page as we know it: Product innovation is the name of the game today. TOI has made the half front-page gate fold a regular feature and most other publications have followed suit. It has become a very attractive option for advertisers as well. Rise of the Tabloid: Even though broadsheet still remains the popular format, there is an increasing accent towards smaller formats. The newly launched Mail Today (JV between Associated Newspapers Ltd with Living Media India Ltd) and Metro Now (JV between HT Media and BCCL) have indicated that there might be a subtle shift towards ‘Tabloidisation’ of the Indian market. Factors such as increasing cost of newsprint and shift in reader preference (young readers who find newspapers dull have shown interest in this format), might only accelerate this trend. Move to other Languages: 2007 witnessed the transition in areas such as Business papers which have always been considered the domain of the English press. Economic Times broke the trend by launching a Gujarati edition in Ahmedabad and a Hindi edition in Delhi. Business Standard was not far behind with its launch of Hindi editions for Delhi and Mumbai. The launch of supplements designed for special interest areas such as lifestyle, technology, entertainment, education and careers.

This Year, Next Year – India Media Forecasts

6

April 2008

The Reader: The Indian reader has never had it better. While 2 years back everything appeared plain vanilla, today, he or she has a choice of multiple flavours and publishing houses are more than willing to cater to his or her tastes.

2007 AdEx by Category (Rs. Cr.) 60% Independent Retailers

50%

Cars/ Jeeps

Internet Service

40%

30%

YoY %

Corporate/ Brand Image

Educational Institutions

Events 20% Miscellaneous

Properties/ Real Estates 10%

Audited/ Unaudited Financial Results

Travel & Tourism

0% -2

0 -10%

2

4

6

8

10

12

Net AdEx

Category Contribution 2006 Educational Institutions 6% Properties/ Real Estates 6% Independent Retailers 4% Cars/ Jeeps 4% Corporate/ Brand Image 4% Events 4% Internet Service 3% Miscellaneous 2% Travel & Tourism 3% Audited/ Unaudited Financial Results 2%

2007 7% 6% 5% 5% 4% 4% 3% 2% 2% 2%

YOY % Change 33% 14% 50% 46% 32% 25% 43% 17% 8% 18%

Average = 18%

This Year, Next Year – India Media Forecasts

7

April 2008

Newspapers +18%, +18% The Future:

•

•

• •

2008 will continue to be an exciting year for print. We do not expect the digital wave to dampen our attachment to the morning daily. Rising literacy levels and limited access to Internet will be the key reasons why print will continue to grow. Just as in 2007, this year will see a host of new launches. While existing print players will diversify in related genres and enter new geographies, non-print players will enter print to diversify. Newsprint prices are on the rise and the next few quarters will continue to see increasing prices and shortages. This will put pressure on margins, forcing publishers to look at new formats and revenue streams. Private Equity players and bankers will also continue to explore investment opportunities in Indian media houses. Growth in transport infrastructure will result in the launch of commuter newspapers across cities. For instance, Delhi's underground, which did not exist before 2002, will have 100 stations in three years' time and is expected to carry 3 million commuters, mostly in the age group of 15-45, daily. This is the TG most coveted by advertisers and media houses are already launching publications to tap in to this bunch, with Metro Now being the pioneer.

This Year, Next Year – India Media Forecasts

8

April 2008

Magazines +13%, +12% The Market: At a time when magazines the world over are seeing a decline in advertising pages and are moving to digital distribution, India is experiencing an unprecedented boom in titles. Niche international titles are flocking to India and, not to be outdone, local publication houses are launching targeted special interest titles to cash in on the advertiser’s liking for suitable editorial environments for their brands. However, this increase in titles has not resulted in a significant increase in tracked advertising spends, probably because many of the foreign brands appearing in India editions of international magazines do so as part of regional plans. The Players: Local players continue to have the edge in terms of readership given their long history here. Most new titles have modest paid circulation in the 20,000 range but profess to be quite content with these numbers. Even in the absence of any real readership base, the very equity of these publications and their high production standards have found support from the international luxury brands launching in India. While the high cover prices remain a deterrent, many publications continue to counter these with monthly subscription drives, with freebies thrown in. Every month sees at least one new launch and there seems to be no dearth of advertising space in any one of them. The players themselves seem to have faith in the long term growth prospects of this sector. Last year began with big-ticket announcements such as the partnership between US-based Fortune Money Group and Ananda Bazaar Patrika Ltd to launch the Indian edition of Fortune magazine, USbased Forbes’ tie-up with Network18 for the launch of Forbes magazine in India. The Product: Niche was the watchword as publication houses raced to corner different consumer segments. We have seen launches across News, Fashion, Travel and Health. The Economist, Vogue, FHM and music magazine Rolling Stone were some of the well known foreign titles to make it here. Indian publishers also seem to taken a cue from their foreign counterparts. This is evidenced in recent launches of EXPAT Insider (aimed at giving the expat community settled in India an insight into entertainment to lifestyle and people of India), Bride & Style (a wedding magazine), DARE (focusing on entrepreneurship) and TRAFFIC Life (lifestyle magazine for urban Indians).

This Year, Next Year – India Media Forecasts

9

April 2008

2007 AdEx by Category (Rs. Cr.) 60%

Branded Jew ellery

50%

40%

YoY %

30%

Lifestyle Events

20%

Independent Properties/ Retailers Real Estates

10%

Readymade Garments

Corporate/ Brand Image

Cars/ Jeeps

0% -2

0

2

Travel & Tourism

Watches

6

8

4

10

12

-10%

Net AdEx Category Contribution

Corporate/ Brand Image Independent Retailers Readymade Garments Properties/ Real Estates Cars/ Jeeps Travel & Tourism Branded Jewellery Watches Events Lifestyle

2006

2007

4% 4% 4% 2% 3% 3% 2% 2% 2% 2%

4% 4% 4% 2% 2% 2% 2% 2% 2% 2%

YOY % Change 9% 15% 9% 17% 1% 2% 50% 1% 26% 30%

Average = 13%

The Future: We expect a spate of new launches in the coming months, with almost a dozen global players planning to launch India editions. This will also be in part due to Indian media laws, which restrict foreign equity to 26% in the news segment, but allow 100% foreign equity in non-news and non-current affairs specialty magazines.

This Year, Next Year – India Media Forecasts

10

April 2008

Television +18%, +17% Television is one medium that has surprised even the media pundits and delivered higher growth than expected. Cricket saw a revival in the second half of last year with Twenty20 World Cup, and viewer fragmentation led to rates being strengthened owing to the increasing cost of reaching consumers. As newer channels are launched and fragmentation continues, we expect similar growth in the coming year. The Market: 2007 witnessed the launch of over 30 new channels in many genres. When competition increases, prices usually fall. However, this hasn’t happened in India for three reasons: • Erstwhile high spending categories like FMCG which used to drive the growth of TV are now looking at “smart regional investments” which trade off size for cost efficiency. On the other hand many of the current large spenders like Cellular Service, Mobile Phones, Automobile and Financial Services are increasingly shifting advertising monies to TV. Advertisers in these categories value “impact” as much as “cost efficiency” in their choice of media and believe that TV is more suited to their “lifestyle” approach to advertising. Their high investment in TV has raised the barrier for entry cost as far as mainline channels are concerned. The highly competitive nature of these sectors will ensure that key channel genres will remain insulated from any rate erosion, at least till the new launches stabilize. • The year also saw the entry of many new advertisers from the sunrise sectors willing to pick up inventory at higher rates. Being nascent categories, these companies could afford to spend way beyond “normal” advertising-to-sales ratios. • New channel launches have resulted in further audience fragmentation. Top programs which delivered 12+ television rating (TVRs) in the ubiquitous Female TG (SEC ABC, 25+ years, Cable and Satellite HHs) dropped to 9+ television rating. Advertisers had to buy more Advertising Spots / Gross Rating Point (GRP) to achieve the desired reach objective, thereby increasing their investment levels even on existing channels. As a result the Cost Per Rating Point (CPRP) across channel genres went up during the year. Regional / niche channel launches have however helped in expanding the market by reducing the entry cost for many advertisers from categories like Real Estate, Retail, Education and Dotcoms.

The Players: The Hindi GEC genre showed signs of decline in 2007 and will get fragmented further with the entry of new channels with “me too” programming. Kid’s channels registered better numbers in 2007 as compared to the previous year. With increased patronage from older male/female audiences, these channels were able to attract a lot of non-traditional category advertising during the year. The entry of regional channels in this genre will grow the segment further as is being witnessed in the state of Tamil Nadu (TN). Improved content on Regional GECs and entry of new channels has resulted in viewers shifting from Hindi in states like Maharashtra and West Bengal. The year also saw “anti incumbency” factor coming into play with regard to channel viewership choices made by the consumer. In many genres, existing leaders who continued with their age-old programming concepts were overtaken or challenged by those who offered differentiated content (9XM’s launch in music genre being a classic case). On the other hand, new launches which were clones of existing channels have failed to sustain viewership beyond the initial sampling phase. TN remained the only monopoly market with a single player/ group dominating TV viewership. The lead channel, Sun TV, was able to weather competition and maintain rates with key advertisers due to increased fragmentation of the market. Andhra Pradesh (AP) continued to be a relatively expensive market where Gemini TV’s attempt at emulating Sun TV was nullified to a great extent by the cheaper alternatives available. Existing channels groups on their part have started de-risking by venturing into new markets/ genres, thereby creating bouquet offerings. This has enabled them to offer network packages to advertisers and improve their

This Year, Next Year – India Media Forecasts

11

April 2008

bargaining power with cable operators. However, with the slow progress in CAS implementation, “carriage fee” continues to remain a big burden for new channels. The Product: Regional channels embraced Reality Shows/ Talent Hunts with a vengeance, while the format gained strength on Hindi GECs. Channels continued to charge higher rates for these programmes keeping in mind the production cost and the visibility such big ticket properties offer. High-yield inventory and auction-like bidding for title sponsorship among competing brands ensures that this kind of programming is here to stay for a while. The oft-repeated “content is king” did play out in some markets where a couple of successful programmes changed the fortunes of a few channels like Asianet and Star Vijay. Channels continued to leverage the high mobile penetration in the country by making their shows interactive. The improved audience participation opened up a new revenue stream for channels through SMS voting, Song downloads etc. However, this did not translate into increased audience involvement and time spent on the medium did not show any major growth. The spikes if any were limited to some programs. Interactivity being the cornerstone of rapidly growing digital media, ingenuity alone will help channels in building better viewer connection in future. Even huge investment in popular stars does not guarantee rd sustained viewership as was amply demonstrated during the 3 outing of Kaun Banega Crorepati (Indian edition of the popular British game show ‘Who Wants to Be a Millionaire?’) on Star Plus. The Audience: Cable and Satellite HHs have seen a growth of about 6% in 2007 (in syndicated surveys). The average time spent by a viewer remains unchanged at around 150 minutes/ day with an occasional upswing brought about by special programming. New channels have largely succeeded only in redistributing existing viewing time. The shift of viewing minutes from Hindi GEC programming to Regional GEC, news and kids genres is amply reflected in the redistribution of advertising monies.

2007 AdEx by Category (Rs. Cr.) 160% 140% Internet Service

120% 100% Cellular Phone Service 80%

YoY %

Insurance-Life Corporate/ Brand Image

60% Cellular Phones

40%

Tw o Wheelers

20% 0% -2

0

2

Cars/ Jeeps

Shampoos

6

8

4

10

12

-20% -40% -60%

This Year, Next Year – India Media Forecasts

Toilet Soaps

Soft Drink Aerated

Net AdEx

12

April 2008

Category Contribution

Cellular Phone Service Cellular Phones Two Wheelers Toilet Soaps Corporate/ Brand Image Cars/ Jeeps Shampoos Insurance-Life Internet Service Soft Drink Aerated

2006

2007

4% 3% 3% 4% 3% 3% 3% 2% 1% 3%

6% 3% 3% 3% 3% 3% 3% 2% 2% 2%

YOY % Change 95% 40% 17% -18% 32% 10% 7% 49% 127% -11%

Average = 18%

The Future: Advertising spends on television are expected to maintain similar growth levels in 2008. The key drivers for this growth will be • Launch of new channels and the resultant audience fragmentation leading to higher Cost per Contact • Increased launch activity by advertisers in sectors like Cellular Service, DTH , Personal Finance and FMCG • Higher cost of acquisition for TV “anchor properties” • Additional advertising money being ploughed in to Indian Premier League (The Indian Cricket Boardsponsored International Cricket League based on the ‘T20’ – Twenty-overs-a-side format) • New channel launches will reduce the entry cost for first time advertisers who will increasingly sample the medium Broadcasters continue to blame limited market coverage by the Television Audience Measurement system (TAM) for their woes. However, even with an increased sample, market dynamics will continue to determine channel pricing. The task for broadcasters would be to demonstrate the real value they bring to the table and how they differentiate themselves in a cluttered environment.

This Year, Next Year – India Media Forecasts

13

April 2008

Radio +48%, +50% The Market: Radio’s share of the total media pie has grown to 4% in 2007. Growth of the medium can be attributed to the increase in number of stations and the corresponding listener base. An emerging medium in its growth phase, Radio is seen as an extremely cost effective medium by advertisers. From being an add-on to TV and Print, today Radio has become integral to many campaigns. This growth has also been augmented by Listenership measurement, with the 3 RAM (Radio Audience Measurement) markets accounting for 65% of the total radio spends. The top categories contributing to the growth of Radio are Banks, Financial Institutions, Telecom, Retail, Media (TV Channel Promotions and Films), Auto, Real-estate and IPOs. Radio has become a retailer’s dream come true and almost 70 % of the deals are tactical in nature (linked to brand promotion rather than brand building). While in bigger cities, there is an equal mix of local and national advertisers, in smaller towns, regional advertisers account for 70 % of the total revenue. This is an indication of both the reduced entry cost and the lack of other cost effective localised media options. The Players: Over 240 private FM stations have become operational since phase 2 of the bidding for radio channel licenses. Radio channels with the highest number of operational stations are Radio Mirchi with 32 stations, Radio City with 16 stations, Big FM with 44 stations and My FM with 17 stations. With restrictions on the number of stations a company can own, many large players have entered into JVs with smaller regional firms. This helps the bigger stations offer wider market coverage while the smaller stations benefit from the access they get to bigger advertising markets like Mumbai and Delhi, and the Marketing/ Sales expertise the biggies bring in. This could also be seen as an early sign of consolidation in the market. The Product: The sudden glut of radio stations has resulted in similar-sounding stations with little variety in content. With an eye on the big-spending ad categories, there has been an overabundance of programming targeting the mass market. However, 2007 saw some radio stations coming out with innovations in an attempt to cut through the clutter by differentiating on the basis of conversational language, the kind of songs they played and RJ speak. Most of the stations have moved from block formats which addressed particular TGs in different time bands to programming which is now scheduled across the day. The former required a “lean forward” listening approach to radio which has so far been absent in a growing market like India. Radio now offers options beyond just advertising spots. Value additions in the form of content integration and ground activation are now an integral part of many radio campaigns. Today, 70% of the total radio revenues come from spot buys, with activations (10-12%) and innovations (18-20%) making up the balance. The Audience: The primary target group for Radio is the 18-34 age group from SEC ABC. Continuous measurement of Radio through RAM currently covers only 3 cities – Bangalore, Mumbai and Delhi. By the end of 2008 Kolkata, Chennai and Hyderabad will also be covered, giving advertisers metrics for the top 6 metros. The growth of this medium even in the absence of any measurement system can be attributed to • Local nature of the medium – in many cases, the retailer himself would be a listener of the particular station

This Year, Next Year – India Media Forecasts

14

April 2008

• • •

Marketing activities undertaken by individual stations Tracking studies undertaken by the stations Willingness to try out innovative concepts

The Future: The radio market is expected to grow by 50% touching Rs.900 cr. by the end of 2008. Phase 3 bidding for licenses is scheduled for 2008 could bring in a lot of changes in the medium. This growth would be driven by

• •

• • • •

Entry of FM channels into smaller markets The opening up of News and Current Affairs programming on private FM possibly changing the profile of the FM listener and allowing stations to create clear differentiators similar to developed radio markets. From the channel perspective, it would open up a new set of market segments, advertisers and product categories to target. Wider market coverage of measurement systems like RAM, resulting in increased accountability of the medium Multiple ownership of channels in a city, which will help networks in providing station bouquets covering different target segments FDI limit which is currently at 20% in FM radio space is likely to increase to 26% in radio channels that want to broadcast news and 49% in non-news FM stations The proposal to change the unit for Private FM Radio broadcast licensing from city to district will help advertisers in tapping hitherto unreachable semi urban / rural India

This Year, Next Year – India Media Forecasts

15

April 2008

Outdoor +20%, +22% The Market: The Indian OOH market is expected to reach Rs.1,700 cr. in 2008. The OOH industry in India is characterised by a distinct metro skew in market spends where the top 5 metros constitute nearly 75% of the total spends. A concentration of key target audiences clusters, better OOH inventory and relatively higher media costs in metros drive this ‘Metro focus’ phenomenon in the India OOH industry. Regionwise OOH Industry Split in India 2007 Mumbai 25% Others 18%

Bangalore 6%

Delhi 23%

Hyderabad 7% Kolkata 9%

Chennai 12%

The ‘city beautification’ drive by the Metropolitan Corporations in India is forcing a cull of larger format OOH media in India such as Hoardings. Interestingly there is a rise in development of smaller frequency builder & ambient OOH media such as Pole Kiosks and Bus Shelters to name but two. Add to that the growing realisation amongst site owners such as Airport Authorities of the potential of advertising as a key revenue stream and we have a market waiting to grow strongly in the near future. OOH as an industry is constrained by the need to deal with multiple levels of authority across a country, given the very nature of control on the medium. Local authorities are yet to come up with a long-term plan and are usually not very transparent in their dealings with vendors. There exists a significant lacuna in tracking spends in the medium, which currently functions on ‘best-rate’ deals. Tracking in combination with the audience reach studies could bring in much-needed credibility and the corresponding growth of the medium. Investments in this regard have been ad-hoc and have not been encouraging at an industry level, in spite of moves to roll out the Indian Outdoor Study by the end of 2008.

This Year, Next Year – India Media Forecasts

16

April 2008

Total Spends Rs.1,700 cr. by 2008 end

Others 9% Automotive 4%

Telecom Services 43%

FMCG 5% Entertainment and Media 13% Financial Category 26%

Key advertiser categories such as Automotive and Financial Services use OOH media tactically to lend support to local retail channels and dealerships. The need of mobile phone operators to penetrate smaller markets where OOH media is more advantageous than Print and Radio has also contributed to its growth. The rebound of interest in the OOH space is largely influenced by the growth in time spent outdoors by the general populace thanks to the rise in local travel and dwell time caused by traffic congestion and the options to spend time outdoors in places such as malls, cafés and spaces for public recreation. The Players: The Indian OOH market, currently, has a 3-4 tiered model that encompass the OOH site owners, vendor/ concessionaires, specialist OOH agencies and ultimately the OOH advertisers themselves. There is a 3:2 split between the unorganized and organized concessionaires leading to a fragmented market where pan-Indian concessionaires have yet to emerge on the merit of their strong portfolios. International concessionaires are making slow inroads into the Indian OOH market by wining tenders on the back of their technical expertise. JC Decaux winning the Bangalore Airport tender is a case in point. The Future: The medium will continue to grow on the back of changes in inventory. Given its long history, advertisers don’t seem to scrutinise its efficacy as closely as they do emerging media. Any new information on how this medium really works at the consumer level could change the way players look at the space. OOH advertisers led by cellular operators, TV channels, print media and organized real estate developers are expected to up the ante as the competition literally spills over to the streets. The burgeoning of mall spaces as well as the modernization and expansion of existing infrastructure is bound to increase over the next 5 years when the Airports Authority of India plans to refurbish over 35 airports in India.

This Year, Next Year – India Media Forecasts

17

April 2008

Digital +91%, +60% The Market: Digital media comprising Internet and Mobile is the fastest growing medium in the country albeit accounting for only 2% of total media spends. Digital media have today become integral to most media plans. Top categories are spending much more and new advertisers within these categories have also started using this medium. A new category that might see an increase in spends is Sports, with the launch of IPL, the Twenty20 Cricket League, in 2008. Growth in advertising spends of this medium have largely been driven by the measurability of the medium’s effectiveness in generating leads. Some of the other factors contributing to increased ad-spends are • Increasing user base: According to IAMAI report the total number of active internet users has grown from 21 million in 2006 to 32 million at September 2007. Broadband penetration grew from 3 million households in 2006 to 3.5 million households in 2007. This increase in penetration is expected to result in increased consumption of digital media. • Increasing options to advertise in Digital Media: Fancier technology (e.g. Affle, Google’s click-to-call) leading to innovation, new sites increasing reach • More time spent with digital media by consumers • Better ROI for advertisers While most categories use the medium for lead generation, some FMCG and lifestyle brands are trying to also use it for brand engagement. Technology clients and Consumer Durables use internet search as it provides them with consumer leads. Retail advertisers use SMS to increase walk-ins during Sales/ Weekends. Financial institutions use it as a business driver to get more leads. The medium helps in engaging the users resulting in lead and demand generation. Advertisers are moving away from pure display advertising to internet search as the returns are measurable and hence it is easier to evaluate the efficiency of the campaign. Top advertisers in the Digital space are ICICI, The Times Group, Department of Tourism, Maruti, Make-my-trip, Nokia, IBM, Hindustan Levers, Monster and Naukri. The annual spends for these advertisers range from Rs.3 cr. to Rs.20 cr. The Players: The key players can be categorized into search engines (Google), horizontal portals (Yahoo and Rediff) and vertical portals (Web 18). The top 4 players in the market are: • Google - Started as a search engine and has been expanding its applications such as Google Maps and Google Earth • Yahoo - has the largest number of visitors on the site for Indian content • Rediff - has a good presence with lots of local content as it is an Indian portal • Web 18 - provides variety in its portfolio so advertisers can choose the mix they want to advertise on. Its portfolio includes MoneyControl, Tech2, IBNLive and Cricket Next Delivery mechanisms used by these portals are keywords, banners, images, links, videos and calls. Some of the commonly used metrics to measure them are cost per impression, cost per click and cost per lead (which is more ROI focused) The choice of websites to advertise on depends on the ratings provided by the comScore Report which is used as a common industry benchmark to check the number of visitors on a website, number of paid views, and other factors like the Visitor Profile and Categories Visited.

This Year, Next Year – India Media Forecasts

18

April 2008

Mobile: Mobile Phones as a medium are gaining prominence with increased priority being given to one-to-one communication. For instance, the channels in the Star TV network have been using the mobile medium through innovative applications to remind their viewers about upcoming movies and serials. The 3G platform slated to be launched in June 2008 will revolutionise mobile advertising. Programme interfacing with consumers will then become real time, bringing in a whole new dimension to interactive programming. Social Media: 2007 marked the growth of social networking and sites like Orkut and Facebook have become youth icons. A lot of advertisers used these platforms to generate positive word-of-mouth. An example of a successful campaign is the one run by Accenture which used Orkut to promote its careers month. As a part of the campaign it got people to join competitors’ communities (IBM and Intel) and promote the company. It reached 150,000 people and generated 15,000 resumes with no media costs. The Future:

Ad Ex (Rs. Cr.) Internet Search Mobile Total

2007

2008e 320 75 45 440

512 120 81 713

•

IPTV services are likely to give a major thrust to digital advertising in 2008. Entertainment is the next big thing to hit digital industry – whether it is watching TV or playing games through the internet.

•

Social media is gaining relevance in building communities. In future it is expected to be an integral segment within digital media.

•

Advertiser’ categories likely to increase their digital share of spend in 2008 are Technology, Travel, Automobile and Telecom. These categories have been high spenders and will continue to increase spends year on year on this medium.

•

With the ever-increasing demand for digital media in India and increasing spends by top categories, Internet, Search and Mobile services are expected to grow in 2008 by 60%, 80% and 60% respectively.

This Year, Next Year – India Media Forecasts

19

April 2008

Cinema +34%, +30% The strong growth of Cinema in India in the last 5 years has implications not just for film producers, distributors, audiences and cinema hall owners, but also for advertisers reaching out to film-going audiences as well. The improved production quality and the multiplex ambience have pulled audience back to the theatre. The high growth in Cinema advertising has 3 factors: • Continuing roll out of multiplexes: This is resulting in more people going back to the movies, and the superior aesthetics of the environment has lead to increased advertiser acceptance of the medium. • Organised players getting into the space and providing end-to-end solutions: Local players are becoming more organized with some entering into tie-ups with overseas players, thereby raising the quality of the medium. • Digital cinemas have rolled out at a fast pace and now account for about 15% of total screen universe across town-classes. Since this results in assured print quality and monitoring of advertising has become easy, there is no time delay in the advertising message reaching even the smaller towns. Cinema advertising is finding easier acceptance in the media plan, for many brand categories. Advertisers use Cinema to effectively showcase their brands against an entertainment backdrop and access the star power that drives consumers to theatres. Food and Beverage, Cellular Phones, Automobiles and entertainment brands see this space as having a logical fit. Other brands see this as an extension of their television communication. Categories are attracted to the multiplex spaces for the quality of the TG and the controlled environment in these spaces. Cinema advertising is a dynamic medium offering advertisers the opportunity to reach their target consumers in a distraction-free environment. Even though Cinema has lower reach than TV, it is a far more cost effective and high impact medium.

Cinema spends in this report do not include on-ground activation spends at Cinema Halls/ Multiplexes.

This Year, Next Year – India Media Forecasts

20

April 2008

Retail Media +56% The Market: Organized retail is booming in India and as a result Retail Media are beginning to take a more definitive form and has grown by 50% from Rs.150 cr. channel in 2006 to Rs.225 cr. in 2007. Though Retail Media have always been present in the form of glow signs, display windows etc., it has leapt to the forefront with the growth of organised retail and the emergence of organised vendors. The key challenges in this medium are: • Lack of organised or published database with details of sites, size and rates • Non-standardised and varying formats of the various retail media available • No industry benchmarking • Ambiguous classification of retail media as ATL/ BTL spends depending on advertiser. For some advertisers the component of retail media is included in OOH while for some it is a part of the regional activation budget or BTL budget • Some options available within retail media are viewed as “terms of trade” or “key account” deals, especially by brands available in store for sale • Prevalence of store-level deals made by the store manager, even in organised retail chains, to increase store revenue Retail media in India comprise traditional options such as facades/ show windows and in-store static media such as standees and drop-down banners. In addition to these, retail television and store magazines have emerged as popular media. Activation/ contests (including kiosk/ promoters/ sampling etc.) have become effective modes to increase interactivity and engage the consumer. These options are available in destinations such as malls, quick-service restaurants (including coffee chains), department stores, music stores, supermarkets, cinema (excluding screenings) and other locations such as consumer durables chains and health and wellness chains. Increasing numbers of malls and stores across the country will lead to an increase in the space available for organised retail in the country. Malls will continue to dominate this category largely through facades and show windows which complement the regular OOH medium in a typical plan. The total mall space in India is expected to grow from 50m sq ft. to 80-90m sq ft. The prominent categories advertising in this medium are Cellular Service Providers, Handset Manufacturers, Lifestyle, Media and Entertainment, Personal Care and FMCG, Banking/Finance and Insurance and Automobiles. The key drivers for this medium are: Urban development of superior aesthetics vs. traditional retail: National level developers are coming up with malls across India and also bringing in a better shopping experience for consumers. Malls are evolving from being a shopping destination to a family entertainment centre for a full day’s activity offering shopping, movies, food and amusement for the entire family.

Emergence of National Players: The emergence of national players in retail sector like Future Group, AV Birla Group, Reliance, Bharti and RPG has given a further fillip to organized retail This is not only leading to increased investment and employment in this sector but also to the creation of an all-new shopping experience for consumers. A critical factor in driving the growth of this medium is the presence of youth with spending power in coffee shops, quick-service restaurants and music stores. These formats will continue to attract youth oriented brands, which can connect with the TG frequenting their spaces. The key currency used by retailers and vendors of retail media to convince advertisers is daily footfall. Another key component is the quality of footfall in terms of SEC and age profile, which is largely perceptionand evidence-based given the absence of hard data. Analysis of ticket size/ bill size and purchase patterns by retailers would help put this factor in perspective for advertisers. This Year, Next Year – India Media Forecasts

21

April 2008

Cinemas are also likely to continue their trend in lines of offering with coffee chains and also offering a destination for family entertainment. The use of static media and activation in combination with innovations will continue to drive this medium. The Players: Future Media India Limited is one of the early movers in this space with a pan-India retail media offering across formats. It is the only one that offers an integrated solution across formats. Other key players in retail media space are department stores like Shoppers Stop, coffee chains like Café Coffee Day and music outlets like Planet M. Retail television or in-store media is a key component of retail media where various organised players like Future TV, OOH, Live Media, TAG Media and DSN have come to the fore in the last 2 years. Rapid expansion by these players across the country in the coming year is expected to increase the number of screens from 11,800 in 4,400 locations to 26,000 in 9,000 locations. This improving reach is expected to drive growth in advertising expenditure on Retail TV by 300% by the end of 2008. This could escalate further if a metric on the lines of TAM for TV, RAM for Radio or IRS/NRS for print is instituted for this medium during the year. Other critical factors for this medium would be medium-specific content, optimal locations of screens and interactivity of the medium. Using technology aids at specific locations, the medium’s effectiveness can be measured and enhanced. If these developments take place the medium is likely to see rapid growth. The Future: The overall industry is expected to grow by 55% with the Retail Media industry reaching Rs.340 cr. by the end 2008. Possible drivers of future growth: • Restrictions are already in place in the OOH space in Delhi and are expected to be implemented in Mumbai by the end of 2008. This could increase the demand for key retail spaces dramatically and also lead to an increase in the premium charged for such spaces. Malls are likely to be the biggest gainers followed by organized retail chains.

•

Use of technologies like Video Mining and RFID by retailers and vendors would help to customise offers for consumers and also put metrics in place for advertisers.

•

Mobile technology such as Bluecasting can be used to make offers based on a consumer’s buying pattern in the store and building interactivity and information on demand could dramatically change the industry. Increasing penetration of Bluetooth-enabled mobile phones in key cities will help drive this further.

•

Emergence of consumer databases through loyalty programs of retailers will also enable consumerfocused marketing activity in organized retail in the years to come. This could further be monetised by these players to enhance the retail media experience, to their advantage.

This Year, Next Year – India Media Forecasts

22

April 2008

GroupM is the leading global media investment management operation. It serves as the parent company to WPP media agencies including MAXUS, MediaCom, Mediaedge:cia, Motivator and MindShare. Our primary purpose is to maximise the performance of WPP’s media communications agencies on behalf of our clients, our shareholders and our people by operating as a parent and collaborator in performance-enhancing activities such as trading, content creation, sports, digital, finance, proprietary tool development and other business-critical capabilities. The agencies that comprise GroupM are all global operations in their own right with leading market positions. The focus of GroupM is the intelligent application of physical and intellectual scale to benefit trading, innovation, and new communication services, to bring unfair competitive advantage to our clients and our companies. For any queries/ clarifications please contact: Juhi Ramakrishnan Director - mConsult GroupM Media Pvt. Ltd. 201, Peninsula Chambers Ganpatrao Kadam Marg Lower Parel Mumbai – 400 013 Maharashtra India +91 22 4095 8888/ 6771 0900

GroupM A WPP Company

This Year, Next Year – India Media Forecasts

23

April 2008