Advertising Industry: Mere Ten Per Cent Growth in 2023 Makes It Slowest In The Last Six Years

However, compared to global trends, India along with Brazil remained two of the fastest-growing major markets as global advertising expenditure slowed down to 5 per cent.

In terms of categories in India, the Fast-Moving Consumer Goods (FMCG) sector continues to be the largest contributor with a 33 per cent share and added almost Rs. 1,500 crores in 2023. E-commerce is the second largest category though with only 11.3 per cent, which is followed by education with a spend of just Rs. 2610 crores that has seen a drop of about 33 per cent on the back of poor show by ed-techs.

Furthermore, the automobile sector is the next largest category on the back of high demand for mid-level cars and SUVs.

Significantly, it was seen once again that when the going gets tough, it is the established companies who continue to advertise the most and this keeps advertising expenditure (ADEX) going, by maintaining or even increasing their spends. Almost all these advertisers are long-established players, who believe in the power of brand and advertising’s role in maintaining and building it.

Top Ten Advertisers Grew By 20 Per Cent

It is significant that the spending by the top 10 advertisers - which includes the likes of Unilever, Reckitt Benckiser, Reliance, Godrej, and Amazon - have grown by almost 20 per cent, compared to total ADEX growth of 10 per cent. This demonstrates that large advertisers have greater confidence in advertising, having substantially benefited in the past by using it effectively. In fact, six out of the top 10 advertisers are FMCG companies with only one startup in the top 10.

The latest Pitch-Madison 2024 report on Indian advertising finds that ADEX has sharply slowed down to 10 per cent against a forecast of 16 per cent and 21 per cent accomplished in 2022.

Barring the Covid year, this is the slowest growth in the last six years despite current GDP growth of about 7 per cent. The other key highlights of the report are:

• Digital advertising grew at a modest 15 per cent while that of television was at 7 per cent.
• While the advertising in the print medium was just 4 per cent, outdoor grew comfortably at 13 per cent.
• Four years after the pandemic, Radio ADEX has finally reached its pre-pandemic level of Rs. 2,272 crores which represents a 12 per cent increase with radio’s share having stabilized at just around 2 per cent.
• The total ad spends closed the year just short of Rs 1 lakh crore.

The major reasons for the slower growth of ADEX are the increase in the price of raw materials especially in the print medium, the recession in some parts of the world triggered by the Russia-Ukraine and Israel-Hamas wars, inflation and rising prices that have limited the consumer spending of the middle class and the startup funding winter that have left the startups with virtually no ad spends.

First Half Saw Subdued Growth

The first half of 2023 was subdued as ADEX grew by just 6 per cent during this period. However, as raw material prices tamed, ADEX grew 14 per cent in the 2nd half. “The higher growth was also driven by festive spending and marquee events like ICC Cricket World Cup and Assembly Elections,” the report said.

The fourth quarter was the best performing one with a contribution of 31 per cent to the full year and in absolute terms added as much as almost Rs. 5,000 crores or 50 per cent of the annual growth.

Even as the Indian ADEX grew only modestly, the even lower growth of Global ADEX made the Indian ADEX look good in terms of growth rate, having achieved 10 per cent versus only a 5 per cent growth achieved by Global ADEX. Brazil and India are now the two fastest-growing advertising markets in one that is dominated by the US, which accounts for 31 per cent of the Global ADEX.

Further, the construct of the Indian market continues to be very different from that of the global market, which is dominated by Digital with a share of 73 per cent versus India’s share of 40 per cent in this category.