Published on 13/03/2018 5:28:42 PM | Source: Motilal Oswal Securities Ltd

Media Sector - Ad market to buck previous year`s muted trend - Motilal Oswal

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Ad market to buck previous year’s muted trend

Key highlights from ‘FICCI Frames 2018’ Convention

We attended ‘FICCI Frames 2018’ – a three-day convention that provided useful insights into the fast-growing Indian media & entertainment (M&E) sector. FICCI Frames 2018 also saw the launch of its annual M&E report this year by Ernst & Young (EY).

Ad market expected to grow 14% in CY18

According to this year’s FICCI-EY report, the overall ad market is expected to grow 14% in CY18, after registering muted 10% growth in CY17 due to the initial setbacks caused by reforms like demonetization and GST. Ad market CAGR estimate for the next three years is trimmed down to 11%, from 16% estimated in the 2017 report.

* TV ad revenue is estimated to grow 14% in CY18, with free-to-air (FTA) contribution increasing from meager INR4b in CY16 to INR20b in CY17.

* Print ad revenue is expected grow 10% in CY18 (as against flat growth in CY17), driven by pre-election spending, a favorable base and a recovery in local ad spending. On the language front, vernacular print revenue is expected to outpace English revenue.

* Radio revenue is expected to grow 10% in CY18, steered by higher volumes (primarily from new stations) and also yield improvement at legacy stations.

* Led by its increasing attractiveness, digital medium should post robust ad revenue growth of 27% in CY18 to reach INR146b – i.e. 19% of the total ad pie. An interesting development to note is that video-based ads now contribute 33% of total digital ad revenue.

Television viewership shows no signs of dying in India and globally

Presentations on the strength/longevity of the TV ad market by BARC chairman and a global TV marketing expert provided some valuable insights into the outlook of TV viewership. 

* BARC presentation highlights: In India, TV penetration grew from 54% in 2013 to 64% in 2017. Importantly, there is still significant room for growth, with average daily TV viewing time remaining stable at ~03:44 hours – lower than that in many European countries. A key point to note here is that TV viewership in India is highest among the 15-30 year age group.

* Global TV market expert: In the US, households spent ~5x more time on TV than OTT. In the UK, average TV viewing time has sustained at ~3 hours and 30 minutes over the last 10 years (reduced from 4 hours in last six years), even as internet penetration has increased from 47% to 89%. Another study suggests that TV commands 58% active viewing, higher than digital platforms like YouTube (31% active viewing) and Facebook (4% active viewing).

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