The Indian ad market is finally rebounding from the pandemic-induced slowdown and is showing signs of growth. The upcoming festive season is expected to further boost this growth.

According to Ashwin Padmanabhan, Chief Operating Officer, South Asia, GroupM, both ad and consumer spending will see an uptick during the festive period. In a conversation with exchange4media, he delved deep into the evolving Indian advertising landscape, India's position in the global ad market, the impact of major events on ad spending, the shifting dynamics between TV and digital, and the role of emerging platforms. 

Edited excerpts:

As per the 2023 Global End-of-Year Forecast by GroupM, India had rapidly ascended to the world's top eight ad markets. Considering the high-profile events India hosted this year, do you anticipate an even steeper climb in the rankings?

I think India will likely maintain its eighth position in the global ad rankings. While we're seeing a strong rebound in markets like the UK and Europe, and even the US, India's growth rate, though still impressive, has slowed down from the exceptionally high figures we've seen in the past. It used to be growing at 15%-16% and now we are anywhere between 9.5%-10%. Additionally, currency fluctuations impact comparisons at the dollar level.

That said, India is still a top-three market in terms of incremental ad expenditure and growth. So while its overall ranking might stay the same, its contribution to global ad growth remains significant. 

Has there been any significant impact on AdEx because of the elections, IPL and World Cup happening in the first half of the calendar year?

There has been good growth, but it's important to look beyond factors like IPLs and elections to understand the underlying trends. Even without these events, we've seen consistent double-digit growth.

However, last year's challenging January-March quarter created a low base for comparison. This means the growth we're seeing now might appear inflated compared to that period. When we compare April-June this year to the same period last year, we still see double-digit growth, but it's a more realistic picture.

While we wait for complete data, I estimate the overall half-yearly growth to be in the 11-13% range, leaning towards the higher end, perhaps 13-14%. This reflects both the low base from last year and a genuine uptick in consistent spending by brands.

Unlike the previous four years marked by erratic spending patterns due to COVID, 2023 has been relatively stable. This provides a better foundation for measuring growth. Looking ahead, the second half is promising, with indications of a larger-than-usual festive season. We're also seeing a return to longer-term planning cycles which is a positive sign for the industry. 

Planners across the board believe that spending, especially in the real areas, has gone down, leading to low advertiser sentiment. What is your perspective?

The pandemic drastically altered Indian households, especially those reliant on daily or weekly incomes. With savings depleted and limited support, many are still struggling to recover. Employment challenges, particularly in terms of days worked, have further impacted disposable income. This has led to a widening income gap and subdued spending on mass-market products, while premium and luxury segments thrive.

However, finally we are seeing hope. Job creation is slowly picking up, and inflation is under control. Additionally, a normal monsoon and upcoming festivals could boost rural spending. While the road to recovery is gradual, we anticipate a significant improvement in the consumer landscape by 2025.

Ultimately, brands must adapt to this new consumer reality and focus on long-term strategies rather than short-term gains. 

Given the premium pricing of TV (which is still higher compared to digital), where has digital ad revenue reached in comparison? Are advertisers now spending less on TV and more on digital? Or is it just overall more spending on digital? 

While still highly effective for mass reach, TV offers lower CPMs than digital. Its challenge lies in precision targeting. Digital, on the other hand, has thrived due to lower barriers to entry, granular targeting, and measurability. This has opened doors for smaller advertisers. But digital has not necessarily grown because people are spending more on digital. It has grown because more people are spending on digital. 

To compete, TV needs to evolve. Addressability and geographical targeting can breathe new life into the medium. While distribution methods (terrestrial, cable, satellite, streaming) have changed, the core value of TV which is mass impact remains relevant. As consumer viewing habits evolve, so must TV planning. We're witnessing a shift from traditional linear TV to a multi-platform approach, encompassing linear, VOD, and catch-up TV. This requires a holistic view of the TV audience across different distribution channels.

Digital ad real estate is evolving with new entrants. How are these new platforms shaping the market? Are advertisers comfortable diversifying their ad spend beyond Google and Meta?

India boasts over 20 platforms with 100+ million users each. While platforms often equate large audiences with advertising revenue, the reality is more complex. Digital advertising hinges on accountability, audience understanding and measurable outcomes.

While many platforms excel in content delivery or e-commerce, few have invested in ad tech to offer advertisers sophisticated audience insights and targeting capabilities. This is where giants like Google, Meta, and Amazon lead.Homegrown platforms must bridge this gap to attract advertisers.

The focus should shift from simply aggregating users to creating platforms that can effectively serve brands. This involves developing the technology to understand and reach specific audiences within the platform's ecosystem. Platforms that can demonstrate this capability will thrive.

So the question is not whether brands are open to experimenting on other platforms because they really are. The real question here is, have platforms built enough capability to be able to service these brands.

That’s where we are handling these platforms. We’re actively collaborating with them to enhance their ad tech capabilities and tailor offerings to meet brand needs. 

You’ve mentioned previously that the FMCG sector witnessed a remarkable revival in 2023. Do you foresee a similar growth in 2024? What are the most significant trends in the ad space this year?

I would start by analyzing consumer behaviour. A significant shift is the increasing integration of technology into our daily lives. And the way technology and content are interacting with the consumer today,  I feel more and more brands are going to wake up to this opportunity of engaging with audiences.

Companies across sectors, especially those impacted by pandemic driven economic challenges like retail, fintech, and BFSI, will need to innovate rapidly. We will see every day innovation coming back and not just for the sake of innovation. I see the deployment of technology and content and communication happening at an everyday level.