ABSTRACT is Asia’s second fastest growing advertising market, grew

ABSTRACT
The research paper “Role of digital advertising and traditional advertising in the
currentscenariooftheIndianadvertisingindustry,” aimsatunderstandingthe
cross-section of the Indian advertising industry, a subset of the Indian Media and
Entertainment Industry, in the period between 2017-2018. The report then
extrapolates and infers the impact of these industry trends for the coming years
with attributed facts and figures.

Due to the macroscopic nature of study of the prevailing and changing trends
within the industry, and its impact thereof, this evaluation majorly attributes its
findings to industry analyses and curated reportage from existing think-tanks

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within the local market, national market forecasting and research agencies, and
published media, industry reports and news reports.

With the world’s second largest population and the fastest growing economy
(Indian GDP increases by 7.1% in 2016-17), India today has a large consumer base
with an increasing discretionary spending, making it effectively one of the most
interesting markets for global investments. The winds of political change in the
last four years have further cemented the role of a proactive government in
rolling out national schemes such as GST Taxation reforms, the demonetisation
drive and digital India initiative that drive entrepreneurship, business and industry
at an accelerated pace. All these factors, coupled with the rise of cheap, yet fast
broadband internet speeds, and the rise of the digitally savvy urban Indian
consumer, are believed to be pushing towards the exponential growth of digital
media, even as traditional Indian media platforms face greater pressure to
innovate and offer better value propositions (KPMG-FICCI, 2017)

Demonetisation — the economic policy launched by PM Narendra Modi where
the old INR 500 and 1000 rupee notes ceased to be recognized or used as legal
tender — was a black swan event for the Indian economy, which even though
caused economic slowdown in the near term, has created a new normal that
promotes a cashless Indian society. This further provides greater tailwinds to the
proliferation of digital ecosystem in India, thereby dictating media advertising
allocations following the period of December 2016.

INTRODUCTION

According to the KPMG—FICCI (Federation of Indian Chambers of Commerce and
Industry) FRAMES 2017 report on M Industry, “the Indian media and
entertainment industry is projected to grow at a faster pace of 14% over the
period of 2016-21, with the advertising revenue expected to increase at a CAGR of
15.3% during the same period.” This is a telling statement, since the Indian
Advertising Industry, which is Asia’s second fastest growing advertising market,

grew by INR 5,500 crores in 2016 (Pitch Madison Advertising Report, 2017). The
current cross-section of the Indian advertising industry is broadly segmented
across TV (38%), Print (41%), Digital Advertising (11%), Radio and Out-Of- Home
advertising (10%) (IBEF, 2017). Yet these numbers can be misleading if not
contextualised — Digital Advertising saw a year-on-year growth of 28% when
compared to TV’s 11% (KPMG-FICCI, 2017). This, however, is just the tip of the
iceberg as India has crossed 1 billion mobile phone subscribers in 2016 (IAMAI,
2017), and 80% of Internet usage in India happens on mobile phones today.

The Indian consumer is defined by heterogeneity — differing by socio-economic
factors, language, location, behaviours and spending pattern, and family
structures to name a few. Consumers in emerging cities behave different from the
big city consumers. Yet for the modern Indian consumer, the Internet is an
increasingly pervasive factor in commerce. This is true both for urban and rural
consumers (Jain, Sanghi, 2016). As per the Reserve Bank of India, mobile banking
is the fastest growing digital platform in 2016. The digital payments industry in
India will grow by 10 times to touch $500 billion by 2020 and contribute 15% of
the GDP. These serve as a proxy to understanding the shifts to- wards digital
transactions that will all be powered by digital point-of-system sales and digital
advertising in the days to come. Growth of mixed media consumption across
multiple screens and growth of e-commerce, consolidation and last-mile
deliveries through robust supply chains provide yet another impetus.

LITERATURE REVIEW/ CONTEXTUAL/ THEORETICAL BACKGROUND

India is the fastest growing consumer market in the world. With developmental
economics becoming the prime agenda of the current government, business,
economics and entrepreneurship have all received a shot in the arm. Initiatives
such as Digital India coupled with India’s young, aspirational demographic
dividend (41% of the Indian population is under the age of 20 years) (Census
Report, 2011), and access to high-speed, but cheap broadband

speeds are all fanning the flames of faster Internet adoption, across all societal
divides. Yet, these are all recent trends (in the last decade-and-a-half), even as
traditional modes of mass media have been the mainstay for businesses in India
and continue to proliferate into rural areas.

AIMS & OBJECTIVES

The Indian advertising industry is the second fastest growing market in Asia and
offers an interesting insight into the evolving dynamics of digital-vs-traditional
advertising in a country at the cusp of second growth wave. The aim of this study
is to unearth the trends and fault lines existing in India’s fragmented market and
understand the impact of digitization thereof. In order to fulfil the needs of this
report, the process of fact-finding has been broken via the following objectives:

1. Study the published reports from government releases citing trends and
initiatives
2. Investigate the emerging trends as cited by think-tank groups, agency and
consultant reportage

3. To extrapolate and predict the future trends in the context of the shifting
Indian advertising landscape
4. Study the impact of Digital India initiative by Narendra Modi government that
continues to drive ahead the agenda of a digital-first India.
5. Understand what the impact of cheaper smart phone technology being
available to the Indian masses and rural communities and the greater integration
of social media has on the changing dynamics of the Indian advertising industry.

METHODOLOGY

In order to achieve the aims and related objectives mentioned above, a mixed
approach methodology of qualitative and quantitative method would be the

most recommended to understand the research problem the best and combine
both numeric findings with information gathered through personal experiences
and opinions.

Firstly, the findings of this report will be curated via multiple interviews with
subject experts, marketing/brand managers who work across sectors
(FMCG/CPG/Retail/Manufacturing/Services/ Advertising) to get first-hand
experiential data. Their opinions will aid fulfil above mentioned objectives as they
portray valuable information regarding this topic and form evidence for the type
of advertising that is taking over in the current scenario of the advertising
industry.

Secondly, an online questionnaire in the form of a non-experimental correlation
design is to be conducted, which targets audience of different demographic
variables like socio-cultural linguistic and religious diversity of India, class-mass
divide and generation gaps. Due to the gap in research of this topic, the questions
of this survey are to be developed independently. The goal is to reach as many
audience as possible to accumulate a large amount of information that reflects
their opinions and preferences.

Further, these findings will be juxtaposed and checked against the reported
macro-analyses published in the reports of KPMG and BCG Group India for the
year 2017. Attributed facts and figures will be taken from publicly available
reports from Not-For-Profits, think tanks and government bodies like India Brand
Equity Foundation, Internet And Mobile Association of India.

A major influencer of the Indian economic outlook in the near term is the Indian
Elections Season. Recent history suggests that economic activity increases in the
backdrop of elections in India; digital advertising specifically is set to see a robust
growth in this wake. Our interviews suggested that this macro development is still
to roll-out and any predictive near-term understanding would be limited.

POSSIBLE LIMITATIONS

The bulwark of above summary and analyses will be consolidated through
curation of data points, facts and opinions of industry leaders who are in the thick
of the Indian advertising industry. All extrapolations are a factor of current trend
analyses and future events can have an unforeseen impact on the trend lines. In
theory at least, digital media marketing is said to overtake the traditional media
marketing in the next decade in India, however, this doesn’t take into account
black swan events. The demonitisation drive in India in 2016 was one such black
swan event, not to have been implemented before in a country of 1 billion
people. The prior event had caused near-term market shock, which had
practically frozen future marketing spends on digital media in the near-term. This
example serves as a grim reminder that forecasts can sometimes be wrong.

CONCLUSIONS/ RECOMMENDATIONS

To conclude, India seems poised for a revolution in digital media expansion. India
is a large country with great diversity, and government’s focus on a Digital-first
India can be a game-changer for the sub-continent. Although, traditional media
still has a lot of room to grow in a rising India, the explosive growth of digital
media is enabling faster change and greater impact. In the future too, numbers
predict that digital will be integrated into other channels of marketing and
distribution, thereby significantly dwarfing the traditional marketing channels.