Group m India Media Forecast Apr 08

8/14/2019 Group m India Media Forecast Apr 08

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This Year,

Next Year

India Media Forecasts

April 2008


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This Year, Next Year India Media Forecasts April 202

Contents

Contents . 2Summary . 4

Newspapers . 6

Magazines . 9

Television . 11

Radio . 14

Outdoor . 16

Digital . 18

Cinema . 20

Retail Media . 21

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


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This Year,

Next YearIndia Media Forecasts

April 2008

GroupM201, Peninsula ChambersGanpatrao Kadam MargLower ParelMumbai 400013MaharashtraIndia

All rights reserved. This publication is protected by copyright. No part of it may be reproduced, stored in aretrieval system, or transmitted in any form, or by any means, electronic, mechanical, photocopying orotherwise, without written permission from the copyright owners.

Every effort has been made to ensure the accuracy of the contents, but the publishers and copyrightowners cannot accept liability in respect of errors or omissions. Readers will appreciate that the data are asup-to-date only to the extent that their availability, compilation and printing schedules will allow and aresubject to change.


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Summary

Media, Rs. Cr., Net 2004 2005 20062007

Actual2008f

Newspapers 5,554 6,651 7,856 9,290 10,962

Magazines 502 552 629 705 789

TV 4,528 5,185 6,051 7,110 8,354Radio 240 300 399 590 885

Internet 75 120 204 390 624

Outdoor 875 995 1,165 1,398 1,698

Cinema - 45 56 75 98

Retail Media - - 150 225 350

Media Total Rs. Cr. 11,774 13,848 16,510 19,782 23,760

YoY % Change 2004 2005 20062007

Actual2008f

Newspapers - 20% 12% 18% 18%

Magazines - 10% 14% 13% 12%

TV - 15% 17% 18% 17%

Radio - 25% 33% 48% 50%

Internet - 60% 70% 91% 60%

Outdoor - 14% 17% 20% 22%

Cinema - - 25% 34% 30%

Retail Media - - - - 56%

Media Total YoY % Change - 18% 18% 20% 20%

% Shares of Media 2004 2005 20062007

Actual2008f

Newspapers 47% 48% 48% 47% 46%

Magazines 4% 4% 4% 4% 3%TV 38% 37% 37% 36% 35%

Radio 2% 2% 2% 3% 4%

Internet 1% 1% 1% 2% 3%

Outdoor 7% 7% 7% 7% 7%

Cinema - 0.3% 0.3% 0.4% 0.4%

Retail Media - - 1% 1% 1%

Media Total 100% 100% 100% 100% 100%

Media, USD m, Net 2004 2005 20062007

Actual2008f

Newspapers 1,389 1,663 1,964 2,323 2,741Magazines 125 138 157 176 197

TV 1,132 1,296 1,513 1,778 2,089

Radio 60 75 100 148 221

Internet 19 30 51 98 156

Outdoor 219 249 291 349 425

Cinema - 11 14 19 24

Retail Media - - 38 56 88

Media Total USD m 2,944 3,462 4,128 4,946 5,940


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SummaryThe Indian Media market has been on an upswing in the last 5 years and 2007 has been no exception. Whatis even more heartening is that the estimates in the TYNY 2007 report, which looked very ebullient at thetime, 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 totalmedia 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 atnew 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 andthe Youth, who are the primarily being targeted through new mediums like Mobile and Internet, and Radioand 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

2006 2007 2008e

AdEx/ GDP Ratio 0.59% 0.65% 0.75%


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Newspapers

+18%, +18%The Market:

The Display advertising component of the Newspaper market in India for calendar year 2007 was valued atRs.9,290 cr. This is a growth of 18% over calendar 2006 (Rs.7,856 cr.) as against the 17% predicted by us inlast years report.

Print, despite being the biggest incumbent medium, continued to attract the largest share of advertisingspends. The India Print story is in stark contrast to the threat being faced by the medium globally. The majorreason for the revenue growth has been the consistent hike in Card Rates of major players, in spite ofincreased competition in the top 8 Metros and stagnant Average Issue Readership (AIR) numbers. While thishas been made possible due to the continued dominance of publications in their home markets, rate hikes insome 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. ExpensiveEnglish 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 tostrengthen its media investment in regional publications. Here increased colour options helped publicationsimprove 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 GoLocal 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 andformats. Publications are using e-paper versions by targeting NRI population, which gives them over 75% ofthe total hits. However, it would take some time before this avenue begins to generate real value. Publicationswhich promoted their Classifieds portals as separate entities have succeeded in penetrating segments likeMatrimonials, Real Estate and Jobs.

The Players:

Within each language there are one or two players that have seen over 25% growth and others which arecloser to 10% levels. Typically the big players have got bigger. While some players have grown on the back ofincreased offerings and entry into new markets, others have done so on the back of Rate Hikes and improvedColour 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 madethe half front-page gate fold a regular feature and most other publications have followed suit. It hasbecome a very attractive option for advertisers as well.

Rise of the Tabloid: Even though broadsheet still remains the popular format, there is an increasingaccent 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 thatthere might be a subtle shift towards Tabloidisation of the Indian market. Factors such as increasing costof newsprint and shift in reader preference (young readers who find newspapers dull have shown interestin this format), might only accelerate this trend.

Move to other Languages:2007 witnessed the transition in areas such as Business papers which havealways been considered the domain of the English press. Economic Times broke the trend by launching aGujaratiedition in Ahmedabad and a Hindiedition in Delhi. Business Standard was not far behind with itslaunch of Hindieditions for Delhi and Mumbai.

The launch of supplements designed for special interest areas such as lifestyle, technology,entertainment, education and careers.


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Newspapers

+18%, +18%The Future:

2008 will continue to be an exciting year for print. We do not expect the digital wave to dampen ourattachment to the morning daily. Rising literacy levels and limited access to Internet will be the keyreasons why print will continue to grow. Just as in 2007, this year will see a host of new launches. Whileexisting print players will diversify in related genres and enter new geographies, non-print players willenter print to diversify.

Newsprint prices are on the rise and the next few quarters will continue to see increasing prices andshortages. This will put pressure on margins, forcing publishers to look at new formats and revenuestreams.

Private Equity players and bankers will also continue to explore investment opportunities in Indian mediahouses.

Growth in transport infrastructure will result in the launch of commuter newspapers across cities. Forinstance, Delhi's underground, which did not exist before 2002, will have 100 stations in three years' timeand 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, withMetro Nowbeing the pioneer.


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Magazines

+13%, +12%

The Market:

At a time when magazines the world over are seeing a decline in advertising pagesand are moving to digitaldistribution, India is experiencing an unprecedented boom in titles. Niche international titles are flocking toIndia and, not to be outdone, local publication houses are launching targeted special interest titles to cash inon the advertisers liking for suitable editorial environments for their brands. However, this increase in titleshas not resulted in a significant increase in tracked advertising spends, probably because many of the foreignbrands 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 titleshave modest paid circulation in the 20,000 range but profess to be quite content with these numbers. Even inthe absence of any real readership base, the very equity of these publications and their high productionstandards 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, withfreebies thrown in. Every month sees at least one new launch and there seems to be no dearth of advertisingspace in any one of them. The players themselves seem to have faith in the long term growth prospects ofthis sector. Last year began with big-ticket announcements such as the partnership between US-basedFortune Money Group and Ananda Bazaar Patrika Ltd to launch the Indian edition of Fortunemagazine, US-based Forbes tie-up with Network18 for the launch of Forbesmagazine in India.

The Product:

Niche was the watchword as publication houses raced to corner different consumer segments. We have seenlaunches across News, Fashion, Travel and Health. The Economist, Vogue, FHM and music magazineRolling Stonewere 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 recentlaunches of EXPAT Insider(aimed at giving the expat community settled in India an insight into entertainmentto lifestyle and people of India), Bride & Style(a wedding magazine), DARE (focusing on entrepreneurship)and TRAFFIC Life (lifestyle magazine for urban Indians).


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2007 AdEx by Category (Rs. Cr.)

Branded

Jewellery

WatchesTravel &

Tourism

Events

Lifestyle

Independent

RetailersProperties/

Real Estates

Corporate/

Brand Image

Readymade

Garments

Cars/

Jeeps

-10%

0%

10%

20%

30%

40%

50%

60%

-2 0 2 4 6 8 10 12

Net AdEx

YoY%

2006 2007

YOY

% ChangeCorporate/ Brand Image 4% 4% 9%

Independent Retailers 4% 4% 15%

Readymade Garments 4% 4% 9%

Properties/ Real Estates 2% 2% 17%

Cars/ Jeeps 3% 2% 1%

Travel & Tourism 3% 2% 2%Branded Jewellery 2% 2% 50%

Watches 2% 2% 1%

Events 2% 2% 26%

Lifestyle 2% 2% 30%

Average = 13%

Category Contribution

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 newssegment, but allow 100% foreign equity in non-news and non-current affairs specialty magazines.


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Television

+18%, +17%Television is one medium that has surprised even the media pundits and delivered higher growth thanexpected. 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 newerchannels 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, pricesusually fall. However, this hasnt happened in India for three reasons:

Erstwhile high spending categories like FMCG which used to drive the growth of TV are now looking atsmart regional investments which trade off size for cost efficiency. On the other hand many of thecurrent large spenders like Cellular Service, Mobile Phones, Automobile and Financial Services areincreasingly shifting advertising monies to TV. Advertisers in these categories value impact as much ascost efficiency in their choice of media and believe that TV is more suited to their lifestyle approach toadvertising. 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 willremain 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 inventoryat higher rates. Being nascent categories, these companies could afford to spend way beyond normaladvertising-to-sales ratios.

New channel launches have resulted in further audience fragmentation. Top programs which delivered12+ 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 existingchannels. 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 entrycost 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 newchannels with me too programming.

Kids channels registered better numbers in 2007 as compared to the previous year. With increasedpatronage from older male/female audiences, these channels were able to attract a lot of non-traditionalcategory advertising during the year. The entry of regional channels in this genre will grow the segmentfurther as is being witnessed in the state of Tamil Nadu (TN). Improved content on Regional GECs and entryof 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 madeby the consumer. In many genres, existing leaders who continued with their age-old programming conceptswere overtaken or challenged by those who offered differentiated content (9XMs launch in music genre beinga classic case). On the other hand, new launches which were clones of existing channels have failed tosustain viewership beyond the initial sampling phase. TN remained the only monopoly market with a singleplayer/ group dominating TV viewership. The lead channel, Sun TV, was able to weather competition andmaintain rates with key advertisers due to increased fragmentation of the market. Andhra Pradesh (AP)continued to be a relatively expensive market where Gemini TVs attempt at emulating Sun TV was nullified toa great extent by the cheaper alternatives available.

Existing channels groups on their part have started de-risking by venturing into new markets/ genres, therebycreating bouquet offerings. This has enabled them to offer network packages to advertisers and improve their


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2006 2007YOY

% ChangeCellular Phone Service 4% 6% 95%

Cellular Phones 3% 3% 40%

Two Wheelers 3% 3% 17%

Toilet Soaps 4% 3% -18%

Corporate/ Brand Image 3% 3% 32%

Cars/ Jeeps 3% 3% 10%

Shampoos 3% 3% 7%Insurance-Life 2% 2% 49%

Internet Service 1% 2% 127%

Soft Drink Aerated 3% 2% -11%

Average = 18%

Category Contribution

The Future:

Advertising spends on television are expected to maintain similar growth levels in 2008. The key drivers forthis 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 Board-sponsored 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 themedium

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 determinechannel pricing. The task for broadcasters would be to demonstrate the real value they bring to the table andhow they differentiate themselves in a cluttered environment.


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Radio


Radios share of the total media pie has grown to 4% in 2007. Growth of the medium can be attributed to theincrease 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 Listenershipmeasurement, with the 3 RAM (Radio Audience Measurement) markets accounting for 65% of the total radiospends.

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 retailers dreamcome true and almost 70 % of the deals are tactical in nature (linked to brand promotion rather than brandbuilding). 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 costand 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 channellicenses. 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 JVswith smaller regional firms. This helps the bigger stations offer wider market coverage while the smallerstations benefit from the access they get to bigger advertising markets like Mumbai and Delhi, and theMarketing/ Sales expertise the biggies bring in. This could also be seen as an early sign of consolidation inthe market.

The Product:

The sudden glut of radio stations has resulted in similar-sounding stations with little variety in content. With aneye on the big-spending ad categories, there has been an overabundance of programming targeting the massmarket. However, 2007 saw some radio stations coming out with innovations in an attempt to cut through theclutter 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 toprogramming which is now scheduled across the day. The former required a lean forward listening approachto 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 andground activation are now an integral part of many radio campaigns. Today, 70% of the total radio revenuescome 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 andDelhi. By the end of 2008 Kolkata, Chennai and Hyderabad will also be covered, giving advertisers metrics forthe top 6 metros. The growth of this medium even in the absence of any measurement system can beattributed to

Local nature of the medium in many cases, the retailer himself would be a listener of the particularstation


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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 forlicenses 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 ofthe 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 productcategories to target.

Wider market coverage of measurement systems like RAM, resulting in increased accountability of themedium

Multiple ownership of channels in a city, which will help networks in providing station bouquets coveringdifferent target segments

FDI limit which is currently at 20% in FM radio space is likely to increase to 26% in radio channels thatwant 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 helpadvertisers in tapping hitherto unreachable semi urban / rural India


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Outdoor


The Indian OOH market is expected to reach Rs.1,700 cr. in 2008. The OOH industry in India is characterisedby a distinct metro skew in market spends where the top 5 metros constitute nearly 75% of the total spends. Aconcentration of key target audiences clusters, better OOH inventory and relatively higher media costs inmetros drive this Metro focus phenomenon in the India OOH industry.

Regionwise OOH Industry Split in India

2007

Mumbai

25%

Delhi

23%

Chennai

12%

Kolkata

9%

Hyderabad

7%

Bangalore

6%

Others

18%

The city beautification drive by the Metropolitan Corporations in India is forcing a cull of larger format OOHmedia 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 growingrealisation amongst site owners such as Airport Authorities of the potential of advertising as a key revenuestream 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, giventhe very nature of control on the medium. Local authorities are yet to come up with a long-term plan and areusually not very transparent in their dealings with vendors.

There exists a significant lacuna in tracking spends in the medium, which currently functions on best-ratedeals. Tracking in combination with the audience reach studies could bring in much-needed credibility and thecorresponding growth of the medium. Investments in this regard have been ad-hoc and have not beenencouraging at an industry level, in spite of moves to roll out the Indian Outdoor Study by the end of 2008.


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Digital


Digital media comprising Internet and Mobile is the fastest growing medium in the country albeit accountingfor only 2% of total media spends. Digital media have today become integral to most media plans. Topcategories are spending much more and new advertisers within these categories have also started using thismedium. A new category that might see an increase in spends is Sports, with the launch of IPL, the Twenty20Cricket League, in 2008.

Growth in advertising spends of this medium have largely been driven by the measurability of the mediumseffectiveness 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 from21 million in 2006 to 32 million at September 2007. Broadband penetration grew from 3 millionhouseholds in 2006 to 3.5 million households in 2007. This increase in penetration is expected to result inincreased consumption of digital media.

Increasing options to advertise in Digital Media: Fancier technology (e.g. Affle, Googles 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 toalso use it for brand engagement. Technology clients and Consumer Durables use internet search as itprovides 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 engagingthe users resulting in lead and demand generation.

Advertisers are moving away from pure display advertising to internet search as the returns are measurableand hence it is easier to evaluate the efficiency of the campaign. Top advertisers in the Digital space areICICI, 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) andvertical 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 andGoogle 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. Itsportfolio includes MoneyControl, Tech2, IBNLive and Cricket Next

Delivery mechanisms used by these portals are keywords, banners, images, links, videos and calls. Some ofthe commonly used metrics to measure them are cost per impression, cost per click and cost per lead (whichis more ROI focused)

The choice of websites to advertise on depends on the ratings provided by the comScore Reportwhich isused 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.


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Mobile:

Mobile Phones as a medium are gaining prominence with increased priority being given to one-to-onecommunication. For instance, the channels in the Star TV network have been using the mobile mediumthrough innovative applications to remind their viewers about upcoming movies and serials. The 3G platformslated to be launched in June 2008 will revolutionise mobile advertising. Programme interfacing withconsumers 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. Alot of advertisers used these platforms to generate positive word-of-mouth. An example of a successfulcampaign is the one run by Accenture which used Orkut to promote its careers month. As a part of thecampaign it got people to join competitors communities (IBM and Intel) and promote the company. It reached150,000 people and generated 15,000 resumes with no media costs.

The Future:

Ad Ex (Rs. Cr.) 2007 2008e

Internet 320 512

Search 75 120

Mobile 45 81

Total 440 713 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 integralsegment 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 increasespends 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.


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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 thetheatre.

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 thesuperior aesthetics of the environment has lead to increased advertiser acceptance of the medium.

Organised players getting into the spaceand providing end-to-end solutions:Local players are becomingmore organized with some entering into tie-ups with overseas players, thereby raising the quality of themedium.

Digital cinemas have rolled out at a fast pace and now account for about 15% of total screen universeacross town-classes. Since this results in assured print quality and monitoring of advertising has becomeeasy, 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. Advertisersuse Cinema to effectively showcase their brands against an entertainment backdrop and access the starpower that drives consumers to theatres.

Food and Beverage, Cellular Phones, Automobiles and entertainment brands see this space as having alogical 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 inthese spaces. Cinema advertising is a dynamic medium offering advertisers the opportunity to reach theirtarget 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.


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Retail Media

+56%The Market:

Organized retail is booming in India and as a result Retail Media are beginning to take a more definitive formand has grown by 50% from Rs.150 cr. channel in 2006 to Rs.225 cr. in 2007. Though Retail Media havealways been present in the form of glow signs, display windows etc., it has leapt to the forefront with thegrowth 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 someadvertisers the component of retail media is included in OOH while for some it is a part of the regionalactivation 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 mediasuch as standees and drop-down banners. In addition to these, retail television and store magazines haveemerged as popular media. Activation/ contests (including kiosk/ promoters/ sampling etc.) have becomeeffective modes to increase interactivity and engage the consumer. These options are available indestinations such as malls, quick-service restaurants (including coffee chains), department stores, musicstores, supermarkets, cinema (excluding screenings) and other locations such as consumer durables chainsand health and wellness chains. Increasing numbers of malls and stores across the country will lead to anincrease in the space available for organised retail in the country. Malls will continue to dominate this categorylargely 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 andAutomobiles.

The key drivers for this medium are:Urban development of superior aesthetics vs. traditional retail:National level developers are coming up withmalls across India and also bringing in a better shopping experience for consumers. Malls are evolving frombeing a shopping destination to a family entertainment centre for a full days 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 BirlaGroup, Reliance, Bharti and RPG has given a further fillip to organized retail This is not only leading toincreased investment and employment in this sector but also to the creation of an all-new shoppingexperience for consumers.

A critical factor in driving the growth of this medium is the presence of youth with spending power in coffeeshops, quick-service restaurants and music stores. These formats will continue to attract youth orientedbrands, 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 perception-and evidence-based given the absence of hard data. Analysis of ticket size/ bill size and purchase patterns byretailers would help put this factor in perspective for advertisers.


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Cinemas are also likely to continue their trend in lines of offering with coffee chains and also offering adestination for family entertainment. The use of static media and activation in combination with innovationswill 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 offeringacross 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 Caf Coffee Day and music outletslike Planet M.

Retail television or in-store media is a key component of retail media where various organised players likeFuture TV, OOH, Live Media, TAG Media and DSN have come to the fore in the last 2 years. Rapidexpansion by these players across the country in the coming year is expected to increase the number ofscreens from 11,800 in 4,400 locations to 26,000 in 9,000 locations. This improving reach is expected to drivegrowth in advertising expenditure on Retail TV by 300% by the end of 2008. This could escalate further if ametric on the lines of TAM for TV, RAM for Radio or IRS/NRS for print is instituted for this medium during theyear. Other critical factors for this medium would be medium-specific content, optimal locations of screensand interactivity of the medium. Using technology aids at specific locations, the mediums effectiveness canbe 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 end2008.

Possible drivers of future growth:

Restrictions are already in place in the OOH space in Delhi and are expected to be implemented inMumbai by the end of 2008. This could increase the demand for key retail spaces dramatically and alsolead to an increase in the premium charged for such spaces. Malls are likely to be the biggest gainersfollowed by organized retail chains.

Use of technologies like Video Miningand RFIDby retailers and vendors would help to customise offersfor consumers and also put metrics in place for advertisers.

Mobile technology such as Bluecasting can be used to make offers based on a consumers buyingpattern in the store and building interactivity and information on demand could dramatically change theindustry. Increasing penetration of Bluetooth-enabled mobile phones in key cities will help drive thisfurther.

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


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For any queries/ clarifications please contact:Juhi RamakrishnanDirector - mConsultGroupM Media Pvt. Ltd.201, Peninsula ChambersGanpatrao Kadam MargLower ParelMumbai 400 013MaharashtraIndia

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Group m India Media Forecast Apr 08