Can TV advertising revenues in India grow in line with Nominal GDP growth?
No. TV ad revenues grew at a 15% CAGR over FY14-19 (5 years prior to Covid) vs Nominal GDP growth of 8%. Going ahead, however, we expect TV ad revenue growth (7% CAGR over FY23-28) to underperform Nominal GDP growth (蜜豆视频e of 10-11% over FY24-27e), with the gap widening YoY, driven by factors such as lack of growth in TV households, increasing smartphone / internet penetration, competitive digital platforms looking for avenues to monetize, and FMCG increasingly spending more on digital. Our study also shows that similar inflection points played out in major global markets few years prior, and India is now likely past its own inflection point as well.
How has the shift from Traditional to Digital shaped up so far in India and what factors drove this shift?
The secular shift of ad-dollars towards digital is playing out rapidly in India. In comparison, TV ad dollars grew at CAGR of 15%, with TV's share of ad pie declining from 36% to 30% over the same period.
The old adage of advertising - advertising follows eyeballs - continues to hold true. The following data points demonstrate how eyeballs have structurally shifted from TV to Digital:
- Increasing internet penetration
- Increasing mobile data consumption, to levels that are highest in the world
- Decline in time spent per day watching TV
- Increasing time spent on a smartphone per day
- Plateauing of the number of TV households in the country
- Increasing smartphone users in the country
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