26 December 2005

BusinessWeek International Editions: Asian Busin

Indian advertising is growing at 12% according to leading research firm Media Partners Asia, who also predict higher growth rate of 12-15% for 2006. At this pace, India would be amongst the top three high growth markets of the world. Is it time to open the bubbly? While it is true Indian advertising is growing fast, we must remember that our base (estimated at Rs 12,000 crore) is still miniscule compared to developed markets. Even China's ad business is at least twice our size and is expected to be growing faster, at 17-18% a year. We may not have missed the bus, but we will have to run faster to catch up with China. Can we? Advertising is one of the best health indicators of an economy. It is intensely sensitive to the growth and recessionary phases of an economy. As India has been identified as a growth country alongside Brazil, Russia and China, we could confidently predict a healthy ad business in the medium term. While this is generally true, the industry must be prepared for a few surprises.

For example, the IT and BPO/KPO sectors, that are contributing significantly to India's growth, do not depend on a lot of advertising. A significant investment is planned in infrastructure development, like roads, railways, airports, seaports and hotels; most of these sectors have no relevant role for advertising. Government is committed to investment in rural development-again another sector weakly associated with traditional advertising. Yes, these investments will create jobs, which in turn will create wealth that will be used to acquire consumer goods and services. So, these could contribute indirectly to growth in advertising in the long run, through the multiplier effect. However, if advertising could offer meaningful solutions to these IT and infrastructure sectors, it could get off on a quicker start. Can advertising help software houses in their global marketing drive? Could we use the power of advertising to help accelerate rural development, by enhancing the comprehension of audiences? In future, the discontinuous growth of advertising shall fructify by thinking out-of-the-box. Standard growth industries like insurance, telecom, automobiles, consumer durables and FMCG will provide growth only at par with the economy. We have to think beyond the realms of traditional media, to new media like the internet and other interactive media. We must think beyond the shores of India and open ourselves to the global advertising market. There is no reason, other than our limited vision, why Indian advertising cannot be the next big KPO sector. Some of this is already happening; Indian advertising talent is already in great demand globally. But a lot more has to be done if we, as an industry, hope to catch up with China over the next five years. -The writer is president & COO, Lowe Lintas