Media investment soaring in India: GroupM.

Prompted by increased spending power among Indian consumers, current media spend is comparable to Canada, Japan and the largest European countries.

Media investment in India is on an explosive growth path and is expected to exceed $5 billion next year and possibly hit $10 billion by 2011, according to a new study from UK-based global media investment management company GroupM. This Year, Next Year: India examined all major media in India, including Internet, outdoor and cinema, and concluded that overall media investment is growing at an annual compound average of 21%.

‘Only China and Russia combine such scale with such growth,’ comments GroupM futures director Adam Smith. ‘India is currently contributing 3-4% to annual global media investment growth, which is comparable to Japan, Canada or the largest European countries.’

The report said the boom has been sparked, at least in part, by the evolving sophistication and increased spending power of the Indian consumer – leading to increased lifestyle-lead advertising in categories such as financial services, automotive, fashion and high-end household goods. As well, wages among the nation’s urban dwellers are rising as fast as the Indian economy.

Among specific media, the report states that:

• Internet users have grown tenfold to 21 million since 2000.

• Online brand display advertising and transaction generation are the mainstay of Internet ad revenues.

• Search is now increasingly being used by direct-response advertisers, and total Internet advertising revenue will overtake magazines and radio in the near term.

• Unique among the big emerging markets, newspapers dominate advertising – sustained by more colour, targeted supplements and ever-wider distribution.

• TV growth is being sparked by the launch of new channels and the growth of new ad categories. The majority of TV advertising continues to be for household consumer goods. But India’s rising affluence, along with the telecom revolution, is reflected in increasing spend contributions by telecom (mobile handsets and service providers), automotive and financial services, with retail making a promising entry.

• While terrestrial TV continues to drop and cable TV grows, satellite TV is spreading fast. It already expands choice in three million subscriber homes, and now delivers free TV to an estimated four million homes in hitherto media-dark provinces.

• Radio is often the only channel where electricity and literacy are scarce. It is set to outperform as the government releases more bandwidth, consumer appetite for music-based content rises, more people drive and audience measurement begins. Virtually all mobile phones now receive FM radio.

The full report is available on request from: