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of Advertising in India and the controlling agency for directing and monitoring
Introduction:
Advertising, as we understand it today, was not used until about 200 years
ago. The form of advertising for the transmission of information dates back to ancient
Greece and Rome. Criers and signs were used to carry information for advertising
goods and services well before the development of printing. Even during the Middle
Ages, advertising signs were very extensively used. These signs generally consisted
of illustrations of symbols of the products advertised. The upsurge in advertising
came after the development of printing in the 1450s. When printing techniques were
perfected, and as this industry developed, the signs were replaced by written words or
messages.
During the 17th century, when newspapers started appearing in various parts
of the world, newspaper advertising began to develop. This was an important phase
in the history of advertising. Dining this Century, newspapers appeared throughout
Europe; and advertisements in them were very different from those by illustrations
and signs at the locations of mercantile establishments. The invention of printing
revolutionized the advertising; but newspapers gave it the necessary medium for its
very rapid growth. The first newspapers had a large number of advertisements. At
the end of the 17th century, a great number of commercial newspapers were published
in England and elsewhere. Earlier advertisements in the newspapers were for books,
marriage offers, new beverages and advertisements for travel. Soon, advertising
became the main source of revenue for newspapers, and space-selling came into
existence. Around 1840, several people were selling space in newspapers in New
York, Philadelphia and other metropolitan centers in countries where newspapers
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were brought out on a regular basis. Space-brokers, who later on developed into ad
agencies, came into existence in all these centers.
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Table No.111.1
Historical Development ofAdvertising in India
Time
Stage Happenings
Period
First 1900-1947 Advertising of products originated abroad. Indian production
minimal. In the first 50 years of last century, economic growth it
was negligible. Agriculture grew at an average annual rate of 0.01
per cent between 1900-1947.
In 1939 investment in industry stood at Rs.450 crore. The foreign
investment was Rs.350 crore. Most indigenous products were
commodities, requiring no advertising.
Second 1947-1977 India started on the path of self-reliance and by 1977 she become
more or less self-reliant.
Press Commission of 1953. At this point, volume of advertising in
terms of print media was not more than Rs.3.5 crore.
The total spend was Rs. 5 crore; with hoardings and other media
taking Rs. 1.5 crore. The most visiable ad agencies were JWT,
Lintas and Grand.
By 1977, India became a nation with the 3rd largest pool of
technical manpower. There was not any great advertising, which can
flourish provided that there is mass consumerism.
Third 1977-2000 Second Press Commission, 1983. At this point, ad revenues touched
Rs.200 crore. During these three decades, the increase in revenues
was phenomenal, almost 40 times. But in terms of volume and I
space, the increase was only 90 per cent. 1983 was a landmark year
because TV came in, changing the Indian lives completely. Within a
year, it changed lifestyles. Illiteracy was no bar for its reach. It
reached lifestyles. Illiteracy was no bar for its reach. It reached
nearly 70 p.c. of the Indian people. TV demonstrated the product
very well and took away the language barriers.
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4 Technological innovations like online distribution channels, web-stores, multi-
and mega-plexes are complementing die ongoing revolution and the growth of
the sector.
4 Indian film industry is second largest in the world and the largest in terms of
the films produced and tickets sold.
4- The low cost of production and high revenues ensure a good return on
investment for Indian Media % Entertainment industry.
Weaknesses:
4 The Media And Entertainment sector in India is highly fragmented.
4 Lack of cohesive production & distribution infrastructure, especially in the
case of music industry.
4 The lack of efforts for media penetration in lower socio-economic classes,
where the media penetration is low.
Opportunities:
4 The concept of crossover movies, such as Bend It Like Beckham has helped
open up new doors to the crossover audience and offers immense potential for
development.
4 The increasing interest of the global investors in the sector.
4 The media penetration is poor among the poorer sections of the society,
offering opportunities for expansion in the area.
4 The nascent stage of the new distribution channels offers an opportunity for
development.
4 Rapid de-regulation in the Industry
4 Rise in the viewer ship and the advertising expenditure.
4 Technological innovations like animations, multiplexes, etc and new
distribution channels like mobiles and Internet have opened up the doors of
new opportunities in the sector.
Threats:
4 Piracy, violation of Intellectual Property Rights pose a major treat to the
Media & Entertainment companies.
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+ Lack of quality content has emerged as a major concern because of the
‘Quick- buck’ route being followed in the industry.
♦ With technological innovations taking place so rapidly, the media sector is
facing considerable uncertainty about success in the marketplace.
The Indian Advertising Industry has out-performed the Indian Economy and is
one of the fastest growing sectors in India. The Advertising Industry generally tends
to grow faster when the economy is expanding. The Indian economy has been
growing at a fast clip over the last few years and the income levels too have been
expanding a high growth rate. Above that, consumers pending are also on the rise due
to a sustained increase in disposable incomes brought about by reduction in personal
income tax over the last decade. All these factors have given an impetus to the
advertising industry (media and entertainment) and are likely to contribute to the
growth of this industry in the future. Besides these, economic and personal income -
linked factors, there are a host of other factors that are contributing to this high growth
rate.
The KPMG - FICCI report has rightly mentioned that in many ways, 2008 was
a testing time for the industry. "With the global economic slow down affecting
advertising spends, sectors like television, print, radio and out-door that depend on
advertising revenue were affected". In spite this situation, the report looks forward for
better days, saying that "behind every adversity lies an opportunity. Media companies
are under pressure to change innovate and re-examine the existing business models".
Even after lowering the growth projections compared to the earlier figures for
2008-2012, growth rate during 2009 - 2013 is pegged at 27.9% for the internet, 14.5%
for the television, 14.2% for the radio business, 22.4% for the media.
The current phase of challenging environment, however, will force the media
and entertainment companies to innovate and revamp their strategies. The following
table shows the size of India's Media & Advertisement Industry.
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Table No. IH2
Growth ofIndia's Media & Entertainment Industry
Media Segments:
The Indian Advertising Industry has been enrolling a sufficient and
meaningful growth rate from its inception. The Indian Advertising Industry largely
relays on various media segments as shown in the Table 3H.3.
Table No. III. 3
Media Segments
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The above table presents the comparison of size and Compound Annual
Growth Rate (CAGR) in media segments between 2008 and 2013 and it derives
there is drastically increase in all the media segments from 2008 to 2013.
Advertising Segments:
The Indian Advertising Industry comprises with Print, Television, OOH,
Radio and Internet segments. The value and percentage growth for the years 2008,
2009 and 2009-2013 is incorporated in the Table No.III.4.
Source: KPMG-F1CCIReport
The above table states that, there is an increasing trend in all the advertising
segments from 2009 - 2013.
Advertising Spending:
The prosperity of a nation depends on the pace of manufacturing and
marketing operations. These operations directly or indirectly integrated by
advertising programs and the investment made by the organizations in advertising
known as “Advertising budgets”. The advertising budgets reveal “how much money
has spent by an industry over various slots”. Table No. III.5 describes, advertising
spending by the Advertising Industry for the years 2006 and 2010 and the Compound
Annual Growth Rate (CAGR).
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Table No. III. 5
Advertising Spending
2010
2006 CAGR
Segments (Expected)
(in crores) (in percentage)
in crores)
Television 14,800 42,700 24%
Filmed 6,800 15,300 18%
Radio 300 1,200 32%
Music 700 740 1%
Live Entertainment / Outdoor advertising 900 1750 14%
Internet 100 750 50%
Source: KPMG - FICCI Report
Media Penetration:
The Indian entertainment and media industry has out performed the Indian
economy and is one of the fastest growing sectors in India. It has been supported by
Table No.UI.6 as
Table No.IH.6
Indian Entertainment and Media Industry
SEC Print Media TV Satellite TV Radio Films
Urban Reach in Reach in Reach in Reach in Reach in Reach in Reach in Reach in Reach in Reach
India million %age million %age million %age million %age million in%age
A1 7.57 95.2% 7.64 96.1% 6.68 84.0% 2.90 36.5% 2.43 30.6%
A2 13.90 90.5% 14.51 94.5% 11.90 77.5% 4.58 29.8% 3.85 25.1%
B1.B2 31.97 81.1% 35.71 90.6% 26.57 67.4% 9.73 24.7% 7.53 19.1%
C 33.78 69.5% 41.69 85.8% 28.86 59.4% 11.22 23.1% 8.79 18.1%
D 29.28 52.6% 43.15 77.5% 27.23 48.9% 11.41 20.5% 9.52 17.1%
EI.E2 20.99 30.1% 45.32 65.0% 26.35 37.8% 11.02 15.8% 10.95 15.7%
Source: IRS 2009, Round 2 as quoted in Jagran Prakaslian Prospectusfiled with SEBI dated February 3"1,2006
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the low ad spends may seen like a challenge before the media industry, it also throws
open immense potential for growth. It has been incorporated in the Graph No.III. A.
Graph No. HL l
Ad spend as a percentage of GDP
Zealand
Source: Advertising Expenditure Forecasts October 2004 by Zenith Optimedia as quoted in Entertainment Network Limited
Draft Red Herring Prospectusfiled with SEBI on November 11,2005
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countries. This company is the first one to introduce pioneer careers in ad for women,
sex-appeal ads and also produced the first ever sponsored -TV program.
RedifTusion-DY&R:
This Advertising company of India has made a benchmark in the field of
creativity. India's 5th largest advertising company is Rediffiision. This advertising
agency offers a wide array of integrated pr services for external and internal
communications. The primary strength of the company lies in the media relations.
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Kolkata, Ahmedabad, Bangalore and New Delhi. It is a subsidiary of Grey
Worldwide. The company specializes in advertising and marketing services.
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Vernacular advertising, with local press and appeals compatible with Indian
culture and sub-cultures, will develop into an impressive profession in the years to
come. In brief, advertising in India, which came of age will grow in its dimensions in
this new millennium.
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The AAAI has addressed various issues relating to advertising business and has
assisted bodies like Advertising Standards Council of India (ASCI) and Indian
Broadcasting Foundation (IBF). AAAI plans to launch a book on the History of
Advertising and form a new code of best practices and promote advertising as a
profession.
4 To benefit the nation by harnessing advertising for the good of the country, its
institutions, its citizens; to co-operate with the Government in promoting its
social objectives and in nation-building.
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biggest; to encourage market and media research; to serve society by meeting
its social responsibilities.
4 The AAAI today is truly representative, with a very large number of small,
medium and large-sized agencies as its members, who together account for
almost 80% of the advertising business placed in the country. It is thus
recognised at all forums - advertisers, media owners and associations, and
even Government, as the spokesperson for the advertising industry.
Activities of AAAI:
The AAAI's activities cover all areas of vital importance to the advertising
industry. Some of these include:
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❖ Doordarshan & AIR: Protection of members' interests on issues related to
Guidelines and Rules of Commercial Broadcast, Sponsorship, Rates,
Commission and Accreditation; working towards full service operations at all
Doordarshan Kendras.
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❖ INS: Protection of members' interest in matters relating to INS policies, credit
periods, Rules for Accreditation and streamlined operations; promotion of
better production values and effective advertising purchases.
❖ Statutes and Laws: Constantly examining all relevant laws and statutes
affecting the advertising industry including ESIS, Sales Tax, other taxes,
Arbitration, MRTP guidelines; seeking professional advice and presenting a
common viewpoint at relevant forums to protect members' interests; pursuing
new avenues like Credit Insurance cover, etc.
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• Public Service: Offering the services of the Association and members in
significant projects, e.g., for Family Planning, the National Wastelands
Development Board, etc; encouraging the creation of such advertising by
members. There are innumerable instances of successful AAAI activities,
with benefits to the entire advertising industry and all others associated
with it.
Functions of AAAI:
• The AAAI functions through the active, voluntary services of a President, a
Vice-President, an Honorary Secretary, an Honorary Treasurer and an
Executive Committee assisted by a full-time Executive Secretary and his staff.
The Association maintains a permanent office at Mumbai, which is located at
35 Maker Tower 'F', 3rd Floor, Cuffe Parade, Mumbai 400005.
• Assisting the above groups are various Sub-committees, each looking after
specific activity areas of the Association, and Regional Conveners who co
ordinate members’ activities in different regions of the country.
• The AAAI is thus a true association, in the sense that nearly half of all
members are directly involved with one or more of the active committee
groups and the remaining members in touch through direct communication.
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AD Club, Mumbai;
The Advertising Club-Mumbai was established in 1954 with just 25 members.
It was then known as the Advertising Luncheon Club. Members were the individuals
from ad agencies and publicity departments of advertisers.
The objective of the club was to enable these members to meet informally and
to get to know each other socially. It also provided a forum for talks and discussions
on theoretical and practical aspects of advertising.
The membership was then thrown open to include people from allied
professions: marketing, communications, media, printing, publishing, block making,
radio and film commercial production.
The Club's greatest strength lies in the fact that it is a body of individuals and
not of corporate entities.
Today, the club has more than 1000 fully paid-up members. It represents the
broadest cross-section of individuals connected with advertising and communications.
It is the largest such body in this country, perhaps in the world.
The Indian advertising industry also has Indian Society of Advertisers (ISA)
which is non-profit professional organization and a national body representing a wide
spectrum of advertisers from the public and private sectors.
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