As per a survey conducted by media firm Zenith, India will have the fastest-growing market for fast-moving consumer goods (FMCG) food and drink brands’ advertising investment over the next three years, with ad spending reaching 14% annually.
For the research, 12 markets – including the United States, United Kingdom, France, and China – were evaluated by Zenith. The report findings stated that all other markets are expected to develop consistently at between 2% and 5% a year.
India will profit from booming consumer demand as disposable incomes rise quickly, and the underdeveloped ad sector catches up with growth. Only 0.3% of India’s GDP is devoted to advertising, which is less than half the global average of 0.7%.
FMCG food and drink firms, which include packaged food and soft drink brands, will raise their digital advertising spending by 7% annually by 2023, rising from $12.3 billion in 2020 to $14.9 billion in 2023, while their market share will expand from 46% to 49%.
FMCG brands prioritize conventional TV highly, investing 39% of their advertising budgets in 2020, compared to 24% for the specific brand. FMCG businesses spent 52% of their budgets on television, compared to an average of 26%, excluding China, where they have already embraced digital advertising as their primary method of commercial communication.
However, TV is becoming less successful due to its dwindling audience, especially among the young, driving businesses to follow consumers to digital platforms. Additionally, brands will seek to support and develop their e-commerce capabilities by directing customers to DTC (direct-to-consumer) businesses or retail alliances.
Out-of-home advertising is an exception to the traditional media’s falling reach. The proliferation of digital displays will increase the effectiveness of reaching customers with relevant and targeted adverts close to the point of sale as traffic returns to normal following the COVID-19 dip.
The total amount spent on advertising by FMCG brands decreased by 10.7% to $26.7 billion in 2020, a steeper decline than the overall ad market. Instead of spending money on advertising, the businesses opted to invest in e-commerce operations and relationships.
The survey predicted a 4.4% annual growth in FMCG ad expenditure between 2020 and 2023. However, given that FMCG e-commerce infrastructure is being put in place, firms will need to boost their investment in advertising to support it.
The report concludes by forecasting that e-commerce will be the main arena of competition for FMCG brand expansion in the following years.
source: India’s FMCG advertising spend to surge by 14%in 2023: report