Zenith, the media agency owned by Publicis Group, has predicted that the fastest growing market in India will be a few years away, with food and drink brands (FMCG’s) fast moving consumer goods advertising growing by 14% a year. The agency says that all markets are projected to grow steadily between 2% and 5% per year in its Business Intelligence – FMCG food and drink reports that have followed 12 global markets including the US and the UK. FMCG ad spending in India will be benefited as the availability income rises rapidly, coupled with the growth in the under-developed ad market. In India advertising accounts for only 0.3% of India’s GDP. Less than half the world average which is 0.7%.”There are different reasons why FMCG growth remains robust. First of all, despite the pandemic, demand is continuously increasing if not seen. Secondly FMCG is still seeing a wave of new product launches and an expansion in its category with evolving consumer demand. Finally, since the population is vast in Tier 2 it is a potential market which is untapped with the FMCG brands still increasing their penetration,” says Jai Lala, CEO of Zenith India.
With regard to media platforms, Zenith forecasts that both, FMCG and Food and Drink (F&B) brands will increase their digital ad spending by 7 % per year to 2023. That is well ahead of the 4% annual FMCG ad spending growth forecast in the 12 markets listed in this report. The FMCG brands continue to rely heavily on conventional television spending 39% on television in 2020. The FMCG brands continue to rely heavily on conventional television spending 39% on television in 2020, aside from China, where digital advertising is already a major form of trade communication for FMCG brands.
FMCG Brands have spent 52 % of their television budgets up from 26 % on average. Their main aim is to increase brand awareness and reach, so that as many consumers as possible are at the point of purchase. TV has historically done this but their decreasing reach – especially among young people – making it less effective. Consequently, FMCG brands follow digital channels audiences. Zenith predicted that FMCG’s digital ad spending will rise in 2023 from $12.3 billion in 2020 to $14.9 billion.
Following the pandemic in 2020, brands will seek to strengthen and expand the ability of FMCG to provide consumer support for direct to consumer (DTC) operations or retail partnerships. However, the major challenge is to use digital to effectively replace television – to create a broad brand awareness during frequency management. Subscription video on demand (SVOD) will make this even harder, along with the termination of third-party cookies by blocking high-value audiences away from direct advertising. Out-of-home is the exception to traditional media’s declining reach. Since traffic returns to normal after the collapse of Covid 19, digital displays will be more effective in getting consumers near the point of sale with targeted and relevant ads. FMCG home marketing is expected to expand by up to 9 % a year between 2020 and 2023, while market share is slightly higher than its pre-pandemic share of 6.8 % .
