Advertising is a marketing tactic involving paying for space to promote a product, service, or

cause. Advertising is a marketing communication that employs an openly sponsored, non-

personal message to promote or sell a product, service or idea. Sponsors of advertising are
typically businesses wishing to promote their products or services. Advertising is differentiated
from public relations in that an advertiser pays for and has control over the message. It differs
from personal selling in that the message is non-personal, i.e., not directed to a particular
individual. Advertising is communicated through various mass media, including traditional
media such as newspapers, magazines, television, radio, outdoor advertising or direct mail;
and new media such as search results, blogs, social media, websites or text messages. The goal
of advertising is to reach people most likely to be willing to pay for a company’s products or
services and entice them to buy. The actual presentation of the message in a medium is referred
to as an advertisement, or "ad" or advert for short.

The advertising industry is the global industry of public relation and marketing companies,
media services and advertising agencies. The advertising industry is a global, multibillion-dollar
business that serves as a conduit between manufacturers and consumers. The research group
Magna Global reported that U.S. advertising agencies earned $166.8 billion in revenue in 2014.
There are more than 65,000 advertising businesses employing more than 248,000 workers in the
United States.
Whether for nonprofit organizations or Fortune 500 companies, advertising agencies are hired to
cultivate brand identities, persuade consumers to switch brands, launch new products, and lobby
for political issues. The advertising industry creates and manages the connection between
companies, products, and consumers, translating their clients’ messages into effective
campaigns. Advertising can stimulate buying, increase sales, and help to jumpstart the economy.
The economy, though, can also affect the advertising business. When it slows down, consumers
tighten their wallets, and manufacturers, in turn, reduce production and scale back on
promotions. Ad spending decreases, as does ad revenue. Popular media and technology drives
this industry. Before the advent of radio, television, and computers, print publishing was the
main method of advertising, with ads appearing in newspapers and magazines, flyers, and on
billboards.

Evolution of advertising industry

The earliest forms of advertising included simple signs that merchants put over their doors to
inform the public about what was for sale inside. Posters, pamphlets, and handbills began
appearing in England following the invention of movable type in Germany around 1450.
Advertising became a part of newspapers when they first appeared in England in the seventeenth
century and in America at the beginning of the eighteenth century. Magazine advertising
followed in the early nineteenth century.

During the 1700s Great Britain made great advances in advertising. Handbills and trade cards
were common. A wide variety of goods were advertised. For example, one of the most exciting
subjects of advertising was the New World. Historians have commented that posters and
handbills lauding the wonders of the New World may have hastened emigration there.

During the eighteenth century advertising could be found in the British colonies in America—a
practice that, centuries later, achieved a great level of refinement and popularity in the new
nation. Advertising in the colonies, however, initially had little impact. Since America was
predominantly wilderness and farm country, many people lived in comparative isolation. In
addition, ads appearing in newspapers were often illegible and poorly written.

Improvements in printing technology and a new advertising philosophy led to advances in U.S.
advertising in the larger cities during the 1820s and 1830s. New York's penny press newspapers
began to make their advertising more understandable and accessible to common readers. Finally
in 1848 the New York Herald began changing the newspaper's ads daily. This expansion created
a need for advertising agencies. They sold space in newspapers and magazines for commission.
The commission system allowed the agency to collect a fee for placing an ad in a given
newspaper or journal. 

Throughout the nineteenth century the most widely advertised products were patent medicines.
Even as late as 1893 more than half of all advertisers who spent more than $50,000 annually on
advertising were patent medicine manufacturers.

During the 1890s the advertising industry grew dramatically. By 1897 more than 2,500
companies were conducting large-scale advertising campaigns. This expansion was the result of
the increased use of brand names and trademarks and growing newspaper distribution.
Copywriters also contributed to the growth.

During the 1920s advertising agencies were transformed into professional organizations offering
specialized services. Market research was used to gain a better understanding of the prospective
audience, and agencies developed separate departments and operating units, including research
and art departments (which were added to complement copy-writing services). 

During the 1920s the introduction of radio in the United States gave advertising an impetus that
carried it through the Great Depression (1929–1939) and World War II (1939–1945). When
radio was first introduced, many people felt that radio advertising should be prohibited. With the
formation of the NBC and CBS radio networks in 1926 and 1927, respectively, radio became an
important medium for advertisers. Ad agencies created nighttime radio programs as a way to
communicate their client's message. 

Following World War II, the introduction of television laid the foundation for an advertising
boom in the 1950s. By 1948 one million U.S. homes had television sets; the first coast-to-coast
network was established in 1951 From 1950 to 1980 advertising expenditures increased tenfold.

From 1976 to 1988 U.S. spending on advertising grew faster than the economy as a whole. TV
advertising was mainly responsible for this growth. In 1988, as the country began slipping into
an economic recession, there was a slowdown in advertising spending, when U.S. advertising
spending reached $140.6 billion.

Technological innovations also had an impact on traditional advertising. The proliferation of

alternative communication, including the rise of cable television, changed the way advertisers
could reach their audience. Advanced market research techniques allowed companies to gather a
wealth of data about their customers and consumers in general. This data could be effectively
used to create a database marketing program. Direct marketing increased in usage and popularity
as direct mail, direct response, database marketing, coupon redemption, in-store promotions, and
other.

Global Advertising Scenario

The spending on advertising worldwide has been increasing steadily and is expected to surpass
560 billion U.S. dollars in 2019. North America is the region that invests most in the sector,
followed by Asia and Western Europe. Middle East and Africa as well as Central and Eastern
Europe spend the least. The largest ad market in the world, the United States, invested more than
229 billion U.S. dollars in advertising in 2018, while China, second in the ranking, invested less
than half of the amount in the same period. American consumer goods corporation Procter &
Gamble was the largest advertiser worldwide in 2017, having spent more than 10 billion U.S.
dollars on ads. Other big advertisers include Dutch-British Unilever, French L’Oréal, and
German Volkswagen, respectively second, third and fourth in the ranking.

TV and radio

The global TV advertising spending in 2018 amounted to 182 billion U.S. dollars and it is
expected to decrease, albeit slowly, to nearly 178 billion dollars by 2021. Central and Eastern
Europe together with Latin America are the only two regions expected to see growth in TV
investments in the measured period. Global radio advertising is projected to slightly grow
between 2018 and 2021, by roughly one billion U.S dollars, mostly due to development of digital
formats.

Print media

With regard to print media, there has been a decrease in the advertising expenditure on both
newspapers and magazines, and industry forecasts are not kind to the future of print media. In
2018, global spending on magazine ads amounted to 26.8 billion U.S. dollars, but it is believed
to drop to 21 billion in the next three years. At the same time, newspapers will not fare any
better, with investments in ads declining from 47 to 40 billion U.S dollars. Again digital media
counterparts are disrupting the market and drawing the focus away from traditional media.

Digital and mobile

Spending on digital advertising worldwide was estimated at 333.25 billion U.S. dollars in 2019.
The sector is growing at an impressive rate and is expected to surpass 517 billion dollars in 2023.
In 2018 fiscal year, American multinational technology company Google generated 116 billion
U.S. dollars in revenue from digital advertising. Comparatively, Facebook and Twitter made 55
and 2.6 billion U.S. dollars on ads respectively.
Mobile internet advertising is the fastest growing medium on the global ad market. In
2018, mobile ad spends worldwide amounted to roughly 159.9 billion U.S. dollars and it is
expected to grow further to 250.5 billion by 2021. As of 2018, Asia Pacific is showing the largest
potential for development, with mobile ad requests from advertisers having increased by 44
percent compared to 2017. On a global scale, ad requests have grown by 27 percent in the
measured period. The highest spending industry on mobile ads in 2018 was the retail sector,
accounting for 49 percent of investments into mobile promotional activities. Media followed
with half of the result, and finance held only six percent of the pie.

Indian advertising Scenario

Indian advertising industry is talking business today and has evolved from being a small-scale
business to a full-fledged industry. It has emerged as one of the major industries and tertiary
sectors and has broadened its horizons be it the creative aspect, the capital employed or the
number of personnel involved. Indian advertising industry in a short span of time has carved a
niche for itself and placed itself on the global map.
Indian advertising Industry which has an estimated value of Rs.13, 200-crore has made jaws
drop and set eyeballs gazing with some astonishing pieces of work that it has given in the
recent past. The creative minds of the Indian advertising industry incorporates have come up
with some mind-boggling concepts and work that can be termed as masterpieces in the field of
advertising.
In the year 2009 the industries attrition rate is as high as 20-25 % which was sober in that
sense. According to industry executives the attrition rate is below 5 %, implying that most had
to stay put and deliver on their briefs in their respective agencies.
The ads shown to us are sometimes innovative and sometimes they really get on your nerves,
especially when they are repeated time and again and especially when they are repeated twice.
This happens when there is something sponsored by them say a tennis match or an award
ceremony, etc. Advertisements usually amaze people with their creativity and presentation
whereas some are really horrible in the depiction of their ideas. Most of the times however we
find quite interesting and appealing ads. The Indian ad agencies have some of the most
creative and talented people around which is attested by the fact that global companies are
approaching Indian ad agencies to handle their media campaigns.
2.2 MARKET DEMAND & SUPPLY –CONTRIBUTION TO GDP- REVENUE
GENERATION
Market demand & supply
 An advertisement, or advertising campaign, can have different influences on demand,
depending on its target audience. Effective advertising aims at winning over consumers who
are likely to be compelled to purchase the advertised brand. The demand for a product or
service is not just what the consumer wants or needs, but also what the target consumer will
pay for. Having an effect on demand means having an effect on sales. Learning as much as
possible about the interests and buying power of target consumers can help a company
design the ads that will have the most ideal impact on a brand’s demand.
Effective advertising creates an emotional experience for the consumer that compels
consumer action. When a soft drink commercial shows sandy beaches and bikini parties, or a
health drink commercial shows fit people living active lives, marketers behind these ads
want their consumers to "feel" the product enough to add it to their shopping lists. As social
media and mobile device advertising evolves, online audiences have a more direct and
interactive experience with marketers. Ads online contribute to an ongoing relationship with
consumers through likes, comments, shares, contests, survey participation, and votes. Ads
online also impact demand immediately through orders that can be placed with a mouse
click or tap of a screen.
Advertising keeps consumers focused on your brand rather than on the competition. It can
help win over new consumers who may be looking to switch from a competitor, or who
simply want to try something new. Advertising can increase consumer awareness and
expectations about the benefits of your product, and increase the number of people willing to
buy your product for the right price. Ultimately, advertising affects demand by building a
desire for a product or brand in consumers’ minds.
Advertising supply chain between marketers and online publishersThe marketplace will set
supply and demand, communicate values and pricing, encourage innovation, meet needs, etc.
If the supply/demand thing gets out of whack, then the marketplace will correct it. Supply can
also help your company increase awareness, spread your message and champion your cause
 through various advertising vehicles available.

Contribution to GDP

The growth of the advertising industry is highly dependent on the penetration of various
media platforms. India, with its developing economy, provides numerous opportunities to
advertisers to promote their products and services through the expanding media channels
in the region. The economic growth has also led to an increase in the spending power of
a significant portion of the population, creating an affluent brand conscious consumer-
base. As a result, the companies are focusing on creating a strong brand-image for
themselves by advertising extensively.
Over the next few years, the Indian advertising market is projected to be the fastest-growing
advertising market in Asia, after China. This growth can be attributed to a number of
favorable factors. One of the primary factors is the rapid penetration of Smartphone’s and
internet in the country which facilitates the use of digital advertising. Increasing population and
favorable government regulations are some of the other growth driving factors. According to
the report, the market is further expected to exhibit strong growth during the forecast period.
Advertising market is likely to grow at 14 percent to Rs 80,678 crore in 2019, the fastest
growing market globally, driven by strong macroeconomic factors, general elections and the
Cricket World Cup 2019, according to global media agency GroupM.
The growth in ad spends in 2019, it noted is nearly two times of the estimated forecast of 7.5
percent.
India will be the 10th largest market in ad spends and third highest contributor to the
incremental ad spends, only behind China and USA and the tenth fastest growing country with
respect to ad spends across the globe. Among the sectors, FMCG, auto, retail, are expected to
contribute to two-third of ad expenditure in 2019.

Revenue generation

The Indian Media and Entertainment (M&E) sector reached Rs 1.82 trillion (US$25.7 billion)
in 2019. Digital subscription revenues more than doubled from 2018 levels and digital
advertising revenues grew to command 24% of total advertising spend. Digital media overtook
filmed entertainment in 2019 to become the third largest segment of the M&E sector. While
the exact impact of Corona virus is not yet known, if the current state of lockdown continues
for over a month, the sector could be looking at flat growth. A 3-month lockdown could lead
to a de-growth of 25%. The Indian Media and Entertainment (M&E) sector reached Rs 1.82
trillion (US$25.7 billion) in 2019, a growth of 9% over 2018 states the FICCI EY report ‘The
era of consumer A.R.T. – Acquisition Retention and Transaction,’ launched today. With its
current trajectory, the M&E sector in India is expected to cross Rs 2.4 trillion (US$34 billion)
by 2022, at a CAGR of 10%.

However, FICCI and EY clarified that the findings of this report had not taken into
consideration the rapidly evolving impact of Covid-19 on the industry. While television and
print retained their positions as the two largest segments, digital media overtook filmed
entertainment in 2019 to become the third largest segment of the M&E sector. Digital
subscription revenues more than doubled from 2018 levels and digital advertising revenues
grew to command 24% of total advertising spend.

The sector continues to grow at a rate faster than the GDP, driven primarily by growth in
subscription-based business models and India’s attractiveness as a content production and post
production destination.

The rapid proliferation of mobile access is enabling on-demand, anytime-anywhere content

consumption nationwide. With a population of 1.3 billion, a tele-density approaching 89% of
households, 688 million internet subscribers and nearly 400 million smartphone users, India’s
telecom industry is poised to become the primary platform for content distribution and
consumption. India ranks as one of the fastest-growing app markets globally, where
entertainment apps are driving significant consumer engagement.

Online gaming retained its position as the fastest growing segment on the back of transaction-
based games mainly fantasy sports, increased in-app purchases and a 31% growth in the
number of online gamers to reach around 365 million.

Uday Shankar, Vice President, FICCI and Chair, FICCI Media and Entertainment Division,
said, “Riding the wave of exponential progress made towards digital accessibility and
adoption, the M&E industry has been a forerunner of a dynamic and inspirational India. New
products and business models are being imagined to capitalize on the rise in media
consumption. Global players are recognizing the need to build India-centric offerings. The
coming years are likely to usher in greater innovation in content formats, means of
dissemination, and business models.

“Ashish Pherwani, Partner and Media & Entertainment Leader, EY India, stated, “The M&E
sector witnessed a surge in content consumption as digital infrastructure, quantum of content
produced and per-capita income increased in 2019. Driven by the ability to create direct-to-
customer relationships, the sector firmly pivoted towards a B2C operating model, changing the
way it measured itself. As entertainment and information options grew and choice increased
the era of consumer Acquisition, Retention and Transaction (ART) redefined the media value
chain leading to the emergence of many new trends and strategies across content, distribution,
consumption and monetization.”

“The Coronavirus outbreak will have a significant adverse impact on the sector, the situation
is still evolving both in India and many parts of the world, the scale of the impact cannot be
estimated immediately,” he added.
He further stated that if the lockdown goes beyond a month, the M&E sector can expect a flat
growth. Moreover, if the lockdown is extended to 3 months, it could lead to a de-growth of
25% for the sector.
Key findings:
Television: The TV industry grew from Rs 740 billion to Rs 788 billion in 2019, a growth of
6.5%. TV advertising grew 5% to Rs 320 billion while subscription grew 7% to Rs 468
billion. Regional channels benefited from the New Tariff Order as their consumption
increased by over 20% in certain cases. General entertainment and movie channels led with
74% of viewership. On the back of several key announcements by the central and state
governments such as Article 370, the Citizenship Amendment Act, and a general election, the
news genre witnessed a growth to almost 9% of total viewership, up from 7.3% in 2018. In
sports cricket emerged as the big winner in 2019 as it accounted for over 80% of the sports
viewership, up from 70% last year, due to the ICC World Cup.
Key insights - Television will remain the largest earner of advertising revenues even in 2025,
approaching Rs 570 billion. Viewership of regional language channels will continue to grow
and reach 55% of total viewership in India as their content quality improves further. Content
viewed on smart TV sets will begin to reflect that consumed on mobile phones, providing a
window for user generated content companies and other non-broadcasters to serve content on
the connected television screen.

Print: Despite a 3% revenue de-growth at Rs 296 billion, print continued to retain the second
largest share of the Indian M&E sector. Circulation revenues increased by 2% to Rs 90 billion
as newspaper companies tactically increased prices in certain markets. Advertising revenues
fell 5% to Rs 206 billion in 2019 as AdEX volumes fell by 8%. Margins improved as
newsprint cost measures were implemented and companies benefited from the reduction of
newsprint prices.

Key insights – 2019 witnessed a significant growth in digital news consumers over 2018
when 300 million Indians consumed news online. Most large print companies had a defined
digital business, with two companies crossing Rs 1 billion in digital revenues. Digital
subscription, though nascent, has increased as several publications have put digital products
behind a pay wall.

Digital media: In 2019, digital media grew 31% to reach Rs 221 billion and is expected to
grow at 23% CAGR to reach Rs 414 billion by 2022. Digital advertising grew 24% to Rs 192
billion driven by increased consumption of content on digital platforms and marketers’
preference to measure performance. SME and long tail advertisers increased their spends on
digital media as well. Pay digital subscribers crossed 10 million for the first time as sports and
other premium content were put behind a pay wall. Consequently, subscription revenue grew
106% to Rs 29 billion. Digital consumption grew across platforms where video viewers
increased by 16%, audio streamers by 33% and news consumers by 22%.

Key insights: By 2020, OTT subscription market will approximate 10% of the total TV
subscription market (without, however, considering data charges).We estimates over 40
million connected TVs by 2025, which will provide a huge opportunity for content creators to
reach family consumers. Better bandwidth will drive large screen consumption. By 2025, 750
million smart phone screens will also increase the demand for regional, UGC and short
content, creating a short video ecosystem that can create significant employment. The battle
for content discovery will intensity and move to the unified interface.

Films: The Indian film segment grew 10% in 2019 to reach Rs 191 billion driven by the
growth in domestic theatrical revenues and both rates and volume of digital/ OTT rights sold.
Domestic film revenues crossed Rs 115 billion with Gross Box Office collections for Hindi
films at RS 49.5 billion – the highest ever for Hindi theatricals. Overseas theatricals revenues
fell 10% to Rs 27 billion despite more films being released abroad primarily as films with
superstars didn’t perform as well in 2019. 108 Hollywood films were released in 2019 as
compared to 98 in 2018. The gross box office collections of Hollywood films in India
(inclusive of all their Indian language dubbed versions) grew 33% to reach Rs 16 billion. As
single screens continued to reduce, the total screen count decreased by 74 to 9,527.

Key Insights: Digital rights continued to grow in 2019 with an increase in revenues from Rs
13.5 billion in 2018 to RS 19 billion in 2019. Digital release windows shortened with some
movies releasing on OTT platforms even before their release on television. In-cinema
advertising grew marginally to RS 7.7 billion in 2019 as multiplexes and advertising
aggregators started signing long-term deals with brands. Seventeen Hindi films entered the
coveted RS 100 crore clubs in 2019, which is the highest ever. Interestingly, six movies made
it to the Rs 200 crore clubs in 2019, as opposed to three in 2018. The future will be driven by
immersive content (technology and VFX rich) experiences to drive theatrical footfalls and
some genres of films could migrate to home viewership only. We can expect to see creation of
a segmented Hindi-mass product for the heartland at low ticket prices.
 1.1 LEVEL AND TYPE OF COMPETION – FIRMS OPERATING IN THE
INDUSTRY

Advertisers are increasingly allocating more of their budgets for online ads at the expense of
TV and print media. While TV and online ads will continue to dominate the global ads market,
print ads will be relegated to last spot and have the smallest share in the industry.
More and more of the TV ad market is digital, taking advantage of new technology to
personalize ads to the viewing audience.  But digital is outperforming traditional TV ads –
partly because of the weakness of the traditional TV business model – audiences are declining,
lured away to ad-free video services like Netflix and Amazon – and partly because the digital
ads are more effective at reaching the desired audience.  Traditional TV remains best for
marketers seeking to launch a new product or seeking quick access to a mass audience, but for
other marketers trying to find consumers as they are making purchasing decisions, digital is
the right choice.