Saturday, May 20, 2017

Pakistan Consumer Boom Driving Media Advertising Revenue

Rising buying power of rapidly expanding middle class in Pakistan drove the nation's media advertising revenue up 14% to a record Rs. 76.2 billion ($727 million) in FY 2015-16. Half of this ad spending (Rs. 38 billion or $362 million) went to television channels while the rest was divided among print, outdoor, radio and digital media.

Media Ad Revenue by platform. Source: Aurora











Digital media spending rose 27% in 2015-16 over prior year, the fastest of all the media platforms. It was followed by 20% increase in radio, 13% in television, 12% in print and 6% in outdoor advertising, according to data published by Aurora media market research

HUM TV channel had the highest revenue at Rs. 3.84 billion, followed by ARY Digital's Rs. 3.802 billion, PTV Sports Rs. 3 billion, Geo Entertainment Rs. 2.93 billion, Geo News Rs. 2.6 billion, Urdu1 2.5 billion, PTV Home Rs. 2.5 billion, Samaa Rs. 1.9 billion, and Dunya News, ARY News and Express News Rs. 1.8 billion each.

The television channels with the highest revenue increases in 2015-16 were: Samaa (88%), Geo News (82%), Geo Entertainment (81%) and ARY News (76%).

The current media boom in Pakistan started in early 2000s when Pakistan had just one television channel, according to the UK's Prospect Magazine. Today it has over 100. Together they have begun to open up a country long shrouded by political, moral and religious censorship—taking on the government, breaking social taboos and, most recently, pushing a new national consensus against the Taliban. The birth of privately owned commercial media has been enabled by the Musharraf-era deregulation, and funded by the tremendous growth in revenue from advertising targeted at the burgeoning urban middle class consumers.

Pakistan has managed to significantly reduce poverty and rapidly grow its middle class since 2001 in spite of major political, security and economic challenges. The foundation for the rise of the middle class and the electronic media boom was laid on President Musharraf's watch by his government's decisions to invest in education and infrastructure projects and deregulate the media that led to the expansion of both human and financial capital. My hope is that the continued improvement in security situation and implementation of China-Pakistan Economic Corridor (CPEC) related projects will bring in higher long-term investments and accelerate Pakistan's progress toward prosperity for all of its citizens.

Related Links:

Haq's Musings

Credit Suisse Wealth Report 2016

Pakistan: A Majority Middle Class Country

Pakistan Mass Media Boom

State Bank: Pakistan's Actual GDP Higher Than Officially Reported

College Enrollment in Pakistan

Musharraf Accelerated Development of Pakistan's Human and Financial Capital

China-Pakistan Economic Corridor

12 comments:

Riaz Haq said...

#WorldBank sees #Pakistan FY17 #GDP #Growth at 5.2%, best in 9 yrs. Forecasts 5.5% in FY18, 5.8% FY19 http://reut.rs/2pW7072 via @Reuters

May 20 The World Bank on Saturday forecast Pakistan's GDP growth in fiscal year 2017 to climb to 5.2 percent, the highest expansion rate in nine years, boosted by consumer confidence and fiscal reforms.

Growth is expected to accelerate to 5.5 percent in FY18 and 5.8 percent in FY19, according to a World Bank report released on Saturday.

But it warned that weakening trade and fiscal balances made it crucial to continue reform efforts and to develop skills to find jobs for the country's growing youth population.

"Pakistan's accelerating growth is good news and reflects the country's success in building confidence. But the pace of reforms has slowed and it is important for the structural reforms to accelerate," said Illango Patchamuthu, World Bank country director for Pakistan.

The World Bank forecast came the same day as Pakistan's central bank estimated slightly higher real GDP growth in FY17 of 5.3 percent, which would represent a 10-year high.

Private sector credit showed a net expansion of 503 billion rupees ($4.81 billion) during the nine months through April, well above the 334 billion-rupee expansion recorded in the corresponding period of last year, the central bank said in a statement.

The World Bank's twice-yearly report was released in Lahore on Saturday in collaboration with Lahore School of Economics.

It said a moderate increase in investment was expected to supplement growth, driven primarily by public and private consumption.

The report said there need to be more technical and vocational training programme to boost job prospects for the "youth bulge". Sixty percent of Pakistan's estimated population of 190 million is under the age of 30.

It emphasized that federal and provincial governments must work together on reforms, since many policies are handled at the province level.

"Effective collaboration between federal and provincial governments will be crucial if Pakistan has to deliver on its growth potential" said Muhammad Waheed, World Bank senior economist for Pakistan. (Editing by Andrew Roche)

Riaz Haq said...

Ad spending seen growing at 15.5% in 2016, driven by digital
GroupM estimates show digital advertising will account for 12.7% of all ad spending in 2016, up from 9.9% in 2015

http://www.livemint.com/Consumer/LjI3ZO4nYkN8DNdyMIlJlJ/Ad-spending-to-grow-at-155-in-2016-higher-than-2015s-14.html

Print advertising will expand 6%, compared to 5.2% last year. Photo: Priyanka Parashar/Mint

New Delhi: Ad spending in India will grow 15.5% in 2016 to Rs.57,486 crore ($7.5 billion) with digital advertising expanding at the fastest pace of 47.5%, media agency GroupM, part of global advertising group WPP Plc., said in its This Year Next Year report released on Tuesday.

Last year saw ad spending grow by 14.2%, higher than GroupM’s estimate of 12.4%, to Rs.49,758 crore.

Digital advertising will account for 12.7% of all ad spending in 2016, the agency estimated, up from 9.9% in 2015. Print media’s share will shrink from 32.4% to 29.7%. And TV will remain the dominant medium with a 47.1% share, up from 46.3%.

“India is the fastest growing ad market among all the major markets of the world. 2015 was the best year for ad spend growth we’ve had in the last five years,” said C.V.L. Srinivas, chief executive at GroupM South Asia. “While global headwinds are building up in the new year, there are a number of positive factors that will help the Indian ad sector grow at higher levels in 2016.”

Consumer product, automobile and e-commerce companies will continue to drive growth (as they did in 2015) and telecom, banking and finance, and the government sector will join the party, according to Srinivas. Growth is also expected to get a fillip from events such as the T20 World Cup cricket tournament, Indian Premier League (IPL) and state elections. “While digital media will remain the fastest growing platform, India is one of the few large markets where all traditional media platforms will show positive growth,” added Srinivas.

Riaz Haq said...

Key Highlights:

The overall total minutes of advertising in 2016 decreased by 17.75% compared to 2015.
Comparing the quarter-wise total minutes spend; the trend remains mostly similar across Q1, Q2 and Q4. Whereas Q3 of 2016 witnessed an increase of 4% over 2016.
Top 10 categories have maintained their positions in year 2016 with minor change in % share in total minutes of advertising in each category.
The top advertisers on TV for 2016 were Unilever (20%), P&G (7%), Reckitt Benckiser (6%), Pepsi Cola (6%), Coca Cola (5%) and Nestle (4%). There is a increase of 6% seen in advertising of Unilever brands in 2016.
Coca Cola remained the top brand in 2016 with increased of 1% as compare to 2015.
In both years top three channels including Abb Takk (4%), News one (4%) and Tv one (4%) remains at the top.
The most significant increase of share of advertising across news channels is witnessed by Express News by 2%. Abb Takk has dropped its first position in 2015 and secured third position in 2016.
Similarly, for Entertainment channels, major change is seen across Express Ent which came from 10th place in 2015 (4%) to 2nd place in 2016 (8%).
In 2016, channel Jalwa remain the top position and increased its advertising spend share by 14% compared to 2015.
Health Tv and Nickelodeon has visibly lost its % of share spent while Filmazia has maintained a top spot position with an increase of 8%.
News and entertainment segments remain most popular with their share of 40% and 42% respectively throughout 2015 and 2016.
The most popular time band for both 2015 and 2016 remains prime time slot (7pm to midnight) and afternoon (12pm to 5pm).

http://www.pas.org.pk/tv-advertising-yearly-industry-report-2016/

Srini said...

From your comments the ad revenue comparison between two countries is more than 10 fold in India's favor. $727 million and $7.5 billion - what do you attribute the difference to because population is approximately 6.5 fold.

Riaz Haq said...

Srini: "From your comments the ad revenue comparison between two countries is more than 10 fold in India's favor. $727 million and $7.5 billion - what do you attribute the difference to because population is approximately 6.5 fold."


To me it says that the Pakistani companies are spending their ad budgets more effectively to reach more people with fewer dollar per customer.

Riaz Haq said...

Facebook and Google will eat up 70% of advertising revenue by 2020

https://www.techjuice.pk/facebook-google-eat-70-advertising-revenue-2020/


Press Gazette, a UK-based trade website for newspapers and magazines, is launching a campaign to stop Facebook and Google from destroying the journalism industry.

According to Press Gazette, Facebook and Google have created a strong monopoly in the advertising industry of UK. Owing to this monopoly, the journalism industry is badly affected as a major chunk of advertising revenue is going to this duo.

The advertising industry of UK was 20 billion pounds in 2015. In the past decade, the revenue sharing to the newspapers has gone from half to one-tenth. This is an alarming situation for publishers.

Press Gazette said, “The Government would not allow such a duopoly to stand. Campaigners would call for them to be broken up in the name of media plurality.”

Due to dip in revenues, a major chunk of news publishers are slashing the salaries of employees and the number of journalists being employed has been thinning down as well.

In the past one decade, the newspaper has increased their reach and readership but this scale hasn’t positively affected their revenue graphs.

Riaz Haq said...

Ad spending in India to grow at 10% in 2017, says GroupM report
Digital media continues to be the fastest medium registering a 30% ad spending growth rate, while television remains the medium with a growth rate of 8%

http://www.livemint.com/Consumer/ZMMO64fyHGq0VT0Lbb8qJJ/Ad-spending-in-India-to-grow-at-10-in-2017-GroupM-report.html

Advertising expenditure in India is expected to grow at 10% to reach Rs61,204 crore in 2017 over 2016, according to a forecast by WPP-owned media agency GroupM in its report This Year Next Year (TYNY).

This is lower than the revised estimates of 12% that GroupM put out for 2016. The ad spending stood at Rs55,671 crore last year.

The report, released on Tuesday, stated that the ad spends in 2017 will pick up from March and April, fuelled by a stable recovery post demonetization. Sectors such as auto, media and e-wallets will contribute to this growth in conjunction with government and political parties increasing their ad spends in view of elections in several states.

In terms of media channel growth, digital continues to be the fastest medium registering a 30% growth rate to reach Rs9,490 crore, while television remains the largest advertising medium with a growth rate of 8%.

With internet speeds rising and over-the-top (OTT) video-streaming businesses gaining popularity, ad spends on these platforms will grow.

As more and more advertising money shift to digital, there will be a high emphasis on making the medium more accountable with viewability metrics and outcome-based optimization.

India is one of the few large markets where all traditional media platforms will grow, the report said. Television advertising is expected to grow 8% with Free to Air (FTA) channels adding more inventory and high definition (HD) content gaining ground. The market will also see a consolidation of niche channels.

Anonymous said...

This mean government is the biggest commodity in Pakistan as PMLN lead government is spending minimum of 60% of total money spent on advertisement in Pakistan.

Riaz Haq said...

Anon: "This mean government is the biggest commodity in Pakistan as PMLN lead government is spending minimum of 60% of total money spent on advertisement in Pakistan."

Given that in the FY 2015-16, the Government of Pakistan was the fourth largest advertiser in the print media in terms of product categories (source: Aurora Fact File November-December 2016), the importance of the Government as a client for newspapers cannot be overestimated.

Traditionally, governments have always advertised heavily in the print media, particularly during the 80s and 90s. A major reason is that tender advertising, as per the Public Procurement Regulatory Authority (PPRA) rules must be published in print, and tenders constitute a considerable chunk of the total government advertising. However, since the late 90s, the share of government advertising in print has reduced considerably. According to Umer Mujib Shami, Secretary General, APNS, “the television-print break-up at one point used to be about 50-50; however, in recent years it has changed, with print’s share going down to 25 to 30%.”

There have been ongoing negotiations between the APNS and the Government to rectify this situation. Dr Tanvir A. Tahir, Executive Director, APNS, believes that the importance of newspapers as a medium cannot be ignored. This is particularly true when it comes to information dissemination and influencing opinions of key decision-makers in diplomatic and bureaucratic circles. It is on this basis that the APNS has asked that the Government increase the share of the pie by fixing its advertising spend at two percent of the cumulative development budget. Furthermore, the APNS has asked that the budget allocation between media should follow a 50-40-10 proportion, for electronic, print and digital respectively, as is done in other countries such as India. The APNS stance is that this will ensure that these policy changes will continue to allow the print media to play its role in informing, educating and influencing public opinion.

http://aurora.dawn.com/news/1141941

Riaz Haq said...

From Seeking Alpha by Bader Al-Hussain


https://seekingalpha.com/article/4056008-facebook-higher-growth-digital-ad-spending-compels-high-valuations


Summary

Global digital marketing would grow to $335 billion.

Facebook has a market share of 14%.

Base case warrants for 23% upside.

(Facebook) Revenue would lead the valuations

My narrative for double-digit growth in the future revenue of FB stems from the following arguments:

The ability of the company to pursue aggressive growth by partnering with local mobile network companies of large developing nations such as Indonesia, Pakistan, India, and Brazil.

For instance, in India, which is one of the largest populations with an increasing broadband penetration rate, Facebook has partnered with Reliance Communications and Airtel to offer basic Facebook internet services for free. Similarly, in Pakistan, Facebook partnered with Telenor, which is the second largest operator in the country. In Indonesia and Brazil, FB has partnered with XL Axiata and Oi respectively. Further, Facebook has similar arrangements with TMN in Portugal, Three in Ireland, Vivacom in Bulgaria, Bakcell in Azerbaijan, SMART in the Philippines, STC in Saudi Arabia and much more.

It is to be noted that more than 3 billion people of the world reside in these countries, accounting for ~40% of the world population. I expect a large portion of expected growth would come from South Asia and Asia-Pacific region.

Riaz Haq said...

#Pizza Hut set to open 75 new outlets to double its restaurants in #Pakistan - The Express Tribune #FastFood
https://tribune.com.pk/story/1414386/pizza-hut-set-open-75-new-outlets-pakistan/


KARACHI: American fast food giant Pizza Hut has decided to double its presence in Pakistan, the company and its local partner announced on Friday, adding that they would open 75 new outlets at an approximate investment of $3.4 million.

During a ceremony at the US Consulate in Karachi, a new franchise agreement was signed between Yum! Brands – a Fortune 500 company that owns Pizza Hut – and its local partner MCR. The deal was aimed at expanding Pizza Hut’s presence in Pakistan and adding to its network of 75 outlets over the period of next five years.

Robot waiter serves food in Multan’s pizza outlet
While the official press release stated that the agreement commits to an expansion of “150 new Pizza Hut units in Pakistan”, Pizza Hut (Middle East) General Manager Randall Blackford confirmed that the company is targeting a total number of 150 outlets across the country.

“We are currently operating at almost 75 units in Pakistan and we are going to double this number in the next four to five years,” he told The Express Tribune.

“Pizza Hut has a long list of first milestones, which include the first food product to be sold over the internet and the first food product to be delivered to outer space. Therefore, it is natural that we want to reach the milestone of first restaurant chain to have 150 outlets in Pakistan,” he added.

Inaugurated in December 1993, Pizza Hut was the first international franchise to enter Pakistan and also the first one to expand its presence in all four provinces of the country. It currently operates under MCR, a Pakistani company that is part of the services sector for the past 25 years.

“Pakistan is a great market for us and we have made so much progress over the years that we want to double it again,” said Blackford, when asked about the motivation behind expansion. “Additionally, Pizza Hut is a massive revenue-generating brand especially in this part of the world, hence our eagerness to capitalise on the market.”

Meanwhile, MCR President Aqueel Hasan said that the agreement presents a massive opportunity for Pakistan, adding that the country was looking at approximately $3.4 million on average in investment alone from the deal. “The amount of investment varies between the size of the proposed outlets, but the figure is anywhere from $300,000 to $600,000 per unit,” he said. Moreover, the agreement has been slated to generate around 3,500 jobs, excluding the spill-over effects from the expansion.

Social media battle erupts over pineapple on pizza

“This is a huge investment not only in monetary terms, but also it terms of skilled labour force available in the economy,” said Blackford. “Each outlet has a couple of dozen people working, so hiring them and training them – that is a massive investment in time.”

Riaz Haq said...

Ogilvy #India, #Pakistan co-create #Ramzan ad for spice #brand #Shan Foods. #advertising #Ramadan

http://www.livemint.com/Consumer/8j3UNzkKpZzW72dolTE6CL/Ogilvy-India-Pakistan-cocreate-Ramzan-ad-for-spice-brand-S.html

Shan Foods, Ogilvy India and Pakistan will also set up ‘neighbourhood tables’ in two cities of Pakistan where people will be invited to share a meal

Food opens the door to people’s hearts, breaking barriers of language, culture and nationality. Ogilvy India and Ogilvy Pakistan highlight this in a heart-winning campaign for Shan Foods, one of Pakistan’s biggest brands of spices and recipe mixes. Set up in 1981 by Sikander Sultan, Shan now has a presence in over 65 countries, including India.

The campaign, rolled out weeks before Ramzan, aims to bring new neighbours together using the power of food. Shot in Lahore, Pakistan, the film opens with a Chinese couple who has recently moved into the neighbourhood. The wife, still adjusting to the new place, complains she cannot make new friends locally considering they don’t even eat the same food. Minutes later she asks the husband to drop her off at the supermarket where she buys biryani masala and prepares the flavoured rice dish to break the ice with her neighbours. Surprised at her skill (aided by Shan, of course), the women in her neighbourhood open their homes and hearts to her with great warmth.

“The neighbourhood comes alive by sharing food. It was a nice concept to bring back in today’s busy world that we live in. There are many Chinese expats living in Lahore hence we decided to tell the story from their perspective. The product is weaved in the story beautifully and highlights how Shan Foods brings out the ease of cooking. We collaborate on lot of projects with Ogilvy Pakistan and the credit also goes to the client (Shan Foods) to believe and own the work we do,” said Sukesh Nayak, executive creative director, Ogilvy Mumbai.

Apart from television and digital, the campaign will look at on-ground activation. The brand along with its agency will set up “neighbourhood tables” in two different cities of Pakistan where people will be invited to share a meal.

Noting that the space of food eliminating cultural differences has been explored, Deepak Singh, chief creative officer, The Social Street, said, “The insight of neighbours connecting over food is quite true and relevant to us Indians as well. I also quite like the plot, the cast and particularly the music.” Singh also noted that since food is an integral part of any festival, and Ramzan being the holy month followed by Eid which is one of the biggest festivals in Pakistan, the on-ground activity to set up “neighbourhood tables” will connect the brand with consumers.