The advertising industry in India, pegged at $5 billion, is set to grow at twice the growth rate of the national economy to reach a size comparable to the $43 billion advertising industry of China and $145 billion in the US, said leaders of the ad industry who have come together for the 6th annual ad festival, Goafest 2011.

“In a growing economy where markets, brands and communication are growing, growth is bound to happen. Also, macro factors like rising literacy level as mentioned in this year’s census, and the spread of digital and mobile media will be key drivers,” said Ashish Bhasin, chairman, Carat Media.

Digital media is definitely the way forward for brands, said Mayank Pareek, managing executive officer (marketing & sales), Maruti Suzuki. “We have increased our digital spend by 100 per cent and I keep on insisting on my agencies to work more on digital media but not all of them seem to be keen on investing in it.”

Bhasin further said, “Although we often contest the power of digital media given the low penetration in our country, we should not rule out the fact that digital is getting accepted among masses in India. Today, Facebook and Twitter are the staple among all new-age consumers who are our prime target.”

Rajiv Dube, director, group corporate services, Aditya Birla Group, said that synchronisation of functions of agencies can be useful for the industry. “Rather than having different agencies for different functions like a separate creative agency, separate digital agency, synchronisation of functions under one roof will definitely help the client side better.”

Although the growth potential is huge, the experts agreed that the profit margins of the agencies have declined over the years and the industry has failed to attract and retain the right kind of talent. For this they blamed the rigidity in functioning and mindset of agencies.

Arvind Sharma, chairman and CEO, Leo Burnett, said, “Earlier there were only the FMCG clients who were at the heart of the business and all we needed to do was to come up with a TV campaign once a year, but that age has gone. Today, there are many clients and many media. But the agencies are not ready to take the risk of experimenting with newer media.”