Events and activation industry grown at 15% to INR 4,258 crore in 2014-15: EY Report
Delhi, 08 April, 2015
- Organized events industry to grow to INR 5, 779 crores by 2016 – 17
- Staff strength has increased from an average of 55 employees in 2011-12 to 84 employees in 2014-15 resulting in an increase in payroll costs from 13% to 18% of total costs
- Margins are expected to decline from an average of 16% to 13% over the next two years mainly due to a growth in overall costs by 12%, and more particularly in payroll costs by 15%, as companies expect to increase their average headcount from 84 to 104 employees.
The events and activations industry has grown at 15% annually from INR 2,800 crore in 2011-12 to INR 4,258 crore in 2014-15 according to an EY – EEMA (Event and Entertainment Management Association) report titled ‘Making experiences in India: The events and activations industry’. The report, released today, states that while managed events remain the largest service offering, IP (Intellectual Property) and digital events are growing at a faster rate than managed events. The key strengths of the industry remains its ability to get things done, and the ideation and efficiency with which it operates. That said, there is a need for the industry to work on acquiring the right talent, managing costs, demonstrating ROI to marketers and increasing transparency in operations.
Ashish Pherwani, Partner and Media & Entertainment Advisory Leader, EY India says, “The events and activations industry holds great potential and this is evident from the considerable growth that the industry witnessed over the last few years. Our report aims to provide insights around key strengths of the industry and the challenges it faces. The report also looks into the opportunities for M&A transactions, implications around taxation and corporate governance.”
Sabbas Joseph, President, Event and Entertainment Management Association says, “With a new government at the helm, there is a growing interest in the culture and people. The events and activations industry is best poised to capitalize on this opportunity and there is a crying need for a new world order - one in which event companies work along with government to create an events calendar that drives tourism and related industries.”
According to the report, the events and activations industry is expected to grow to INR 5,779 crores by 2016-17. This growth will be on the back of marketers increasing their below the line (including digital) spends to 21% of their total marketing spends. The growth will also be led by personal events, MICE (meetings, incentives, conferences and exhibitions), activations and sports.
Non-metro markets are expected to increase in importance as marketers look to tier II and tier III cities for incremental growth, states the report. Digital events and activation is also expected to grow significantly on the back of smart phone penetration, internet availability and the cost efficiency of such campaigns for marketers.
While the industry has reported very few M&A transactions over the last few years, there exists scope for consolidation. Valuations are driven by IPs owned, advertising agencies’ interest in activations, and digital events and sports leagues. On the taxation front, double taxation, taxation across multiple states, and varying and inconsistent application of different taxes are some of the challenges faced by the industry. Also, the introduction of Goods and Services tax could have a significant impact on the industry in terms of rates and implementation across multi-state activities.
The report also states that the introduction of the new Companies Act, 2013, will result in some key changes in internal financial controls, compliance with more than 60 acts and regulations, and implementing a vigil mechanism to identify undesirable activities.
EY also conducted a workshop with CEOs of the industry that resulted in Vision 20:20 for the industry’s future success. The industry needs to work towards the following initiatives:
- Internal aspects: Improve the quality of talent through skill definition for various jobs, skill development, job security, compensation benchmarking and implementation of health and safety standards. The industry must build robust policies, processes and information systems to manage business efficiently and safely, and implement technology and automation.
- External aspects: The industry needs to work on its positioning to marketers, build an account focus and demonstrate returns more effectively. There is a need to improve the supply chain by developing quality vendors, implementing a system of vendor accreditation and improving overall risk management. The regulatory ecosystem needs to be made more conducive by simplifying taxation, permissions and copyright issues.
- Strategic aspects: The industry must build more IPs focused on defined communities of interest to marketers, and embrace the opportunity provided by marketers’ increasing spends on digital media.
The report is based on the findings of a survey conducted via extensive discussion with over 60 respondents including the heads of events and activation companies across the country, along with inputs from advertisers and sponsors.
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