INDIAN ADVERTISING: UPS AND DOWNS

Who else could experience the ongoing downturn in advertising better than a media sales guy, when advertisers are forced to cut down their advertising expenses throughout.

At the start of year 2008, the outlook for advertising and media industry was very glossy. But finally the year ends with crests and troughs for the industry. Last year was the year when a consumer got choices – many new editions of ‘print’ got launched, new channels like 9X, NDTV Imagine, Colors pumped lots of currency into the system as they got heavy advertiser’s support. It was a great year with sports properties such as the Indian Premier League (BCCI’s T20 cricket event), the Zee-promoted Indian Cricket League, F1 and marathons being added to the list.

During the year 2008 :-
- Radio advertising continued to do well.
- Print advertising was the hardest hit due to slowdown and the increase in advertising rates.
- Digital media (Internet, mobile, digital signage) grew the most and will continue to do so as their RoI is far better and easily measurable. Analysts believe digital will grow by over 80% YoY.
- The media industry has been growing in double digits for more than a decade. It grew by over 20% in 2007–08 (Rs 19,700 crore). But in FY09, the growth rate may go down to a single digit (7%-8%).
- For the current fiscal, the hope is from DTH, telecom, education and healthcare segment.

Recently I was going through some data on advertising spends and realized that financial segment has cut advertising budgets (value) by nearly 40%. As per a data, the advertising by Indian banking industry on television has come down by 3% in 2008 Vs 2007, loan related advertising dropped by over 35% and mutual fund is down by more than 80% whereas the Insurance companies increased their spends by 70%! This (increase in advertising spends by Insurance companies) might be due the entry of new players and currently insurance companies are practicing advertising through out the year (may be due to the launch of their new products every now-&-then) and not only during the first three months of the calendar year.

If I am not wrong the financial advertising consists of about 5% of total TV advertising market (of more or less Rs 5000 crore). I realize, Max NY Life Insurance Company is very aggressive in their ad spends for recent past (eg. Max was exclusive telecast sponsor of IPL), ICICI Prudential and Bajaj Allianz also spend significantly in 2008 & even presently.

November 2008 was assumed to be one of the toughest periods for print, here is some data for reference (Volume wise, first 7 days of Nov’08 Vs first 7 days of Oct’08) –
Top Print Categories Variance%
Social ads -43%
Education negligible
Branding -42%
Retail advertising -73%
Real Estate -67%
Auto -52%
Healthcare -18%
Banking -28%
Travel & Tourism -40%
Computer Education 3%
TOTAL -44%

Many of the print media houses, currently taking corrective measures including slashing down their advertising rates. They are bound to take such steps assuming the current terrible impact on advertising can get inferior further – I remember an incidence from my professional experience, few years ago I asked for discount for a particular publication and after a lot of chasing around, the publication finally offered me a discount of mere 7% on their rate card (I was looking at anything above 12%, but the publication refused) and finally I had to dropped the publication out from the media plan, but now the same types of publications are sending their proposals to the media agencies at a discounted rate varying from 30% upto 80% and still they face pressure from media buyers and competition from their rivals!

I believe several national advertisers who were, till 2007-08, were opting for the main section of the newspaper are now thinking of moving towards city-centric supplements (to save the advertising cost); at the same time many magazines have now stopped their city-centric supplements like India Today suspended its health supplement ‘Pink’, Outlook stopped City Limits. There is a real tough time for luxury & lifestyle advertising – luxury / lifestyle is something which is mood driven rather than the need and when consumer’s sentiments get hit, the impact of the hit is felt on such advertising.

But I still feel that recession is not having only the bad impacts, it also improve many situations. When we had enjoyed our past good times, now is the time for us (in which ever industry we are working on) to realize the experiences of past, develop our strategies depending upon past & present experience and hope for a better tomorrow, going forward.

EMLOYERS / EMPLOYEES / ADVERTISERS / MEDIA CONGLOMERATES / CUSTOMERS MAY TAKE RECESSION AS AN OPPORTUNITY
this is the time when -

Employers will cut short inefficient employees;
Employees may get recognized in their own companies or opportunities in better organizations;
Advertisers may put endeavor to check efficiencies of their media vehicles;
Media houses will do enough brain storming to finalize their offerings to subscribers and advertisers;
Companies think of cutting down cost of production without compromising on product quality.
Customers may get expensive items for lesser price.