India was the exception to the global rule, the government firmly assured its citizens. So when the global financial crisis rudely interrupted that complacency, courtesy a severe liquidity crunch that sucked cash out of the money markets, nobody was prepared to cope with the misery that followed. Real estate and exports were the worst hit but others, too, were about to enter a prolonged slump, with not even a glimmer of light visible at the end of the tunnel. Taking a cue from governments and central banks around the world, the finance ministry and the Reserve Bank of India then embarked on a series of stimulus measures to help ease the worst effects of the crisis. Interest rates were slashed, taxes were cut, measures that are having an effect on some areas of the economy. This primer, which is full of arrows pointing down, shows what happened across some of the key sectors.
ADVERTISING EXPENDITURE
Dragged down by slump
The economic downturn has put the brakes on the Indian advertising industry with the pace of growth in advertising expenditure having slowed in 2008, after five years of rapid growth rates averaging 17-18% per year. After expanding 21% in 2006-07, advertising expenditure slowed to a growth pace of 16% in the next year and further to 10% in 2008-09. Of the total Rs22,288 crore advertising expenditure in 2008, print and TV constituted 88% of the pie, but the growth rates for the two media verticals fell significantly from 15% in 2007-08 to 7% in 2008-09 for TV, and from 14% to 12% for print in the same period, noted a study by media buying and planning agency Lintas Media Group, part of the Interpublic Group. The Internet was the fastest growing medium at 56%.
What’s worse is that 2009 looks even more bleak for the advertising industry, which has faced its first bout of negative growth in the first half of this year. According to a media spends projection report by Madison Communications Pvt. Ltd in association with trade publication “Pitch”, the advertising expenditure for the first half of 2009 was Rs7,452 crore, which is Rs1,414 crore less than advertising expenditure for the same period last year. Industry professionals believe even advertising expenditure achieved this year have been all thanks to the two mega events, the Indian Premier League and the general election that bumped up spending, which could have otherwise been even worse, leaving the industry grappling with a crisis. By the year end, the overall advertising expenditure is not likely to cross Rs20,000 crore, marking the end of what has been a dream run for the advertising industry.
BUSINESS CONFIDENCE
Losing faith in the economy