Advertising expenditure looks likely to grow 15-20% in 2010

Advertising expenditure looks likely to grow 15-20% in 2010
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First Published: Wed, Dec 30 2009. 08 57 PM IST

Holding on:Cadell says while the advertising industry globally has contracted by 10-11%, it has seen single-digit growth in India, where the traditional medium, the TVC (television commercial), still
Holding on:Cadell says while the advertising industry globally has contracted by 10-11%, it has seen single-digit growth in India, where the traditional medium, the TVC (television commercial), still
Updated: Wed, Dec 30 2009. 08 57 PM IST
Bangalore: Focusing more on online advertising and moving away from the current commission-based remuneration system will be the key challenges for the Indian communication and advertising industry in 2010, says Charles Cadell, chief executive officer of Lowe Lintas India Pvt. Ltd. Cadell, a British and New Zealand citizen, has worked in India for about two years and has earlier been in several crucial South-East Asian markets such as Thailand, Malaysia and Hong Kong.
The avid outdoorsman, who counts sailing and diving as his current hobbies, recently lost his pilot’s licence as he had to devote more time to his job. In an interview, Cadell talks about the challenges facing the industry and how his firm is gearing up to tackle them. Excerpts:
You have been in the Indian market for two years. How does it compare with other South-East Asian markets you have worked in earlier?
I was in Thailand in 1998 when that (Asian financial) crisis hit, then subsequently moved to Hong Kong where it followed. This time around, I am lucky to have been in the right place. While our industry globally has contracted between 10-11%, in India we have had single-digit growth rates. I would rather be here than anywhere else.
Holding on:Cadell says while the advertising industry globally has contracted by 10-11%, it has seen single-digit growth in India, where the traditional medium, the TVC (television commercial), still reigns. Hemant Mishra / Mint
Interestingly in India, while the media business has been shedding staff, the (advertising) agencies haven’t been (doing so). Obviously, they have been managing costs in other ways.
That is a crucial difference compared with the other markets where I have worked, where at the first sniff of tough times, businesses will go for (a reduction in) the headcount.
Also, the rush into the marketing services discipline, which has happened in other Asian markets, I don’t see that in India. Digital, direct and basically any one-to-one marketing will go through the roof during tough times. That didn’t happen to the extent I thought it would.
In India, the traditional media, the TVC (television commercial), is still god. This is in contrast with the developments happening in other parts of Asia and the rest of the world. In the UK, for instance, digital already has overtaken TV and other traditional media and (the same) would have happened in America if not for the slowdown.
Digital is still less than 5% of the total spends because of the insignificant broadband penetration in India. The market is not yet ready for it. But that is the way for the future and we (India) will go that way too.
At Lowe Lintas, we are trying to integrate digital into the very fabric of the agency. Even if its time has not yet come, even if it does not make financial sense, we will still go ahead. This is because when the change will come, it will be very rapid and sudden. India will do to broadband penetration what China did to the telephony market. India will most likely skip landline-based broadband to mobile broadband.
The current commission-based remuneration system also encourages traditional media. So there are several challenges in the Indian market.
Newspapers suddenly seem flush with advertising. Has there been a resurgence in print media advertising in the past two months. Is it sustainable?
I hope that the uptick is for real and sustainable. Across the board there is cautious optimism. Depending on what source of data you use, an Adex (advertising expenditure) increase of 15-20% looks likely in 2010.
That is what the main media companies are saying publicly. It is not irrational exuberance, it is based on some solid data, including sales.
How have advertising rates behaved in print and television the past couple years?
There has been some very serious discounting, which has happened specially in the print media. But I wouldn’t have detailed data and the right person to respond to that would be Lynn (Lynn De Souza, CEO of Lintas Media Group).
Your chairman and chief creative officer R. Balakrishnan (Balki) has spent more time in the recent past directing movies like ‘Cheeni Kum’ and ‘Paa.’ Has that been a handicap?
India is unique in the sense that three great creative guys run the top three agencies. Specific to Balki, he is a brilliant guy and one of the best creative persons I have ever worked with.
In terms of our own work, we produced more stuff in the last 8-12 weeks than we did in the last six months. Mind you, Balki was away during this time. What I am saying is that there is plenty of talent in the industry.
venkatesha.b@livemint.com
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First Published: Wed, Dec 30 2009. 08 57 PM IST