BackBusiness houses look at group ads as economy loses steam
Business houses look at group ads as economy loses steam
PremiumBrand standing: Godrej Industries and UB Group are using group brand names Godrej and Kingfisher, respectively
Chennai / New Delhi: India’s business conglomerates are looking at advertising as a single umbrella brand instead of promoting individual products within the group as they consider maximizing their return from ad spends at a time when the economy is showing signs of slowing.
Though the concept of projecting a common brand is not new, business groups are looking at group advertising as one way to beat increasing advertising cost while also projecting a common theme for their group brand. Typically, the costs are picked up by various business units or brands.
Chennai-based Shriram Group, which has diverse interests from vehicle finance to chit funds to insurance, is looking at running a group ad campaign over the next six months to one year.
“The advantage of running a group campaign would be to build its brand image, to give the flavour of the kind of group activities being undertaken. It can be projected that our group is a retail powerhouse", says R. Sridhar, managing director of Shriram Transport Finance Co. Ltd, a market leader in second-hand, vehicle financing.
Other groups, such as Godrej Industries Ltd and Bangalore-based UB Group are among the prominent ones to use group brand names, Godrej and Kingfisher, respectively.
While India’s economy has been growing at more than 9% for the last three years, interest rates have soared and inflation is at a seven-year high of 8.75%, putting the breaks on runaway economic growth.
A slowing economy, led by slower industrial production, is starting to hurt the profits of companies and dent business confidence. Typically, when profitability starts to hurt, advertising is the the first to get clipped. With group ads, a holding company can opt to recover the costs from individual companies.
In the case of Godrej Industries, it has chosen to recover the costs from individual companies for the ad campaign it ran during the recently concluded Indian Premier League.
In a letter dated 28 May, it has sought Rs4.2 crore from Godrej Properties Ltd, which had recently filed offer document with the market regulator to sell shares to the public, for the “advertising benefits" availed.
“We use group ads as it would give us economies of scale, helping to reap maximum benefits from the expenditure," said a Godrej Industries spokesperson over the telephone.
United Breweries is another conglomerate that has actively promoted its Kingfisher brand across different segments ranging from beverages, airlines, water and wine.
“The brand Kingfisher stands for good times and a certain value. It is the same across various segments we operate, (be) it... beverage or airlines", said Shekhar Ramamurthy, deputy president of United Breweries, explaining why they use a common brand that is sometimes accused of being a way of surrogate advertising for products such as liquor that are barred from advertising in India.
Group ads need not fit all conglomerates. “Suppose, the group name is very prominent and the names of the group companies are known but don’t really stand out, then they would go for individual company advertising", saidS. Radhakrishnan, executive vice-president (south) for Mudra Communications Pvt. Ltd.
He also said medium-sized groups would not opt for group ads because of resource constraints.
Individual companies need to advertise their new product launches because they need to talk to their target audiences, said Prakash Dharmarajan, president at advertising firm Ogilvy and Mather.
For example, he said, if TVS Motor Co. launches a new bike, then a TVS group ad will not be able to convey that. TVS Motor would have to advertise its new product because people would like to know what the mileage is, what are the features of the bike, etc.
vidhya.s@livemint.com
Raghu K. in Bangalore contributed to this story.
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