New Delhi/Mumbai: India’s advertising market, hit by the economic downturn and a decline in consumer demand, could see a boost in the new year as political parties step up spending on media campaigns ahead of general election due by May and brands seek to piggyback on the most important political event of 2014.
Media buyers predict a 10% increase in advertising between January and April as the Union and state governments use up promotional budgets to tout their achievements and political parties raise their decibel levels in the media to woo voters. Companies will also attempt to cash in on the election frenzy and come up with advertisements that have a political streak.
“It could be a cheerful first four months with government spending kicking in to help revive growth,” said Satyajit Sen, chief executive officer (CEO) at Zenith Optimedia, the media buying arm of the Omnicom-Publicis Group. “Ministries will pump in advertising money to reinforce the government’s message, so you will see a lot more of ‘Bharat Nirman’ type of campaigns.”
Bharat Nirman ads, revolving around a central female character, have aired across television channels as part of a Rs.100 crore advertising campaign by the Union government to highlight its entitlement-driven public welfare programmes.
The next general election will likely be announced in March, after which the so-called model code of conduct will come into place, preventing government departments from spending money on ads about their achievements. The result could be a rush of ads from government departments and governments in January and February.
Once the code is in place, advertising by political parties will replace that by governments.
Some of the biggest media agencies expect an additional Rs.1,000 crore to come from political advertising and campaigns by other government entities, most of which will be spent on mass media. The major political parties will spend big money ahead of an electoral contest that will be fiercely fought, said Nandini Dias, CEO at the media buying agency Lodestar Universal.
The elections are seen as a direct face-off between the ruling Congress and the main opposition Bharatiya Janata Party (BJP).
Advertising revenue in 2012, according to GroupM, the media company of the WPP Group, was Rs.35,074 crore, with the print medium’s share at Rs.14,442 crore, television’s Rs.14,812 crore and digital’s Rs.1,939 crore. Cinema, radio and outdoor advertising made up for the remaining. Ad revenue growth was an anaemic 2.26% for print and 5.6% for television. Digital revenue leapt 28% from a low base.
The economic slowdown deepened this year, and cutbacks in consumer spending forced advertisers to pare promotional budgets.
Little surprise then that GroupM revised its forecasts for advertising expenditure in 2013 for mass media channels, such as television down from 7.6% to 5.9%, print from 4.8% to 0.7%, radio from 5.7% to 2.5% and cinema from 7.3% to 4.7%.
“To my mind 2013, was, from an advertising standpoint, a year best forgotten. From the first quarter, things slowed down substantially due to various factors. Even sectors such as fast-moving consumer goods, which usually are a pillar of strength at times like these, slowed down to a certain extent,” said Jehil Thakkar, a partner and head of the media and entertainment practice at KPMG India.
The general election next year will boost advertising expenditure, primarily in print and television, as consumption of news channels and newspapers increases, Thakkar added.
The rural markets become especially critical in an election year, according to Hemant Bakshi, chairman of the Indian Society of Advertisers (ISA).
“The two things advertisers will focus on will be to drive their distribution into rural India and build awareness through mass advertising. A third of rural India is media-dark, and finding innovative ways to reach those consumers will become critical,” said Bakshi.
Meanwhile, even though political parties are yet to launch their general election campaigns, some brands are already looking to peg their new creative output around the poll theme.
Mobile service provider Idea Cellular Ltd’s latest commercial created by Lowe Lintas is based on the Aam Aadmi Party’s espousal of a participative democracy in which two-way communication between the government and the public is encouraged. The ad explores the idea of government(s) using mobile service as an efficient tool to gather public opinion and support when taking decisions that affect people’s lives.
“The theme is relevant to the current times where political campaigns across the world are relying on reaching the voters through mobile and the Internet. Through this ad, we are highlighting citizens’ empowerment by making the individuals opinion count,” said R. Balki, chairman of Lowe Lintas.
To be sure, the new ad is an extension of Idea Cellular’s democracy campaign, which started in 2008 with the popular tagline “What an Idea, Sirji!”.
Creative heads at advertising agencies say more brands may like to use elections as a hook to launch fresh campaigns.
“Whenever something big happens in the country or even across the world, it reflects in advertising. With elections around the corner, issues such as poverty, anti-corruption, self-governance, empowerment, among others, are going to be reflected in brand creatives going forward,” said Soumitra Karnik, national creative director at Dentsu India Group.
Karnik added that companies such as Coca-Cola Co. and Bharti Airtel Ltd, which can afford to spend money on such messages, are likely to lead this trend.
The media industry is pinning its hope on 2014 to turn its fortunes after a poor showing in 2013. In the new year, KPMG’s Thakkar is looking forward to positive action from the political class to rein in inflation and lower interest rates to give a fillip to EMI (equated monthly instalment)-driven industries such as automobiles, real estate and consumer durables, which in turn will drive advertising.
“If we do see the launch of 4G (telecom) services in 2014, we will also see a healthy amount of telecom advertising,” said Thakkar.
C.V.L. Srinivas, CEO (South Asia) at GroupM, is hoping for a revival of the packaged consumer goods sector on the back of an economic recovery. “And they are the highest spenders on television,” he noted.
However, the initial buoyancy in the advertising market may fizzle out if the general election doesn’t produce a clear mandate. “If we have a hung Parliament in 2014, there will be an inevitable policy paralysis. Add to that the turbulence in the stock markets, these could be spirit dampeners for our sector, going forward,” said Zenith Optimedia’s Sen.
The election outcome is critical for the fortunes of the advertising market, agreed Rohit Ohri, executive chairman at the Indian unit of Japanese advertising company Dentsu.
But clearly, the advertising industry is keeping its fingers crossed, unsure if 2014 will be a repeat of this year.
“We are in a depressed market situation and I don’t think this will go away so easily,” Ohri said.
“In 2014, we expect to see more of what we saw in 2013. Any recovery we see will be slow. There will be no rapid bounce back,” said ISA’s Bakshi. Inflationary pressures on companies may not allow them to increase their advertising expenditure.
“From a marketer’s standpoint, margins are shrinking, so spends won’t go up drastically in native advertising media,” said Anisha Motwani, director and chief marketing officer at Max Life Insurance Co. Ltd.
Although television as an advertising medium—currently it attracts an expenditure of Rs.14,900 crore a year—will continue to be most impactful, brands will have to make it work harder.
“The medium has to evolve from pure brand-building to a call to action. We want television advertising to innovate and work around programme integration, content marketing and product placement,” said Motwani. Advertising on digital media, especially videos, will become sharply targeted and contextual.
Marketers believe that since a substantial chunk of the ad inventory will be taken up by political parties in an election year, brands will have to come up with innovative strategies to connect with their target audiences.
“Digital, to my mind, will play an important role not just across different screens such as desktop and tablets, but also on mobile, which is emerging as an important and interesting space for advertisers in view of the time consumers spend on their hand-held phones,” said Mayank Shah, group product manager at biscuit maker Parle Products Pvt. Ltd.
Consumer goods company Dabur India Ltd, the maker of brands such as Real juice and Vatika hair oil, expanded its digital initiatives in 2013. “We created separate verticals in digital; 2014 will see enhanced spends on this medium,” said Devender Garg, senior executive director (consumer care Business) at Dabur.
Srinivas of GroupM said he expected print advertising to improve in 2014 because advertisers who spent more on this medium, especially real estate and jewellery companies, gained good returns in 2013.