New Delhi: Political parties are looking to leverage the ongoing economic slowdown to get the most bang for their advertising buck in the run-up to the national elections—and most experts and analysts are convinced they will be able to do this given the sharp fall in the advertising business.
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“We would get a better deal due to the slump in the economy,” said Jairam Ramesh, the ruling Congress party’s co-ordinator for the national polls that start on 16 April and end on 13 May.
His party’s main rival, the Bharatiya Janata Party, or BJP, also expects advertising rates to be lower.
Ad spend: A Congress hoarding in New Delhi. Most political parties, including the Congress and the BJP, plan to spend substantially more on their ad campaign as they target 714 million voters. Rajkumar / Mint
BJP general secretary Arun Jaitley, who is also the head of the party’s media campaign committee, said: “It is a buyer’s market and not a seller’s market.”
“We will (however) not be able to comment on the rates until they are firmed up,” Jaitley added.
Ramesh and Jaitley would appear to be right. The Pitch-Madison Media Advertising Outlook 2009 released in January expects the advertising industry to grow only 2% this year compared with 15-20% last year.
And no media company can afford to ignore the kind of budgets the Congress and the BJP are speaking about.
The Rs150 crore account for the Congress poll campaign is being handled by Crayons Advertising Ltd and JWT India Ltd; the BJP’s Rs250 crore account is being handled by Frank Simoes-Tag and Utopia.
At least three senior advertising and media buying executives said media firms may look to charge more from political parties than they do from other advertisers.
“Between (the last year’s) assembly elections and now, the advertising rates have tripled. This is because the media has taken advantage of the situation...to milk political parties who, they know, are going to advertise anyway...if you compare rates on print between the last elections and this one, there is a clear 500% increase,” said one of the three, an executive of one of the advertising agencies servicing a big national political party who didn’t want to be identified.
“While a regular 10-second spot of a Hindi general entertainment channel can go up to as much as Rs1.5 lakh, a political party may be charged between Rs3-4 lakh for the same spot,” said the second, a media buyer involved in negotiations with parties, who too didn’t want to be identified.
“If we are getting as many people tuning into our channel (for election coverage) as a 20-20 cricket match, then why should our rates be any different (for poll ads)... Slowdown or no slowdown, people will watch the elections and political parties will spend, so our rates to parties and to regular advertisers will increase accordingly,” said Sanjay Dua, the chief operating officer of media and entertainment conglomerate Network18 Media and Investments Ltd.
“We have divided this election time period right from the notification (for the general election) was given until the new government is formed, into four ad rate packages—silver, gold, diamond and platinum. With each phase, the rates will increase.”
While everyone agrees that political parties will spend more money on election ads this year than what they did in 2004, when the last general election was held, not everyone is convinced media companies can get them to pay market rates.
Both the Congress and the BJP plan to spend substantially more on their ad campaign as they target 714 million voters, mostly young people, many of whom will be voting for the first time.
Citigroup Global Markets had in a 6 March report said that various estimates put the total ad spend in this elections at Rs600-800 crore compared with Rs300 crore in the 2004 elections.
Media companies, while looking forward to this expenditure, say ad rates will, eventually, be “competitive”.
“Media companies are looking forward to the additional revenue coming in,” said N.P. Singh, director of The Indian Express Ltd, which publishes newspapers such as The Indian Express and The Financial Express. “They will accept ads at very competitive prices,” Singh added.
“The media is on a backfoot and from what I hear most media brands are giving enormous discounts to fill inventory. The discounts are in the range of 10-50%,” added Pradeep Guha, an independent consultant with INX Media Ltd.
Media buyers say that given the slowdown in the advertising business, everything is negotiable. “Parties get better rates while media finally gets some advertising. The situation is very negotiation-heavy at the moment,” said Prashant Kumar, managing partner, central trading group, GroupM, the media buying arm of the UK-based marketing communications conglomerate WPP Group Plc.
Rohit Ohri, managing partner, JWT India Ltd, and Rangan Bargotra, president, Crayons Advertising, declined comment for this story, while Frank Simoes-Tag and Utopia couldn’t be reached.
Meanwhile, the Congress isn’t above using details of its ad budget for electioneering.
“Whatever we spend, we will be spending less than the BJP. We had a budget of Rs40 crore last time. In the last elections, the BJP spent six times more than what we spent,” said Ramesh.
According to a 2004 report by TAM Media Research, an audience measurement agency, the BJP outspent the Congress in both print and TV ads in the 2004 Lok Sabha elections.