Home > industry > Government advertising sees 39% fall in April-July

New Delhi: Government spending on advertising fell 39% in April-July from a year earlier, in the process denting the revenue of media companies that had already been reeling under the effects of the economic downturn.

Total ad expenditure by the government in the four months declined to 132.7 crore from 218 crore in the year-ago period across print, television and radio, according to data from the Directorate of Advertising and Visual Publicity.

The fall in advertising expenditure was partly a result of the model code of conduct imposed by the Election Commission of India for the general election, stopping government advertising from the date the polls were announced (5 March) until the completion of the electoral process in mid-May.

“However, even when the new government assumed office, it did not have any policies and programmes readily available for publicity—the bulk of our advertising comes from these schemes," said a government official who is close to the development, but did not want to be named.

The Bharatiya Janata Party-led National Democratic Alliance government may have also shied away from advertising some existing schemes as they were the legacy of the Congress-led United Progressive Alliance (UPA) and were named after Congress leaders.

“The government may not be sure if these names will continue. Lastly, even the budget was passed only in July and may have pushed things back," said the official cited above.

Television advertising by the government saw a sharp drop at 48%, declining to 36 crore in April-July from 69 crore in the same period last year. Expenditure on print advertising declined 33% to 90 crore from 135 crore; ad spending on radio declined 52% to 6.7 crore from 14 crore.

In the last fiscal year, the UPA government spent some 1,200 crore on advertising, including 500 crore on the print media and 600 crore on television.

The Narendra Modi-led government is also promoting the idea of crowdsourcing for communicating with the nation. For Independence Day, it invited people to send in advertising concepts and designs, and published the best entries. This move led to a big drop in advertising expenditure.

“Usually, on 15 August, we release 10 ads from 10 different ministries. This time, only one ad was issued by the ministry of information and broadcasting," said the official cited above.

The government spent 10 crore on the crowdsourced Independence Day ad. A senior official of the information and broadcasting ministry said this may be part of the government strategy to reduce spending on advertisements.

“There is a concerted effort to make the process of disseminating government messages more structured and refined. A policy decision on the same is still in the wings, but the government wants to ensure that rather than all ministries bombarding the country with ads, the ad volumes are more sharply focused and content gets highlighted as opposed to the leader," said the official, who also declined to be named.

The drop in advertising when a new government takes charge isn’t unprecedented. In fiscal 2009, for instance, government ad spending declined to the tune of 25% when the UPA government was sworn in.

People familiar with government advertising trends expect money to be spent on campaigns such as Beti Bachao (Save the Daughter) and Swachch Bharat (Clean India) soon.

The newspaper industry has been hit by the drop in government ad spending, which has come at a time the economy is trying to recover from a downturn that caused growth to slump to below 5% levels in each of the past two years, prompting many advertisers to cut back on spending.

Government advertising is almost at a standstill from the time the elections started, said N. Murali, co-chairman of Kasturi and Sons Ltd, publishers of the The Hindu and The Hindu Business Line newspapers.

“Print revenues have been impacted substantially, especially because we are just coming out of a period of downturn. So even a 10-15% impact on ad revenue is hard to go unnoticed. We still have to see what is the government’s decision on publicity, but I’m optimistic the sentiment should improve going forward," Murali said.

According to Anuradha Prasad, who manages the News 24 channel, all news broadcasters have taken a hit in terms of advertising revenue. “Everyone’s first quarter has been impacted by at least 20-30% in terms of ad revenue. In fact, this same quarter last year the government was advertising heavily because it was an election year," she said.

For television channels in the general entertainment category, the decline in government spending was offset by political parties spending on their media campaigns.

Ashish Sehgal, chief revenue officer at Zee Entertainment Enterprises Ltd, is optimistic. “Typically, government departments are slower in starting their campaigns. Slowly, we are seeing new campaigns kicking off and rural departments are now releasing their programmes," he said. The network saw an increase of 18% in ad revenue during the June quarter this year.

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