Advertisers’ dilemma: to spend or prune the budget this Diwali5 min read . Updated: 15 Oct 2008, 12:05 AM IST
Advertisers’ dilemma: to spend or prune the budget this Diwali
Advertisers’ dilemma: to spend or prune the budget this Diwali
Mumbai: This festive season, auto manufacturer Ford India Pvt. Ltd has tied up with jewellery brand Tanishq to offer diamond jewellery worth Rs20,000 on the purchase of a Fiesta car. It has also tied up with Lifestyle stores across nine cities where the Fiesta will be on display. All this while its campaign Go Fida continues on air and in print.
Traditionally, advertising expenditure in India peaks during the festive season spanning October to December. The spike is expected to be less intense this year because of the turmoil in the global financial markets and dampened consumer sentiment in India.
Still, big advertisers such as Ford say they will spend as budgeted this season. Many big advertisers will, however, advertise more on non-traditional media, including direct and digital, or use a more cost-effective mix of media vehicles.
Data from New Delhi-based media agency Zenith Optimedia, part of the Publicis Groupe, show that 31% of the total ad budget for print, television and radio in 2007 was spent during the festive months of October to December.
Consumer durables accounted for 40% of this ad expenditure; packaged goods, 25%, cellular, 31%, and corporate advertising, 3%. Zenith Optimedia predicts that there will be an increase in expenditure on ads this festival season, too, and expects Rs4,500 crore to be spent. However, this increase will be well below original expectations, with automobile and durables players slashing ad expenditure by 70%, says a Zenith Optimedia spokesman.
But not every company is tightening its belt. Sanjeev Shukla, general manager, Ford India, says the company’s ad budget will remain unchanged. “At a time when there’s inflation in India and recession in the US, companies have to work a lot harder in order to retain the same kind of market share," he says. He expects other auto companies, such as Honda Siel Cars India Ltd and Toyota Kirloskar Motor Ltd, also to “keep up high spends this festival season."
Is it a smart move to prune ad budgets this festival season? Or does it make more sense to make a louder brand noise and tap the latent festive spirit? Nandini Dias, chief operating officer of Mumbai-based media specialist Lodestar Universal, Inter Public Group, says that a recession or an inflationary spell are the best times for companies to invest in advertising. “Returns are not seen during the downturn but later, and it’s been found that the brand which has advertised itself leaps forward."
Still, decisions to spend or not this Diwali, the high point of the festival season, will naturally vary by category. Dias says that while financial services clients, multinational firms with high dependence on the US market and information technology companies have obviously decided not to spend much this festival season, retail and packaged goods sectors are pursuing their plans.
“Traditionally, a number of launches (across categories) happen pre-Diwali. It would be extremely difficult for companies not to launch since the stakes are really high," Dias adds.
Ajay Kakar, chief marketing officer, financial services, Aditya Birla Group, says that it’s a long-term mindset that sets apart the true brand builder, especially when the external environment is uncertain. “A brand is a relationship that is built with a customer. True brand leaders will ensure that they engage and reassure their stakeholders actively during these times. This is the time to invest in the brand rather than cut back on spends," says Kakar. “History has shown that brands that hang in there will be the ones that benefit the most as the difficult times pass us by—as they most definitely will."
Most advertisers are keenly watching returns on investments on ad spending and urging media planners to rejig or optimize their plans. Abdul Khan, president, Tata Teleservices Ltd, says most advertisers will not reduce budgets because the highest turnovers are recorded in this season. “But they will push for greater accountability from media agencies and broadcasters and value for the buck," Khan says.
Santosh Desai, chief executive officer of brand development and marketing firm Future Brands Pvt. Ltd, says, instead of slashing budgets, advertisers should spend wisely and on the right medium. “Cautioned sustenance is okay—companies must invest in advertising in this market but must be cautious and not go overboard."
Selective media buying is essential to enable advertisers to have a presence across key media platforms. Desai, for example, says that certain advertisers could just look at running ads on the top three TV channels or on primary media, such as TV and print, while others may advertise more in non-traditional media or niche channels.
L.S. Krishnan, president of Mumbai-based media agency Radar, a unit of Mudra Communications Pvt. Ltd, says there is definitely a redeployment of ad budgets, with certain brands opting mainly for channels targeting Hindi-speaking markets and others cutting budgets on mainline channels and putting more money on regional news channels and non-traditional media, among others, which are cost-effective.
“When the market’s behaving well, there are more inefficiencies in terms of the media chosen. Now, all of a sudden, everyone’s thinking—how do I get my cost per thousand (of viewers) down?" says Krishnan. “They are looking for effective quantifiable channels."
A durables advertiser, who declined to be named, says, “We have cut back on budgets and whatever money we are spending, we are putting most of it into regional or news channels, which are cheaper in terms of ad rates, and give us greater (relevant) reach and frequency."
Sukhpreet Singh, general manager, marketing, of consumer durables company Whirlpool of India Ltd, says the company is spending more on non-traditional media this Diwali, though overall expenditure remains as budgeted. Whirlpool is using an innovative mix of traditional and non-traditional media for its product portfolio.
“For example, while for our entry-level products we use traditional media, for our cutting edge products, such as Whirlpool Max microwaves and high-end Professional refrigerators, we use niche or non-traditional media options, such as digital or new age out-of-home, in-store and direct-to-home," Singh says, adding that such options are “cost-effective in terms of cost of leads generated or direct response or quality of reach."
Clearly, the mantra for advertisers this season is to spend, but wisely.