Ad spends in telecom, consumer foods, personal products dip
Telecom slashed its ad spends by 22%, consumer foods by 11%, and household and personal products by 10% over an increase in turnover of 3%, 4% and 6%, respectively
New Delhi: Telecom, consumer foods, and household and personal products are the three key industries which have reduced their advertising and sales promotion spends in the last two years (FY15-17) despite an increase in net sales, said a report released by Credit Analysis and Research Ltd. (CARE) Ratings.
Telecom slashed its ad spends by 22%, consumer foods by 11%, and household and personal products by 10% over an increase in turnover of 3%, 4% and 6%, respectively, for each category. The report analysed a sample of 11,183 companies across 124 industries.
“Post the Jio launch, the telecom industry has been under stress with each player losing its market share, which has resulted in a dip in advertising spends. Similarly, Patanjali’s success has taken market share away from other companies in the consumer foods and personal products categories, forcing them to cut down on sales and promotions,” said Vahishta M Unwalla, research analyst, CARE Ratings.
Meanwhile, many consumer focused industries have increased their ad spends in the last two years, including retailing by 45% followed by automobile -- passenger cars (42%), television broadcasting (19%), pharma and drugs (17%) and private banks (12%).
Although households and personal products category has reduced its ad expense in the last two years it was still the highest spending category with a total spend of Rs 6, 591 crore in 2017. The other two biggest spenders last year were automobile -- passenger cars (Rs 4, 517 crore) and pharmaceuticals and drugs (Rs 4, 428 crore).
The top three industries with the highest proportion of net sales to advertising and sales expenses in India were e-commerce (21.2%), amusement parks/recreation/clubs (9.6%), and household and personal products (9.2%). However, only household and personal products has notably high sales of Rs 71,666 crore whereas the remaining two industries have a much lower turnover of Rs 3,493 (e-commerce) and Rs 650 crore (amusement parks). This reflects the higher requirement to spend more on advertising, which in a way, becomes a raw material-like expense for companies.
The total spending on advertising across all media in India stood at Rs 72,200 crore, driven largely by television and print during 2017.
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