‘Cost relief, improved consumption to boost ad industry in second half of 2024’

Dheeraj Sinha, FCB Group chief executive officer, India and South Asia. said the company is experiencing substantial growth in India, transitioning from regional businesses to larger national agencies.
Dheeraj Sinha, FCB Group chief executive officer, India and South Asia. said the company is experiencing substantial growth in India, transitioning from regional businesses to larger national agencies.


FCB Group India has seen substantial growth by transitioning from regional businesses to larger national agencies, with a double-digit surge in the first quarter of 2024

New Delhi: Advertising agencies are optimistic about the second half of 2024, especially since there has been no change in government at the Centre after the election, said Dheeraj Sinha, FCB Group chief executive officer, India and South Asia.

Business is expected to grow in the latter half of the year after a challenging March and June quarter when inflationary pressures and decreased consumption levels had stressed various sectors, Sinha told Mint on the sidelines of the annual advertising conference, GoaFest, held recently.

FCB Group India, owned by Interpublic Group of Companies (IPG), handles major FMCG and automotive companies.

Sinha said the company is experiencing substantial growth in India, transitioning from regional businesses to larger national agencies. FCB Group India's portfolio also includes finance and technology clients. 

"Despite that, the first quarter of 2024 (January to March) has shown promising results for us and we have reported double-digit growth because of new business wins like DBS Bank and Philips," he said.

In a shift towards becoming a cohesive national agency framework, advertising agency FCB Group India, has integrated its four regional businesses into large national businesses, he said. This has resulted in significant growth with a double-digit surge in the first quarter of 2024 (January to March). 

The company has creative agencies, FCB Ulka, FCB Interface and FCB India and some specialised divisions such as Lodestar UM (Media), and various other divisions like digital, healthcare, brand consulting, content creation solutions and production. 

“Our focus is now also on organic growth, and we aim to sell more services to our existing clients. Additionally, we are looking to attract more technology talent to create more new-age work for our clients," he added.

It also has brands such as Tata EV, and HDFC Bank and other long-standing clients like Amul, the Mahindra group, Tata Motors, Indian Oil, ITC group, and ICICI Bank which contribute significantly to its portfolio. 

This year alone, the company secured advertising mandates for Skechers, Philips, and Shoppers Stop. It also brought on board 19 new businesses worth over $2 million and experienced double-digit revenue growth compared to the same quarter last year. 

He added that the company also achieved double-digit organic growth in the first quarter from its existing businesses. India is FCB’s second-largest market globally, trailing only North America.

The media buying curve this year, Sinha said, is following the consumer journey curve and digital has come of age in the country. Even election campaigns were hugely led by digital. 

The elections were the largest consumer marketing programme in the country. Media buying is purchasing advertising space or time on various media platforms, such as TV, radio, online websites, social media, and print publications, to reach a target audience. 

This involves negotiating prices, selecting the best platforms for the campaign, and scheduling the ads to run at optimal times.

Digital push

"Most of the creative and advertising work that is happening in India now, even for companies in the fast moving consumer goods or FMCG sector, is shifting heavily from mass media to digital, he said. 

"We are now doing a lot of digital work for traditional companies in this sector, which were earlier driven by mass media. There are now many more digital-first or digital-only campaigns in this segment, and that has clear implications on how we are buying media. It even impacts what kind of talent we are hiring now," he added. 

Also Read: Inside the digital ads blueprint of BJP and Congress

About five years ago, just 10% of its companies wanted digital-only ads, but today that has doubled or tripled depending on the client.

At the industry level, 60% of all ad expenditure share has moved to digital, and 40% is in the mainstream media.

The FMCG scene

The FMCG sector in India presents a mixed picture, though. He said there is varying performance across different segments, with the lower end struggling due to shifts in consumer spending and high inflation, while the mid and premium segments are doing well. 

“Local players are stepping up with innovative products to fill the gap between value and premium segments," he said. “These companies are attracting customers who are not being fully served by the larger, established brands." 

Despite the challenges at the lower end, he expects single-digit growth in advertising spending for the FMCG sector this year, noting its large base and high market penetration. However, the mid- and high-end consumption segments are likely to see high double-digit growth.

Also Read: FMCG firms navigate rural demand with strategic moves

Interestingly, in the last few years, cricket sponsorships, too, have seen a shift, with startups making way for FMCG categories which are returning to replace these venture capital-funded startups which previously dominated the ad spends. Last month, Amul announced that it would work with USA Cricket for its men's national cricket team for the ongoing ICC Men's T20 World Cup 2024.

Emphasising the role of data in contemporary advertising, Sinha added, "Data is the new fuel. Earlier, there was a broader understanding of culture with no data to support it. Today, we can map cohorts, communities and consumption patterns." 

For instance, if a company has a product like an EV, it doesn’t need to target everyone but only those in a certain geography, etc, while still making the ad interesting. Two or three years ago this was not the case. Most ad agencies were focused on creating personalised ads that felt relevant to each individual while doing this for a larger audience. This was known as "personalisation at scale". They aimed to make their advertising processes more efficient and cost-effective then by using technology to deliver tailored ads quickly and cheaply. 

For example, if you see an ad online for a product you recently searched for, that's personalisation. But today, the needle has moved to being engaging while still being creative. 

"Simply putting 20 or 100 posts a day was not actually leading to any engagement. So, having done large-scale work like this, we are now working on creating more engaging campaigns and using machine learning and AI for assistance," he added.

According to the 'Pitch Madison Report 2023,' the country's advertising expenditure reached nearly 1 lakh crore, growing 10% over the previous year. Challenges such as raw material price increases, ongoing global conflicts, inflation, and a funding winter within the startup industry contributed to the slower growth rate.

Also Read: A three-pronged taskforce in the works to rein in digital ads running amok

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