BackGrowth in ad spends may remain muted
Economic woes and a decline in consumption have forced firms to rework their advertising budgetsEconomic distress, plummeting employment rates and a sharp decline in consumption have forced companies to rework their advertising budgets
PremiumAdvertisement spends growth rates barely touched 9-10% in 2019, compared with a more robust growth rate of 12-13% in 2017 and 2018, though this year was one of the general elections and the cricket World Cup.
In 2020, the figure is expected to stay around 11%, according to top media buyers, with brands shelling out advertising money mostly after the first quarter.
Economic distress, plummeting employment rates and a sharp decline in consumption have forced companies to rework their advertising budgets.
“This year will close around 9.5% as opposed to our earlier prediction of 11.4% growth in advertising spend. Though the year witnessed big-ticket events such as the World Cup, the Indian Premier League and the general elections, the Telecom Regulatory Authority of India’s (Trai’s) new tariff order for television channels, followed by the economic slowdown, had their impact on advertising growth," said Anand Bhadkamkar, chief operating officer, Dentsu Aegis Network India.
Muted consumer demand and a slowdown in sectors such as automobiles, real estate, and banking, financial services and insurance (BFSI), affected advertising, said Bhadkamkar.
“I expect advertising growth to touch 10%-11% in 2020. It is likely to take the first quarter of next year for growth to pick up," Bhadkamkar added.
Navin Khemka, chief executive, MediaCom South Asia, a GroupM owned media agency, admitted revising the advertising industry growth rate to 10% in 2019 as opposed to the 14% predicted earlier.
“This is primarily because of the slowdown that we have seen post-June, in the July-September quarter. The festive season did improve things, but we still revised our growth projection," Khemka said.
The outlook for the new year is bleak and, as such, the advertising industry will not go beyond single-digit growth next year, said Sandeep Goyal, chairman, Mogae Media, a Mumbai-based marketing and communication agency.
“Unlike this year, there are no big events or other major catalysts in 2020, which can be a reason for spends to go up," Goyal said.
The advertising industry’s bellwethers such as fast-moving consumer goods, auto, and banking, financial services and insurance have pulled back on heavy promotions, and this is likely to remain subdued next year as well.
“Promotions work better in a slowdown where the competitive intensity is high as the entire market is fighting for a limited share of wallet of the consumer. In such a situation, trade needs to be lubricated better to push stocks in the market. Also, the consumer is seeking better value and so consumer promotions work better," Mohit Malhotra, chief executive offer, Dabur Ltd, told investors on 5 November.
Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it's all here, just a click away! Login Now!
