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Demonetisation and the fear of ad pullback
MUMBAI: In the wake of the demonetisation of Rs 500 and Rs 1000 currency notes and a slide in consumer spend, several advertisers are deciding whether to go ahead, postpone or curtail their ad expenditure until things settle down.
According to Madison Communications group CEO of media and OOH Vikram Sakhuja, consumer demand has dropped and a fraction of advertisers want to review spend. “November has been impacted. We will have to see how December pans out. It is a fluid situation where the strategy is to wait and watch. Things are being worked out with the broadcasters,” he said.
For Sakhuja the key thing is how long the situation continues. “Some advertisers who are planning activities have to decide if they should go ahead or postpone. Some are even considering curtailing,” he said.
He, however, added that demonetisation is a good thing. It has grassroots support.
Sony Pictures Networks India (SPNI) president Rohit Gupta said that, due to the uncertainty, some clients wanted to cancel but the broadcaster was not ready for that. However, SPNI is willing to postpone. “It is a short-term situation. A client postponed activity by a week, which is not a big deal. The situation will soon return to normal. Moreover, TV for an advertiser is more than just about achieving point of sale. It is also about brand building,” he explained.
Zee Unimedia CEO Ashish Sehgal noted that in November the impact was not there for the TV sector as the monthly release orders had come in. His company followed the Indian Broadcasting Foundation (IBF) directive that asked agencies and clients to honour existing contracts.
“We went with what the IBF advised. Media vehicles that do not have monthly release orders might have been impacted this month. Companies that have ongoing winter campaigns reacted, such as 50% of FMCG companies,” Seghal explained.
For him the coming days are important as advertisers are waiting and watching the situation. “If consumer sentiment returns, then there is no reason for advertisers not to come back. But if the consumer sentiment does not come back, then there can be an impact. Advertisers might postpone winter activities. They are planning for December, but they are holding their plans till they understand the situation. As of now, we don’t know how things will go, but my advice to the advertisers is that they should spend. If they spend and advertise more, it will induce consumption.
“If you want consumption to improve in a difficult time, then cutting back on spend is not the solution. The cash liquidity situation is improving daily. At the end of the day, people have not lost money. The only thing is that it is in a bank. There are other means of consumption coming in besides cash. With Paytm 800,000 vendors have been added. If more consumption can happen through digital, then the overall consumption will improve on a daily basis,” Sehgal said at length.
The good thing for him is that demonetisation happened after Diwali. “It was a good thing. November is typically a low month. All the broadcasters had a really good month in October.”
Seghal also thinks that categories like BFSI will become more active now that extra money is lying in the banks. Banks will also advertise more as they want more loans to be disbursed. E-commerce platforms could also get more active like Paytm and PayU, who will push more online transactions.
IPG Mediabrands CEO Shashi Sinha said that demonetisation would lead some categories to increase the spend, while others will hold their breath over the next 30–40 days. “This is not a viewership thing but a category thing. A blip will be there depending on the category,” he said.
He added that some clients have pulled out for 10–15 days. “It is for a short term. They are not pulling out for six months. People are saying that they will wait and watch for four to five weeks. Nobody has pulled out from a long-term point of view,” he maintained.