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Will festive season turn around sluggish ad growth?

MUMBAI: Hit by demonetisation and then goods and services tax (GST), the first seven months of the year have not been easy from an ad revenue perspective. The growth is estimated to have been in a single digit. Industry experts hope that the festive season will push the growth rate up for the year to at least a low double digit.

The impact of these two factors has forced a revision in growth estimates. For instance, Dentsu Aegis first expected growth to be 13 per cent but then pulled it down and now expects it to be 10–11 per cent.

Dentsu Aegis South Asia chairman, CEO Ashish Bhasin noted that ad revenue growth for this year could be muted unless the festive season changes things. “The first eight months saw a growth rate of just six to seven per cent. We had earlier estimated the growth rate for the year being at 13 per cent, but we subsequently revised it. I expect it to be at 10–11 per cent at best.”

Bhasin, however, cautions that if the mood does not pick up during the festive season, then 2017 could well be a single-digit growth year. He also said that given that there is not much buoyancy in the market, it will be difficult for any TV property to raise rates substantially. “Cricket is relatively better off. There is universal appeal and it is in demand. A 10 per cent growth in rate is possible, but the days when you could ask for a 20–30 per cent raise are definitely over. It is a good thing that the India–Australia series is happening during the festive season.”

The challenge is that there is not that much more money going around. So a lot hinges on the festive season as the last four months account for 40 per cent of annual ad spend. “A lot hinges on the festive season. If it goes well, then the sentiment will come back. But if it doesn’t, then the growth rate might be in single digit. One positive is that the monsoon was good and so rural demand should pick up.”

IPG Mediabrands CEO Shashi Sinha noted that this year there were two factors to contend with compared to last year when there was just demonetisation in the last quarter. “Last year a 13 per cent growth rate was achieved. This year if we manage 10 per cent, then we would have done well.”

Sinha, however, added that it was too early to make a call on what the growth rate will eventually be. The reason is that there is chaos in the market thanks to GST.

Sony Pictures Networks India president Rohit Gupta noted that the challenge for the industry is that the duration of the festive season is now much less than what it used to be. “The challenge for the Industry has been that the festive period, which used to be six to eight weeks, has over the last two years crashed to four weeks. So it becomes critical to monetise effectively every second that you sell,” he said.

Zee Unimedia COO Ashish Sehgal noted that the first seven months saw a single-digit growth for the TV industry. However, he is confident that the festive season will see a 20 per cent growth and the momentum should continue beyond Diwali to November and December. If that happens, then the overall growth for the year in television will be in double digit.

“In January there was hardly any growth. April and May showed good growth, but June and July were very bad due to GST. However, in August things got corrected and picked up. But the average growth from January to August is a single digit. The GST issue was from the company side. For the end consumer there was no impact. The festive season which started in September is looking good. It looks like the festive season will see a 20 per cent growth for the TV industry. If the momentum continues towards the end of the year as well, which I expect will happen, then the average for the year will be a double digit.”

He also noted that, even though consumer sentiment might not be as high as it could be, advertisers know that the way to bring up sentiment is to advertise. “When the sentiment is low how do you bring it up? You advertise more. You induce consumption. That is what advertisers are now doing and they are pumping in money at least till October.”

He went on to add that after Diwali there might be a lull for about 15 days, but things will pick up given that at the end of the year people celebrate Christmas and the New Year.