Media industry braces for a muted festive ad spend growth due to economic slowdown
MUMBAI: The media industry is bracing for a muted ad spend growth during the festive season due to the on-going economic slowdown, which has had an adverse impact on the ad market for much of 2019.
While the consumer mood has picked up to an extent it is still nowhere as good as last year with industry experts admitting that this festive season may only see a marginal growth compared to the festive season last year.
Some say that there is a danger that the ad growth might even be flat. The experts also noted that while the government has announced measures like tax sops for corporates it would have been better had the announcement happened at the time of the budget itself.
With austerity being the buzzword clients are looking to stretch the rupee further which could benefit a medium like digital.
Speaking to TelevisionPost.com, Madison Media and OOH Group CEO Vikram Sakhuja said, “It does look a little subdued this year. October would be a telling month. Let’s see. Advertisers are cautious though not averse to spending. Good deals can help attract spends.”
IPG Mediabrands CEO Shashi Sinha expects festive ad spend growth to be marginal at best. “I expect spends to grow very marginally. I cannot put an absolute number to it but growth will be marginal. We all know what is happening with the economy. Auto companies are sinking. Auto sales are down 20-30% on an average month on month. People who are under pressure will not spend that much more.”
In terms of different media vehicles, he noted that TV and digital will get the money while “print will be slow”.
ZEEL chief growth officer Ashish Sehgal said that September has been a good month for television. But he added that last October was a bumper month as spends had earlier been held back on account of GST. So, in his view, if broadcasters can match last year’s October numbers this year it will be excellent.
“The market sentiment currently for television is picking up. Inventory is going completely full and most categories are advertising right now. Even if we can match last October’s performance it would have been a good Diwali. Last year due to GST June and July were slow. The money held back was spent in October.”
He expects festive season growth this year to hopefully be seen in November and December. Last year, there was some course correction during November and December as a lot of money was spent in October.
Havas Media Group CEO India, Southeast Asia noted that 2019 has been a difficult year and while the consumer sentiment is picking up she does not think that the festive season ad spend will rescue the year.
“Initially various ad growth forecasts for the year predicted growth of 16-18%. Then forecasts were revised to 13%. I have a feeling that when we are done with the year we would have seen ad spend growth in single digits for the year – less than 10%,” Nayyar stated.
She thinks that television especially English language channels will find the going tough at a time when people are looking closely at outlays. She further stated that clients can spend less on digital and still achieve the desired results as the overall entry cost is less.
“Digital spends do not hurt the advertiser. The outlays are less. One does not need huge monies to go on digital. This medium is both efficient and accountable. Radio might also benefit. These mediums should gain. What will probably suffer a bit is television. The FCT consumption on entertainment genres is going down. Television all said and done needs huge money to be put on the table. Also, television is not really a call to action medium,” she explained.
On television, she noted that the industry has still not settled down post the implementation of the new tariff order (NTO). “It has not settled down to a large extent and you can see the English genres being hit so badly. Of course, the OTT platforms are there and they are adding to the loss of certain genres for sure. Particularly in the English genre, there is so much available on OTT. So the audiences are moving out. Then the money moves with them.”
Print, she noted, is being used as it is the call to action medium but will not see any growth. E-commerce, real estate and auto brand have come to the rescue of print. Her expectation is that ad spend across various mediums during this festive season will be at par or might even lower than last year, she noted.
“There is no scope of it increasing for sure. As compared to what one has seen in the previous quarter one is obviously seeing a little better festive spend this quarter. That doesn’t necessarily mean growth. The festive season has been reduced and advertising is only happening for two to three weeks now. That will not compensate for what was lost in the previous quarter which was very bad. Things were very, very slow. During the festive season brands need to monetise and mobilise but to be honest I am not seeing too much of a growth,” Nayyar elaborated.
She noted that the fact that corporate gifting is down is an indicator of things. She added that while the mood in the market has started to pick up one has to wait and watch. “The festive period is now. Post that everything dies down. Some bit of spend will continue due to Christmas and New Year. The mood is not as good as what one might expect to be during the festive season.”
While the government has come up with relief for corporates the move should have been made at the time of presenting the budget, said Nayyar. In that case, the sentiment would have picked up earlier as there is always a lag between measures and consumer sentiment picking up. “If you have to something then you might as well do it in time so that the market sentiment improves. There is no point in going through a slowdown and the market always take time to bounce back from a slowdown.”
Dentsu Aegis Network India CEO Anand Bhadkamkar expects a low double digit growth during the festive season which is a similar number to what his agency expects for the year which 10.5-12%. The festive period, he noted, will be quite critical in achieving this figure. It has to be seen how the consumer mood and sentiment comes back.
Right now consumers are quite cautious. He noted that while sectors like auto have come under pressure there is action from other categories like e-commerce which are compensating. He pointed out that Diwali and Durga Puja take away the bulk of the festive spend.
“It is a fact that there is an economic slowdown and categories like auto, finance are seeing a downturn and there is a challenge for them. They have definitely reduced their spends. But other sectors like e-commerce are increasing their spends and transactions are taking place,” he stated.
According to Bhadkamkar, consumer durables are seeing a good consumer response, however, that will not be enough to match last year’s growth. “There would be muted single digit or a very low double digit growth which is what we are looking at. The growth would not be 15% like in the past. The mood in the market is cautious optimism. People are seeing how things are playing out. With Durga Puja, people have started spending a bit but the key is consumer sentiment. The economy has definitely slowed down and the mood of the people is low.”
He expects digital to perform well as compared to other media vehicles. “Advertisers are moving towards it. It is more targeted advertising rather than large format advertising. We are seeing more focused and time-bound advertising. This is what is happening. Planners are using it quite judiciously. Digital is seeing a huge upside and a large growth. Print and TV are subdued compared to last year. People want to be more targeted in their advertising and are using their spends more judiciously.”
He added that television has settled down post the NTO and people do understand how ratings are coming in but after that other things happened like the economic slowdown. Growth for TV is happening in tier two and three towns and cities. Another challenge for television is OTT which is drawing viewers away from some genres like English entertainment.
He noted that there is a slowdown in TV channels filling inventory but it is not an acute challenge. For big properties like ‘Bigg Boss’ and the on-going ‘KBC’ there are takers. “Wherever there are good programmes or good content advertisers are coming in. Where there is a challenge are platforms like Amazon Prime Video, Netflix which is giving too much competition for the screen. People are moving away from television screen to something else.”
ZEEL’s Sehgal stated that a struggling category like automobile is spending on television to clear the inventory which has been piling up. “That is why they are coming up with offers and promotions and are advertising.”
He also said that ad rates have improved in September and October compared to previous months. For 2019, he does not see much ad revenue growth happening for TV.
“It will be a single digit growth for TV and also overall for the year. The first eight months were a real challenge because of the NTO. Now things have picked up and it might pull in marginal growth. Sports, news and regional have grown this year. Hindi entertainment will be flat. English including infotainment has de-grown by 15-20%. It is de-growing any which ways. Viewership is growing but advertisers are not using it due to the misnomer that viewership is not growing. I do not see a reason for advertisers not to use the English genre.”
Sehgal expects digital to once again grow by 20% as it is less expensive and allows for more targeted advertising due to which there is less wastage. He noted that TV is more about brand building while digital is performance marketing. In the same breath, he also added that digital has not yet reached the level where only using this medium can sustain advertising. He also feels that OTT is too small to impact TV advertising.