With a steady monsoon and plump harvest so far, experts are hopeful that the festive season will bring cheer for the in...
- The sluggish two quarters of this fiscal and dull results of auto, FMCG, real estate, apparel, telecom indicate that the upcoming
festive seasonwill not bring profitability.
- However, the first half of the year was unusual, unprecedented that the ad industry took a nosedive to as low as -60%.
- Experts are hopeful that the festive season will bring in cheer and serve as a respite from the pandemic-associated slumber.
The progress of advertising industry has always been in tandem to consumer sentiment and about 40-45% of the annual ad spends in India happen between Raksha Bandhan and New Year. This year, when ad revenue had reached as low as -60% in April, a lot of hopes are banking on the festive season for industry’s overall revival.
In many ways, advertising is a lag and lead indicator for our country -- if the country's GDP is growing at 8%, advertising grows at 12%. If GDP falls, ad revenue falls even lower.
With a steady monsoon and plump harvest so far, experts are hopeful that the festive season will bring cheer for the industry. It will help the ad world bounce back to normalcy.
Ashish Bhasin, CEO - APAC and Chairman India, Dentsu Aegis Network Asia said, “In the month of April, we were -60%. I think we will end this calendar year at probably around -15 to -20% decline in the advertising market, which means the second half will have to do better than the first half. It may not be as good as last year, which in itself wasn’t a great period, however it will start improving and coming closer. Monsoon season is looking good, so our rural economy should do well. For many categories now there is saturation in terms of penetration at least in metros, so a lot of growth will come from Tier II, III and rural areas. So if the rains continue and we have a good harvest, there will be more money in the pockets of the rural consumers and that will help the demand. With the advent of the festive season, hopefully, COVID cycle goes down by that time, coupled with a good harvest, demand going up and sentiment improving, I think by around Diwali we will see some signs of normality returning.”
Priti Murthy, CEO, OMD India said, “The festive season will bring in cheer and serve as a respite from the pandemic-associated slumber. Our recently conducted survey states how the general news consumption has significantly increased during the lockdown period. With an increase in music streaming, online games, and cooking shows, and re-runs of popular shows from the 80’s & 90’s making a comeback, the ad revenue cycle is all geared up during the festive season.”
This Indian festive season is coupled with IPL, which is a gigantic festival in itself that drives advertising industry’s revenue and holds the power to alter market sentiment. While sans-Vivo, OOH and no activitations, Navin Khemka, CEO, MediaCom South Asia still believes IPL will help put ad industry back to 2019’s growth trajectory.
“Given that IPL is confirmed, we can expect this year's festival season to be equal to 2019. Last year, the last quarter was approx. Rs 24,000 crore and this year we expect the number to remain constant,” said he.
Digital taking the bigger chunk of the pie
With the lockdown in Mumbai, which is the creative hub and houses many Indian agencies, Sandeep Sreekumar, Managing Director, Media Moments is looking forward to seeing some creative storytelling made from the inside of four walls on digital mediums this year.
"We feel this new phase will bring in new opportunities for the brands to showcase exceptional creativity and storytelling by integrating messages like social distancing, and work from home into their ads.”
Sreekumar thinks digital will lead the game as advertisers have been shifting their monies from traditional to virtual platforms.
“Digital platforms like Instagram Shop along with other channels including Facebook, Google and OTT platforms are likely to garner the advertiser’s attention across categories which will eventually lead to a significant upsurge in the digital ad revenue. Though, the consumer might still be a little skeptical about spending, the arrival of festivals and the announcement of IPL are likely to change their mindset for the better. We are excited to witness the trends unfold and see the new normal for the advertising industry that will lend an engaging experience to the customers through wit, humour and emotions,” said Sreekumar.
Murthy is hoping that print will also see an increase in advertisers’ volume this festive season.
“Digital and Print will definitely see an influx during the festive period, and OTT will be the new arena that will see more brands coming in. Also, TV will witness a spike due to IPL being held at the same time.”
Khemka pointed out that brands will not go too big on media spendings as they have become cautious of what they are spending on.
He said, “Due to the pandemic, TV & Digital will be the biggest gainers. They will grow at the expense of the other mediums. There is cautious optimism with brands. Given the state wise lockdown is affecting sentiment, brands will be cautious before they commit big monies on media.”
Auto industry, e-commerce and other virtual brands to lead the growth
Experts opined that auto will see a boom because consumers are now avoiding public transport. Other categories that popped up in our discussion were EduTech, E-commerce and OTT.
“Auto is likely to bounce back because people are looking for private transportation. E-commerce, EduTech, telecommunications will all bounce back first because data consumption has gone up but the market has been pretty depressed for them also. So hopefully that will pick up. FMCG demand is quite stable, one category that continued to advertise despite the lockdown because they were under the essential category, they will be steady. Once the feel-good factor starts, entertainment will start coming back. Film, digital and TV production starts, they will come back. Real estate will continue seeing a slump unless there is a big economic pick-up. So overall, it will be a mixed bag,” said Bhasin.
Murthy also shared her optimism about spends from the auto and IT industry.
“Auto has already begun seeing this trend as personal mobility is a higher need in the COVID and post-COVID era. Seeking a digitally enhanced and technologically superior experience across business verticals, IT is an area that showcases an enormous potential, too. Additionally, OTT platforms are also slated to bounce back with all their diverse content.”
Consumers to continue being wary about their spendings
With the economic downturn and uncertainty still looming around, consumer sentiment might suffer this festive season.
Sharing what consumers are likely to spend on, Khemka said, “Given the pandemic I think the consumer has now become more rational. They are spending more on technology, equipment, health & immunity boosters on one hand. However, they have also become cautious on discretionary expenses that can wait for some more time given the tough economic scenario. Also, the list of essentials and non-essentials is being redefined.
Murthy said that the trends so far have only indicated that consumer sentiment is improving, which is more likely to continue growing during festive.
“According to our OMG study, an average daily time spent across OTT platforms is over 95 minutes. Besides, online video and social media have emerged as the top entertainment mediums among Indians, allowing for a great scope of ad spend to be incorporated. It’s definitely an optimistic picture,” said Murthy.