Priya Jacob, President-Media, Network Advertising on how festive season will be different this year.
Festive seasonis going to play a big role in bring back the Indian advertising back on its feet.
- Priya Jacob, President-Media,
Network Advertisingwrites how advertisers will write off this year and try to build customer confidence.
However, let us first look at the Economy. It has dropped by almost 24% in Q1 of 2020-21 as compared to Q4 of 2019-20 (which grew by 3.3% over the Q3 2019-20). Of course, by the time the festive season begins there will be some improvement, but will it be in the positive? Probably not.
When you compare the GDP growth of Q3 (Oct-Dec) over the last two years, we see the GDP growth was above 5.1% in 2018-19 and about 4.6% in 2019-20. When you compare the advertising spends during festive season in 2019-20 you will find it was lesser than what was done in 2018-19.
A small dip in GDP growth did manifest in less business in real life.
Now in 2020-21 we are facing a decline in GDP!
Let’s now look at the pandemic. The number of people who are getting infected has reached almost a lakh per day. Slowly as normalcy is restored with the opening of Public transport, Offices, Shopping malls etc. the number of affected people per day may continue to grow even during the festive season.
And now let us look at the society at large and the consuming class.
The stock market has grown by more than 50% in 5 months between 23 March and 28 August which may have increased the wallet size of the few investors.
The consuming class too may have saved money despite reduction in their monthly income with their focus shifting to saving and investing more than spending.
But when you add up these two classes of people though the number is healthy it is not awesome. Even if you add the 3.5 lakh odd millionaires the numbers won’t improvedrastically. In a light-hearted way it is understood that this class of people do not need to wait for festivals to spend or consume, for them every day is Diwali!
It is the huge middle class from the middle to bottom of the economic pyramid that is badly affected. They are counting money for survival.
India has 63 Million Micro Enterprise. Now if you assume each Micro Enterprise employs 2 people and each worker and the owners live in a 3-member family home, the total number of people who are dependent turns out to be about 600 million. A lot of them are dependent on daily sales and daily wages and donot have much cash saved. These are the people who are part of the consumption net and a lot of them look forward to festivals to spend on indulgence.
While the advertisers will reach out with their offers (most of them will try to reduce the cost of goods on offer, which in turn will increase the cost per customer acquired) the actual commerce is likely to be much less than both expectations and last year.
Advertisers will write off this year and try to build customer confidence. All forms of media have gone overboard to create fear rather than create knowledge-based caution.
Advertisers will have to pitch “things will be fine soon” to all the customers to first try to eliminate the fear of continued lesser income (and to some extent health) uncertainty. Only discounts and superficial feel good messaging may not be good enough.
A lot of advertisers will get encouraged by the surge in media consumption (both reach and time spent). They will try to splurge and since this will be more in hope than as a calculated risk, it could be even bigger than the spend last year.