Quick chat with CVL Srinivas & Sam Balsara on the adspend forecast by GroupM & Madison World respectively

16 Feb,2017

 

A quick chat with CVL Srinivas, CEO, GroupM South Asia and Sam Balsara, Chairman, MadisonWorld on the adspend forecast by their respective agency networks

 

Writing has been on the wall on digital: CVL SrinivasTaking time off a string of interviews after the presentation of the TYNY report on Monday,  CVL Srinivas, CEO, GroupM South Asia spoke with PradyumanMaheshwari on whether the adspend forecast portends ‘achche din’ for A&M-land

 

It’s the type of question we love to ask you: given the forecast of 10% AdEx growth in 2017, would you say it’s achche din or good days for the industry?

In the current circumstances I would say good days, because of all the gloom doom projections going around in the media for a while… actually 10% is not a bad number.

 

In October when we met last around Diwali, it was somewhere around 14%, and which now got from 10 to 12%, what would you have anticipated the growth this year to be?

Well, it is such a dynamic world that nothing is a constant today. Everything from global commodity prices, to petroleum prices, to local economic political factors, to sectoral factors, to media-related factors. I mean there are just too many variables one is juggling with these days, so I don’t think any study or any estimate, can be a one-time number. We obviously have to keep looking at the numbers, and revisiting the hypothesis may be every quarter going forward, giving the kind of change going on.

 

Would you think the numbers could possibly change after the UP election results?

I won’t want to commit on this particular event, but there is no denying the fact that these numbers could go up or down depending upon the various factors. Which is why TYNY as a study is done twice a year, the first time its basis estimates for the 12 months, and the second time we do it is in the middle of the year around July-August when we have the actual data for the first 6 months…

 

Would you say the first few weekshave been fairly decent in terms of spends?

The first month hasn’t been very good at all and we see this continuing till April. In fact the first quarter is going to be pretty tight, things are going to start picking up fully from April onwards, and that’s the way we built up the report.

 

Post-demonetisation therehas been a bit of a scare for media owners with some publications shutting down, some publications shaving off lot of staff. Television has also been down in sales.What do you see is the environment for media owners? Given that you are predicting only a 10% growth, is that good tidings for them?

I think the big story coming out of all this is that we are living in an age which is so dynamic and which is getting so, I would say, which is all converging towards digital so fast that organisations have to kind of somewhere let go completely off the rules of the past when it comes to doing business… I think the base of change is so rapid that sometimes we are not able to kind of make adjustments and we are forced to kind of take some very very massive decisions in a very short span of time. I think if organisations are more on the ball, look at reality and start taking hard calls more often, things won’t reach a state that they have reached today. For example, the writing has been on the wall that digital is going to eat over the shares of traditional media companies for some time now. It’s not a new development. I don’t think demonetisation has anything to do with it. The consumer has moved to digital many years ago for consumption of various kinds of content.

 

Do you think people are using demonetisation as an excuse too…?

To an extent, I think so. I think there are so many other factors which are at play and even in this day and age there are organisations whether it’s in the media sector or whether it’s in other sectors who are continuing to do well because I think they have just been better prepared. I think they have been able to futureproof their business a lot better. For example, in our own case, we diversified our revenue streams many years ago. Today, given the presence we have across areas like content, sports marketing,  data analytics actvations and so on, we haven’t really felt as much of an impact because of the slowdown of the media sector than perhaps some of the more traditional agencies. And I guess the same holds true for other organisation and other sectors as well.

 

In terms of the overall numbers that you see, as per your predictions which sector of the industry has the brightest future?

See, these things change almost year to year. This particular year we are looking at auto, we are looking at BFSI, we are looking at one part of Ecomm which is Ewallets. We are looking at the media sector and we are looking at the government sector -

 

And FMCG continues to be around 27%-28%.

FMCG’s  contribution to the total AdEx will still remain around 27% or so.

 

One of the sectors which was not included in the entire study is the SME sector and that’s where the future of the country is and what’s where everybody is saying that the growth is in terms of advertising. If you were factored into that do you think your final numbers could have been little different?

Infact we factored in the overall base of advertisers. So that would include the long tail or the SME sectors as you call them as well. In fact a lot of the digital growth is not only coming from the established players but…

 

SMEs

…The first-time advertisers. We are finding in the last couple of years, first-time advertisers moving straight to digital because the entry costs are low because they are able to target the consumers a lot better and also measure the return. We see them continuing in the short- to medium-term.

 

2016 growth would’ve been 16% had there been no demonetisation: Sam BalsaraTalking to Labonita Ghosh on the sidelines of the Pitch Madison Advertising Report presentation, Madison World Chairman Sam Balsaraspoke on the dangers of depending too much (or only) on data, on e-commerce advertising and why he thinks the 13.5% growth is realistic

 

Some might say your forecast of 13.5% growth of AdEx or adspends in the year 2017 is very optimistic, especially since we had GroupM telling us just yesterday that it estimates growth to be 10%. Your comments on how realistic the growth estimate is…

Obviously we think it’s realistic otherwise we wouldn’t have put it up. Asyou’ve seen, last year, growth was very low, which has made us bring us forecast down. We do recognise that in the period from January to April, growth will below and that is whyour forecast is 13.5%, otherwise it would’ve been higher.

 

Tsunami is an interesting way to describe the impact of demonetisation. Had demonetisation not happened, what would you say the growth would’ve been last year?

The growth would’ve been 16%. And that is almost exactly what our prediction was in February 2015. It’s because the market de-grew by 8% in the months of November and December, that growth is down to 12.5%.

 

Your forecast on digital touching 43% growth is in line with the way it’s been growing in the last five years. Why do you think it wasn’t impacted by demonetisation?

 

Ofcourse it was. But digital also looks at leads, and search and all that stuff.Also, FMCG [advertising] is very low on digital, the lowest [of all media]. We’re not saying digital was not affected, but we’re saying that it was much less affected by demonetisation.

 

You have also said that January to April is going to be down. But this is also the time when we have elections. So no real impact of election spends?

Assembly elections don’t pull in that much money. And I think that these elections, coming on the back of demonetisation, have been a bit of a dampener, if I may say so. I don’t think political parties were as flush with funds as they normally are. I think we are seeing a more conservative approach by most political parties in these elections

 

‘Don’t over-depend on media data to support business decisions. Use data as a guide and not as a crutch.’ Now that’s quite a statement from a media agency veteran who has been and led most industry forums. Do you really think there is too much dependence on data?

 

What I meant to say was, don’t use data as a crutch. Don’t close your eyes and just blindly go by data. Use your common sense to question whether that data might be wrong or if it even makes sense. Take a holistic look at your plans, and don’t only say this is the data, so it must be like that, so let’s go with it.

I think there is not enough lateral thinking bring applied to data. And I think a lot of plans are routine, andthey get mechanically done. There is a belief that as long as the GRPs and TRPs are met, I’ve donemy job. But it is possible, that despite all these being met, the brand doesn’t do well. And I think we’ve seen quite a few examples of that.

 

E-commerce, as we have seen, has hit the adspend bottomlines. Madison has its own share of e-commerce clients and one of these which has been a big budget advertiser. Do you expect it to go down or up?

I think e-commerce spends are guided more by the penchant of the investors, and I think investors in e-commerce behave in a very erratic manner. So I wouldn’t like to hazard a guess on what e-commerce investors are thinking of, or will think tomorrow

 

 

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