Fireworks less bright, but not media players outlook

13 Sep,2011

By Ritu Midha & Dhara Salla

 

Picture this:

 

– As per a recent survey India’s wholesale price index (WPI) likely rose an annual 9.6 percent in August
– As per Government data released recently, India’s food price index rose 9.55 percent while the fuel price index climbed 12.55 percent in the year to Aug. 27
– As per a Paris based think tank OECD, India, China and most of the developed world are witnessing strong signs of economic slowdown
– August domestic car sales are down 10.1 percent. Total passenger vehicle sales are down 5.9 percentA recent AC
– Nielsen study talks about the reducing consumer sentiment in India in the Q2, 2011
– FICCI and CII have expressed concern on falling business sentiment

And it is almost time to wish Happy Diwali!

The point to ponder here is that, in this backdrop, would the consumer be in a mood to delight the marketers, and would marketers in turn be in a mood to delight the media owners? Or, would they rather use a big chunk of their promotional budget on directly delighting the customer, through special offers and discounts.

As is known, the festive season in most years sees a remarkable increase in ad spends. Ms Punitha Arumugam, CEO, Madison Media Group, explains,About 30 to 40 percent of ad spends come from FMCGs spends in this category are, by and large, not too influenced by festivals. It is the balance 60 percent that spends more during festive season. Keeping that in mind, I would say spends in Q3 of the year would usually be higher by 20 percent or so as compared to the other quarters.


Media players: optimism unlimited


If one looks at print in isolation, spends during festival season increase even more due to the increased spends by categories like autos. Q3, as per Mr Peter Suresh, Head Strategy, Dainik Bhaskar Group typically accounts for almost 35 percent of the annual ad revenues.

 

As for this year, stresses Mr Shantanu Bhanja,Vice President – Marketing, Hindustan Times Media Ltd,There will be an upswing during the season.

 

But would the cash registers ring that loudly for media companies this year? Perhaps not.

 

As per a few experts, ad budgets have already been cut down and the heat is being felt by print media first. To quote Mr Harish Bijoor, CEO, Harish Bijoor Consults, Ad spends are already affected. Marketers have reduced ad spends, and in many cases cut their spends on print altogether. Television is gung-ho as yet though, he adds, For the moment.

 

And gung-ho it is. Mr Rohit Gupta, president, network sales, licensing and telephony, Multi Screen Media emphasizes, Even when we witnessed the biggest global slowdown a couple of years back, the television industry was not affected to that extent. Television is one of the most accountable advertising media, and therefore, slowdown if any, will not have much effect on advertising trends. Overall marketing budgets might be cut down but not the spends on television.As for his own network, he expects growth in ad spends to be to the tune of 30 to 35 percent.

 

Mr Gupta has an ally in Mr Rahul Johri, Senior Vice President and General Manager – South Asia, Discovery Networks, Asia Pacific. He too is very positive that television is all set to gain this Q3 as is the norm every year, As the consumers gear up for the festive season, we can see a positive curve across a category of brands. Year-on-year we have witnessed growth in advertising during festive season on our channels and we anticipate the same trend this year as well.

 

Do the television channels, then don’t need to be worried about ad budget cuts? The opinion here is divided. While a few television players believe there would be no impact, others have a difference of opinion. Mr Bavesh Janavlekar, Deputy VP Marketing, Zee Marathi and Zee Talkies simplifies the predicament, There is a huge splurge on the spends at the customers end during the festive season starting off with Ganpati, Diwali etc. The spike is for the simple reason that consumers are in a mood to spend, and advertisers amplify that opportunity. However, low GDP growth will definitely have an impact on festive ad spends to what extent, remains to be seen.

 

The general feeling, however, is that the festive season just might bring the cheer back in the marketplace . Mr Bhanja explains, Advertisers want to make the most of this increased propensity to spend coupled with increased discretionary income that the festival time brings…This is also a great time for advertisers to launch new products, and capture the general positivity of the Indian consumer during the season.

 

Mr Suresh too states that though there is a slowdown at the moment, festivities just might help in lifting the spirits all around. He states with cautious optimism, We have also been impacted with this slowdown along with other media players. It is quite difficult to issue a forward-looking statement in the current scenario. However, we do remain optimistic.

 

Media experts: festivals have lost a bit of sheen

The optimism of media owners, at this juncture, is not mirrored by media planners and buyers.We had predicted approximately 17 percent growth in ad spends this year, but by looking at the current scenario, in my view, it would be closer to 10 percent, states Ms Arumugam,Most marketers were expecting exponential growth this year however, nothing very dramatic happened in January to June 2011 quite a few companies saw single digit growth, and it has directly influenced ad spends.

 

Does that effectively mean that one would not see any increase in ad rates this festive season. Explains Mr S Yesudas, Managing Director – Indian Sub-Continent, Vizeum Media Services,There is usually no increase in ad rates during festive season. And this year, due to market dynamics, I do not see this happening at all.

 

As per the media experts, though, both TV and print would not see any noteworthy growth in ad revenues, print would be hit more. Ms Arumugam comments,Though both television and print would be affected by the slowdown, impact on print would be far more pronounced.

 

But don’t the categories that spend more during festive season, also spend largely on print? Yesudas takes pains to explain, Categories that are print-centric like automobiles and traditionally advertise more on print  will continue to do so. Specially those which are under pressure due to falling sales will need to reach out to the consumers with their special offers. It is the categories which are not heavy spenders on print that would cut their print budgets further.

The scenario does not look too festive at the moment. However, marketers definitely are getting ready to woo the consumer in a myriad different ways. In media too, one might see a lot of innovations and innovative offers to enable the marketers to reach the consumer in a more impactful way.

 

Photograph: Fotocorp (www.fotocorp.com)

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2 responses to “Fireworks less bright, but not media players outlook”

  1. Burjor Patel says:

    How about a reseach based story on India clients advertising abroad?In view of the slowdown within the country do they see an increased spent abroad specially in asian and gulf countries.Tourism,Health tourism,real estate,retail goods with distributors abroad etc may be looking at these markets.

    • mxm_india says:

      Yes, Mr Patel. Thanks for the idea. We will pursue it. Thanks for commenting,
      Regards, Pradyuman Maheshwari

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