After a two-year lull, advertisers are loosening their purse strings with great gusto this festive season. With business activity back to normal after a prolonged period of disruption caused by demonetisation and the subsequent rollout of goods and services tax (GST), and good monsoons fuelling rural demand across categories, media planners and buyers say the sentiment is expectedly buoyant ahead of the festive period that begins with Ganesh Chaturthi and ends with the New Year.
“I expect Rs 25,000 crore of advertising spends this season," says Ashish Bhasin, Dentsu Aegis Network’s chairman and CEO - South Asia. "I expect an 11-12 percent increase in advertising growth in CY2018 over CY2017 and the festive season will show a similar uptick, if not slightly more.”
Festive advertising expenditure in 2017 was approximately Rs 18,500 crore, according to figures provided by the Dentsu Aegis Network.
“A lot depends on the monsoons. There is hope that the monsoons have taken off reasonably well, although not perfectly well. If that goes off well, then rural demand starts kicking in and a lot of products like fast moving consumer goods (FMCG), two-wheelers, cars and financial products get influenced significantly by rural spends. So that's a big impetus,” adds Bhasin.
Partha Ghosh, COO - West & South, Percept Media, expects the advertising expenditure during the festive season, which accounts for 40 percent of annual advertising expenditure, to grow between 12-15 percent this year. “These figures should translate to festive ad spends of Rs 22-25,000 crores -- it's a big basket,” says Ghosh.
“We've already begun to see an uptick in the months of April, May, June, July and I must say the actuals have been higher than our estimates. Based on that data, I'm optimistic that the festive season is going to be more buoyant than it was last year,” says Sam Balsara, chairman and MD of Madison World.
Asia Cup and State Elections
Encompassing important sporting and political events, this year's festive period will uniquely offer far more opportunities to advertisers and marketers. For one, the Asia Cup is slated to begin right at the onset of the festive period, and with India playing against arch rivals Pakistan on September 19, this will lead to significant eyeballs for advertisers. The Asia Cup 2018 will be hosted by the UAE from September 15 to 30.
By December, several states including Madhya Pradesh, Rajasthan and Chhattisgarh will go to the polls, and the slew of political advertisements released in the run-up to the assembly elections will also add significantly to the advertising inventory.
Predictably, FMCG, the mainstay of advertising, will continue to heavily advertise during the festive period as will automobiles, two-wheelers and financial products. But it is the emergence of new categories that are now contributing to the advertising basket that is catching the attention of media planners.
New categories that are taking to advertising in a big way during the festive season, especially on digital platforms, include ecommerce companies, OTT (over-the-top) platforms such as Netflix and Amazon Prime, Direct-to-Home players such as Dish TV and Tata Sky, artificial intelligence (AI) products from Google and Amazon and wearable health devices, say media planners and buyers.
Rise Of Regional Players
While advertising continues to be heavily dominated by national players, the past two years have seen the rise of regional and small players across the country. Industry figures say 12,000 regional brands are active today and this number is set to rise further. Media planners and buyers, however, are divided on how regional and small advertisers will contribute to the advertising expenditure (adex) kitty this year.
Partha Ghosh of Percept Media believes regional brands will be out in full force this year after shaking off the sluggishness of the past two years. “Regional brands have limited resources. They look for opportunities to communicate and the festive period is the most important among them. Hence, they tend to release their marketing budget much more disproportionately during this period than at any other time of the year. The share of voice of national and regional brands tend to come very close during this time,” says Ghosh.
Shashi Sinha, CEO of IPG Mediabrands India disagrees. “In 2017, GST hit small and medium advertisers the most. They got affected because all the arbitrage of cost they had was lost. I'm not sure if there's been a big rebound there and whether they would add a significant amount to the adex kitty,” says Sinha.
While the advertising industry is all set to grow by a robust 12-15 percent this year on the back of a strong festive period, media buyers say the rate of advertising growth across different media will vary vastly.
Media buyers unanimously agree that digital advertising is the fast growing, with year-on-year growth rates as high as 35 percent, which will continue in the future as well. Television advertising, which is expected to grow on the back of increasing TV penetration across the country, is estimated to grow by 12-14 percent.
As for print, while India is one of the few global markets where print advertising is still growing, it is expected to be the slowest among all media, with growth rates pegged as low as 3-4 percent.
That is why brands are investing heavily in their digital presence. Earlier this year, a joint report published by the Internet and Mobile Association of India (IAMAI) and Kantar IMRB stated that expenditure on digital advertising would continue to grow at a compound annual growth rate (CAGR) of 30 percent to touch Rs 12,046 crore by December 2018.