MUMBAI: Hit hard by the cash crunch post demonetisation and consumers cutting back their spends, advertisers across various categories have been forced to cut back on their advertising expenditure (AdEx).
The trend of scaled back advertising spends is now visible across media platforms--be it TV, print, radio or outdoor.
Multiple executives of leading media buying and planning agencies ET spoke with have started to acknowledge that many of their clients have scaled down, cancelled or defered planned campaigns.
“First we looked at it as a knee-jerk reaction and thought things will get sorted by end of November. Now many (advertisers) have clamped down on their ad spends for December too. Conservatively speaking, the industry is staring at a loss of upwards of Rs 1,500 crore,” a top executive of country’s leading media buying agency said on condition of anonymity. Just today, two of his major clients had cut their ad spends.
A chief executive of a broadcast network added that situation has been “bleak” all through last week. “My ad sales head doesn’t know how December is going to be. All FMCGs have slowed production as well as ad spends.”
It is not just TV but across the media sentiments are down, at present.
Ashish Bhasin, CEO – South Asia at Dentsu Aegis Network, is estimating the loss anywhere between Rs 1,500-2,000 crore. He argued that the fourth quarter of the calendar year witnesses disproportionately higher spends, which amounts to 35-40 per cent of the year’s entire adex. “Our study shows that out of Rs 50,000 crore of ad spend during the year, about Rs 20,000 crore was to be spent in this quarter. Now, even if half of the expenditure (Rs 10,000 crore) has been spent till November 15, the remaining Rs 10,000 crore will see a 15% to 20% hit, which would result in the loss of Rs 1,500 - 2,000 crore,” he explained.
According to Bhasin, the loss is huge and sudden and even if turns out to be short-term, the bounce back will take not less than a quarter, in the best-case scenario.
While agreeing at a 15-20% drop number, many top bosses of the industry are not willing to put a final number, emphasising the “short-term” impact and a more positive long-term outlook.
Shashi Sinha, CEO at IPG Mediabrands India said, “In my opinion this is a temporary, short-term disruption. Please take into consideration that this is not recessionary situation and marketers are just being cautious with their ad spends. The market will stabilise from January 2017 onwards.”
Anupriya Acharya, CEO at Publicis Media felt that situation will now improve. “Over the next few weeks, ad spending may be impacted in the range of 15-20%... Our view is that with sufficient cash infusion in the coming weeks by the government, the demand for goods and services should pick up and this shortfall will only be temporary.”
Some experts have a more conservative view on the Adex cut.
Sam Balsara, CMD of the Indian diversified communication group Madison World, estimates a loss Rs 1,000 crore adex in the short-run.
“It is realistic to say that the media industry stands to lose Rs 1,000 crore in terms of advertising revenues as the clients have cut back on their spends starting mid November,” Balsara said. However, he added that in the larger context, the demonetisation have a positive impact on the economy.
The ground reality today is that there is a growing sense of uncertainty and of panic among the media companies. Media companies across the spectrum, from television broadcasters to newspapers and magazines to FM radio players, are looking at a quarter of muted growth and targets going haywire as the biggest categories - FMCG, real estate, jewellery, retail, automobiles etc. have started cutting advertising spends.
But Acharya of Publicis Media is hopeful that things will settle in, over the next couple of months (December-January period). “The government has undertaken many new measures on policy and demonetisation is expected to augur well for the economy long-term... So while we expect a bit of fluidity, we are not expecting any major long term impact on consumption or advertising,” she said.
"I feel in the mid to long term it will actually be positive for the advertising industry as (demonetisation) is expected to benefit the GDP and our studies show that advertising growth is 1.5 times of GDP,” added Bhasin.