NEW DELHI: India Inc. may spend close to Rs 20,000 crore on advertising, marketing and promotion in the four-month festive season that's under way, a 12 per cent increase from levels last year, according to four top media planners in the country.
Consumer durable companies are expected to be among the largest spenders during the festive season, increasing their marketing expenditure by as much as 10 per cent.
Consumer sentiment is expected to be buoyant due to a good monsoon and higher salaries and pensions with the implementation of the Seventh Central Pay Commission recommendations. "We expect a good festive season this year with a growth of 12 per cent over the last year," said Ashish Bhasin, CEO South Asia, Dentsu Aegis Network.
"The sectors which advertise for tier-II, tier-III cities such as two-wheelers, consumer durables and others are expected to spend. The estimate spend during the four months from September to December is Rs 20,000 crore."
The festive season starts with Ganesh Chaturthi and Onam in September, peaks during Diwali and continues on to Christmas. With the season contributing 40 per cent of annual sales, companies spend heavily on advertising to make the best use ofthe biggest shopping opportunity of the year. The surge in consumer spending drives sales for several categories of products, ranging from phones and clothes to vehicles and jewellery.
Spending by ecommerce companies, which were among the big advertisers during the previous two festive seasons, dropped to Rs 394 crore in the first half of 2016 from Rs 629 crore in the first half of 2015, according to the Pitch Madison Mid-Year Advertising Report 2016.
Advertisers in India will increase spending by about 13 per cent to Rs 49,812 crore in 2016, said Pitch Madison in the report. Although ecommerce spends are suppressed, handset makers, automobiles and FMCG companies will more than make up for them this festive season, as will Reliance Jio Infocomm, the new mobile phone operator, according to Sam Balsara, chairman of Madison World, the company that buys media for Snapdeal and ITC, among others.
"The worry is not how much the big three ecommerce companies will spend as much as the 50 others who have packed up. Jio is the new kid on the block and will also spend heavily," Balsara said. The big online retail platforms — Amazon, Flipkart and Snapdeal — are expected to run aggressive campaigns. Snapdeal recently announced a budget of Rs 200 crore for advertising during the festive season.
"The larger players are expected to spend heavily during the festive season. But there will be fewer advertisers in the ecommerce category as compared to the last festive season," Bhasin of Dentsu said. Funding for ecommerce companies has reduced and several smaller platforms do not have enough money to spend on advertising. "While television and print both see an uptake in demand during the festive months, it is skewed slightly towards the print media.
Sectors such as ecommerce, handset makers and automobiles bank heavily on print, increasing the demand by up to 25-30 per cent as against the regular months," said Mallikarjun Das, Group CEO of Starcom India. However, some media planners said that while there is an upsurge in sentiment, there is hardly any uptake in terms of spending.
"The quarter with festive season will definitely be better than other quarters, but whether it will cover the deficit of the rest of the year is a question," said Anita Nayyar, CEO India & South Asia at Havas Media.