Falling sales in many sectors, coupled with uncertainty, have taken a toll.
A steep drop in sales across industries, amid persisting uncertainty in domestic and global markets, have driven companies to rethink marketing budgets, curbing growth in advertisement volumes across radio, print and television platforms.
While total ad volumes across media platforms have not registered a decline, the growth rates have moderated sharply over last year. Data with TAM, which monitors ad expenditure, shows advertising on television had grown by 24 per cent between January and September 2010. This year, it has been 19 per cent. In print, the growth this year has been 17 per cent (against 27 per cent in the year-ago period) and in radio, 14 per cent (from the earlier 44 per cent).
A senior executive at a media planning agency said on condition of anonymity, “Overall ad volumes have not declined but have been stagnant. Insurance has been wiped out, lending and pure banking segments have slowed, which has affected investment plans. Items of consumption dependent on financing options, such as automobiles, have taken a hit. Personal care sectors were under stress on account of competition. As a result, companies rationalised ad spends.”
Passenger vehicle sales in the domestic market dropped 24 per cent, the sharpest in a decade, in October. While automobile companies upped ad spends in print and radio, marginally improving their share in the ad pie on the platforms, that on TV remains unchanged.
Food and beverage companies, top spenders on television and on radio, have cut their share in overall ad pie on the media to 14 per cent (15 per cent in 2009) and seven per cent (11 per cent in 2009), respectively. Similarly, firms in the educational sector now contribute 14 per cent to total ad volumes in print, as compared to 18 per cent in Jan-Sept 2009.
“It has been a difficult year. The tsunami wiped off Q2 growth for advertisers who import from Japan. The liquidity crunch affected business in the latter half of the year. Next year would not be bleak but industries would have to struggle for growth. Firms would have to focus on growing the market, rather than reaping the benefits of a buoyant economy,” said Sudha Natrajan, deputy chief executive officer, Lintas Media Group.
Interestingly, the services sector and electronics goods did brisk business despite the sluggish scenario in the domestic market. In November, India’s services sector expanded after three months, despite inflationary pressure, on the back of new business.
The segment has been relatively resilient to the fluctuations in the market.
The segment’s share in the ad pie in print and radio have gone up to 14 per cent (from 12 per cent in 2009) and to 17 per cent (from 13 per cent in 2009), respectively.”
While market observers said fast moving consumer goods and automobile companies would re-intensify marketing focus to drive up volumes in the coming quarters, Satyajit Sen, chief executive officer, Zenith Optimedia, is cautious. “There has been a rationalisation in ad spends across sectors. How much people invest in the coming quarters will depend on how bullish the growth estimates are for the next financial year,” he said.
