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Rattled by slowing GDP growth, advertisers have been circumspect about their ad spends. Going by estimates, growth in ad spends could be anywhere between 7-8 per cent, roughly the same as last year's. But vernacular print and digital seem to be the media that are increasingly becoming relevant to an advertiser's media plan. TV, even when commanding a lion's share of the advertising pie, is having mixed luck.
Over the last decade, ad-spend growth in India has averaged between 10-15 per cent every year. But like the gut-wrenching last year, if advertising cuts continue this year too, it will take the industry two-three years to recover, much like in the 2008-09 slowdown. "The heydays of 15 per cent growth are not possible for a few years," says Ravi Dhariwal, CEO, publishing, Bennett, Coleman and Company.
The outlook for ad spends in 2013 looks bad for now. The hardest hit have been the news and non-fiction genre on TV. "In April and May (this year), across news and factual entertainment, we have seen cuts of 15-20 per cent on inventory (both in value and volume), compared to the same months last year," says Ajay Chacko, chief operating officer, Network18. "Business has been bad from July last year. The news industry continues to be in a single-digit (percentage) decline," says Ashok Venkatramani, CEO, MCCS, the company that owns ABP News.
What remain indispensable in TV plans are the entertainment channels. The entertainment television business is on a roll, thanks to consolidation. The top five networks - Star, Sony, Sun, Zee and Network18 - control just over 65 per cent of the total viewing time spent on television. Their networks house anywhere between 10-35 channels, each. They are critical for any advertiser's media plan. So, they will continue to grow. For instance, Sony's compounded annual growth rate in the last four years has been more than 35 per cent, according to Rohit Gupta, president, network sales, Sony.
If the 12-minute-per-hour ceiling for advertisements on TV is strictly implemented, it could improve the average growth rate in ad spends. With curtailed supply of ad time on TV, prices are estimated to go up by 20-30 per cent. This will invariably push the industry average up to 10-11 per cent, says Satyajit Sen, CEO, Zenith Optimedia. That is because TV still commands a whopping 45 per cent of the Rs 32,700-crore ad pie.
However, prices will remain a bone of contention for news broadcasters with two-three channels, ie. networks smaller than the general entertainment networks. "With 10+2 around the corner, we need a bullish environment, that doesn't exist. So taking rates up is going to be a challenge," observes Venkatramani.
But TV's dilemma has worked in favour of newspapers, especially Indian language papers. "We are experiencing better times since the last few quarters, as national advertisers have started focusing more on tier II and tier III towns. This is true especially for categories that were earlier either broadcasting-centric or metro/English-centric like FMCG, lifestyle, automobile, mobiles and so on," says Girish Agarwal, director, DB Corp, the publisher of Dainik Bhaskar and other media brands.
Consumer goods marketers, unhappy with the imminent increase of 30 per cent in TV ad rates, are thinking of limiting their total reach on TV, and upping their newspaper spends. On the contrary, price wars among vernacular papers expanding to tier II and III cities in India, have led many of the newspapers to drop rates.
Some advertisers now talk of using print plus digital to reach out to smaller towns, without the waste that TV brings. "You can do a lot of strategic communication through digital and social media. You can build up campaigns on digital, and amplify on old (traditional) media," says Vinay Piparsania, executive director, marketing and sales, Ford India.
On the back of lower rates, rising penetration and full-throated marketer-support, digital advertising has grown the fastest, by as much as 41 per cent in 2012, over 2011. It looks like it will continue at a similar clip this year, too.
Digital was only a single-digit percentage of Ford India's marketing spends. It is now a double digit percentage. "Our media mix is more skewed to the non-traditional media," says Piparsania.
Such advertiser leanings could well challenge the anticipated prospects of 11 per cent value growth this year.
Spends shrink as crunch continues
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Rates for TV ad spots are set to go up by 20-30 % if ad time is curtailed on TV
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Increase in ad spots rates could raise the industry average of ad-spend growth from the estimated 7-8 % to 10-11 %
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News and factual entertainment have it hard when ad spends have shrunk, with some seeing cuts of 15-20 %
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Networks with anywhere between 10-35 general entertainment channels remain indispensable for media plans
- Vernacular print is popular with consumer goods advertisers as they search for new markets in the hinterlands
