An ode to Advertising 3.0

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: keenness to do so.

Both quantitatively and qualitatively, therefore, India is in for heady times. Our economy is robust and only 22% of it is export dependent. Our products and services principally serve the local market. And the western market needs our low-cost service inputs to bring their economies on their feet, albeit at highly competitive terms. Therein lies the challenge and the opportunity and Indian business is confident of seizing the opportunity. Be that as it may, the advertising industry will be affected by this economic downturn. There will be some corrections required.

There is some fat that has been added to the system and times like these will help us shed them. Further, the advertisers require a different kind of service to address their immediate needs. They are looking for help that not only generates sales leads but one that can help close the sale. This is where marketing services industry would have a significant role to play.

In the USA, according to Advertising Age, the total spend in marketing communications was of the order of $31billion in 2007. Of this, advertising and media spends were of the order of $ 16.4 billion and spends on marketing services—direct marketing, promotions, digital, healthcare and public relations—accounted for the balance $14.6 billion. The ratio was 53:47 between above-the-line (ATL) and below-the-line (BTL) advertising.

While we don’t have hard estimates on BTL activities, it is generally believed that it is about 25% of the total marketing communications spending. The growth we saw in the ATL advertising since 2000 is likely to soften. From the highs of 15-20% growth we witnessed since the start of the millennium, we are likely to witness a modest 5% to 7% growth in the year 2009 and probably 2010. The growth in BTL was quite impressive in the preceding periods, but this is unlikely to be significantly affected in the next couple of years. BTL, particularly events and activation, digital/interactive media, promotions etc promote immediacy in sales and companies are likely to embrace such processes, rather than brand related advertising. Over the next few years, India is likely to match the relative (53:47) USA market spends of ATL and BTL.