YEAR 2014 could just turn out to be a far better year for the media and marketing industry than was envisioned at the beginning of the year, if the country?s largest media buying company is to be believed. GroupM India, the media buying arm of marketing communications conglomerate WPP Plc revised its annual advertising expenditure growth forecasts for year 2014 to 12.5% from 11.6% released earlier this year, based on a forward looking economy. CVL Srinivas, chief executive officer, GroupM South Asia, says this festive season is expected to be good for all media as advertisers attempt to create a big impact over a four- to six-week period. “Categories that traditionally focus on the festive season such as consumer durables, retail and auto are expected to see a surge in spend in the coming months. E-commerce is expected to continue showing strong growth. The government is expected to step up spending as more schemes roll out. There will also be political advertising linked to Assembly elections starting soon in several states. All put together, it looks like the festive season will see a healthy double-digit growth over the previous year.?
According to the WPP entity, total ad expenditure was R38,598 crore in 2013. For 2014, it says television spending is set to grow by 14.8% as against the previously predicted 12% in India. Digital media continues to show the maximum growth with 35%. In the print medium, regional publications and local advertisers are projected to lead the growth for dailies. What gives further impetus to this growth in ad spend estimates is the festive season that has just started with Raksha Bandhan and Ganesh Utsav and then proceeding on to Navratras and Diwali, and finally culminating into Christmas and New Year.
The Associated Chambers Of Commerce and Industry Of India (Assocham) in a recent white paper said that faced with a hard sell situation, companies are gearing up to spend 25-30% more on advertising this festive season as compared to that of last year. Consumer durables, electronics and auto are expected to take the lead, but the blitzkrieg is expected in the e-commerce space vying for higher sales in mobile phones, shoes, apparel, gifts and electronic gadgets. Attractive discounts are expected from the main players in the e-commerce space in tie-ups with the manufacturers of mobile handsets and other electronic gadgets, says Assocham. Its general secretary DS Rawat says, ?Though companies are facing higher cost pressures due to high interest rates, rising raw material costs and wages, marketing expenses mainly through advertisements in television, newspapers and the social media have become unavoidable. Companies in the media sector have become the main beneficiaries.?
Improved performance of mining, manufacturing and services sector has pushed India’s GDP growth rate to a two-and-half year high of 5.7% in the April-June quarter, and the economy could be gearing up for a comeback. “The first six months of this calendar year saw a 14% growth in ad spends at an overall level,” Srinivas said. He concedes that after a cautious start to the year, the overall sentiment is positive because the scenario has been charged up by the elections and a new stable government. ?One of the sectors that is adding to the growth story in India is retail, especially e-commerce players that are investing heavily in above-the-line advertising along with digital media. Industries such as FMCG, auto, telecom and BFSI (banking, financial services and insurance) are expected to increase their spend given competitive pressures and clear policies,? he said.
As much as R9000 crore worth of advertising money is pumped in during the festival season which is about a third of the total ad spends, says Ashish Bhasin, chairman and chief executive officer, South Asia, Denstu Aegis Network, ?This year, it could be more because of the surge of optimism. It could even touch R12,000 crore. In categories such as e-commerce, there could well be a 100% growth in ad spending. Flipkart, for instance, has raised funds of over $1 billion. The real estate market is looking good.?
Other media buyers give far more conservative estimates of R5000-6000 crore ad spends for the September-December period. Ad revenues grew under 5% in the first quarter of this year over the same period last year, they said. The mood is still more cautious than optimistic, says Mallikarjundas CR, chief executive officer of Starcom MediaVest Group. ?The optimism may or may not translate into increased ad spends. We will know the real situation closer to October,? he said.
Raj Nayak, chief executive at Colors, Viacom 18 Group said that 2013 was a pre-election year and advertisers were cautious. This year, the sentiment is very positive and he hopes that it translates into big spends as well. ?Pre-festive spending is a big thing in India whether it is Eid, Ganesha, Onam, Pongal, Durga Puja, Dussehra or Christmas. Advertisers up their spends based on specific markets at this time. This festive season too, we think that with more brands competing for the consumer?s mind space, advertising will be high. Our biggest show Bigg Boss comes during this
period and this helps us monetize
better,? he said.
The Flipkart spokesperson said that the e-tailer sees about 4 million visits a day, and about 5 million shipments a month. ?As per Alexa traffic rankings, we are amongst the top seven most visited sites in India. We are expecting traffic to significantly go up during Diwali,? the spokesperson said.
Brands unfold festive plans
The Ganesh Chaturthi festival in Mumbai is one that is celebrated with fervor and sees an outpouring of huge emotion. This time around, brands such as Parle Products, Tata DoCoMo, Godrej Home Safes, Biba and Theobroma were associated with the festival. Parle Products, a biscuit and confectionary manufacturer, is associated with Mumbai?s ?Lalbaug cha raja pandal? which is by far the most popular one in the city. This year, there was a six-foot-tall Ganesh idol made out of Parle biscuits. A lot of spot contests were also organised.
Coca-Cola India has also rolled out its ad campaign for the festival season, led by brand Coca-Cola. The campaign is called ?Formality hatao, Coca Cola pilao? while Mondelez India Foods (Cadbury) has refreshed the designs of the Cadbury Celebrations assorted range packs for the festive season.
?We understand that festivals are the perfect time to celebrate and share moments of happiness at family reunions, informal get-togethers with friends and other impromptu gatherings. However, these occasions are often marred by the burden of ?formality?, which reduces the joy of socialising,? said Debabrata Mukherjee, vice-president, marketing and commercial, Coca-Cola India. ?We have developed our new festival campaign based on this insight. Through the campaign, Coca-Cola will be seen championing the cause of spontaneous, real social interactions between people.? In addition to mass media advertising, the campaign will be extensively leveraged through social media, radio and marketing at point of sale. ?Coca-Cola India will also soon be rolling out the special Coca-Cola festival gift packs which will include the unique Coca-Cola bell glasses,? he adds.
Siddhartha Mukherjee, director, chocolate and media, Mondelez India Foods said that its new packs available in the traditional and modern trade outlets have been well-received. ?We have seen a healthy growth in the sales of our premium range, Cadbury Celebrations Rich Dry Fruit Collection, which continues to drive the festive gifting portfolio. There will be a complete 360-degree integrated marketing campaign for Cadbury Celebrations. We will also continue to invest in store activation and sampling of the Rich Dry Fruit Collection, to build preference for the brand,? he said. The company has also launched its luxury year-long gifting product ?Cadbury Glow? which attempts to reach out to affluent customers. The new product ranges between R400-600 for standard packs and R2000 for the limited edition pack.
Parle Products says that it will launch a range of new gifting options for the festive season. Mayank Shah, deputy marketing manager at Parle Products says that FMCG companies should post good growth this festive season, especially those that ride on premium offerings. ?Festivals offer good opportunity for consumers to up-trade through gifting options of premium products. Given the improving sentiment across sectors and better economic scenario, consumers are more optimistic and are likely to spend more,? he says.
Arun Bhawsingka, chief executive, Portico New York says that sales in the furnishings space go up by 25% during the festive season. ?Consumer spend on home d?cor has increased considerably in the last few years. Our specially designed festive collection Shubh Mangalam was very popular last year. Revamping homes by merely playing with the soft furnishing is what is trending today,? he says. Portico New York?s new soft furnishings collection is called ?Happiness is?. ?The whole idea being that this festive season we should gift each other ?happiness?,? he adds. Portico New York plans a big ad campaign this season. This includes print?campaigns, which began from September, social media engagement to?engage?and inform consumers, on-ground activation, branding and product display in stores.
Will this be a cracker of a Diwali? Big advertisers this festive season are likely to be Amazon, Samsung, Snapdeal, LG, Sony India, Reliance Retail, etc., say media buyers. Auto companies such as Maruti Suzuki, Hyundai and Honda Motor Co have seen a sharp spike in sales because of the festive season rush. Maruti?s sales for instance have seen a 29% jump in August to reach 98,304 units over the same period last year. Honda Motors has seen an 88% rise in sales at 16,758 units. A slew of launches such as the Tata Motors Zest, Hyundai Motor?s Elite i-20 and Fiat India?s Punto Evo have hit the auto category. Rohit Gupta, president of Multi Screen Media (MSM) says that last year, the festive season was extremely low key and most brands had crimped ad spends. ?Under the new political leadership, wave of optimism, investments and a Sensex that is faring far better, advertisers cannot hold out. It is good to see a revival in ad spending. Consumer goods purchases would show stronger gains. In the festival months, we should see an ad spend growth of at least 30-40%. Last year, media and entertainment companies had barely seen a growth of 10% in ad revenues.?
Arunabh Das Sharma, president, Bennett Coleman & Co said that a lot of this new found optimism could just be a flash in the pan. ?Often reality doesn?t quite meet expectation. There is great disparity in the ad estimates given by audit firms and media buying companies and what is actually witnessed by print companies on ground. Many of these firms revise estimates if the advertising spends don?t come in. While it appears to be a good year, the incremental revenues may not be significant enough. There are no dramatic shifts. It will take time for economic reforms to kick in, and most companies are counting on that. Consumer durables and retail will remain active during this time of the year. Auto should also advertise consistently because of new launches. But overall, the monsoon, the economic growth and expectation of big picture reforms has marred the sentiment somewhat. Many advertisers continue to be cautious.?
Suresh Srinivasan, vice president at The Hindu said that though the uptake was slow in the first quarter of the year, things have marginally picked up in terms of advertising in July-August 2014. ?Going by the Onam and Durga Puja response, the advertising flow has just about met expectations. The advertiser response has not been phenomenal for sure. In south India, the real estate market is reeling from over-supply and dying demand. The government advertising is yet to kick in. The white knights are really the auto and e-commerce companies.?