With companies readying a slew of product launches, media buyers expect them to spend liberally on pushing their products
Hoping to cater for pent-up demand and revive consumer sentiment in the festive season, companies are readying a slew of product launches. Given this isn’t going to be easy, media buyers expect companies to spend liberally on pushing their products; as per a Madison Media study, the total ad spend in 2020-2021 is pegged at `55,000-58,000 crore. Ad spends in the second half of 2020, the biggest shopping season, are expected to be 6-13% higher year-on-year. In 2019, the months of October-December saw spends of `20,000-25,000 crore. About 40% of annual ad spends take place during the festive season that kicks off with Ganesh Chaturthi and Onam and continue right up until the new year.
Typically, the festive season brings in more than 40% of annual sales. Hence, many companies set aside a sizable chunk of their annual advertising budget for this season.
Last year, the combined effect of IPL, World Cup and general elections resulted in the festive season reeling in only 25% of the annual ad spend at about Rs 20,000 crore.
Media buyers are expecting companies to be liberal this time around and expect ad spends to clock around Rs 20,000-25,000 crore worth of business during the months of October-December. As per a Madison Media study, ad spend in the second half of 2020 is expected to be about 6-13% higher than the second half of last year. The report says the total ad spend in 2020-2021 could be in the range of Rs 55,000-58,000 crore.
However, this will not make up for the loss that the industry has suffered in the first two quarters of the year.
According to Ashish Bhasin, CEO, APAC and chairman, India, Dentsu Aegis Network, the advertising industry will register a decline of 15-20% in FY21.
Industry analysts say that companies are waiting to advertise during the next four months after months of cutting down on ad spends. Right now, the advertising industry is said to be functioning at about 70% of last year’s levels.
Consumer durables, smartphones and automotive companies are planning new launches ahead of the festive season. For instance, Panasonic is launching a new range of washing machines and refrigerators this festive season. Shirish Agarwal, head — marketing communications and brand, Panasonic India, says, “There was a latent demand for high-end consumer durables as we were confined to our homes, with limited or no domestic help. Therefore, we expect greater sales of high-end appliances such as 55-inch and larger TV models, 550-litre refrigerators, fully-automatic washing machines and grooming products this festive season.”
Xiaomi launched an affordable smartphone, the Redmi 9, priced at Rs 8,999 on August 27. Further the company will launch the Mi TV Horizon Edition in India on September 7. Given greater interest in owning a personal vehicle to avoid public transport, Kia Motors will introduce a compact SUV, Kia Sonet, in September.
Other than these categories, e-commerce brands, OTT streaming services, mobile gaming apps, and edtech brands, too, will advertise during the festive season. “Brands in categories that are active during the summer like air-conditioners, fans, colas etc will remain dormant,” says Navin Khemka, CEO, MediaCom, South Asia.
“While we do not expect a quick ‘V’ shaped recovery, it will be a gradual growth with every month being better than the previous one. By Diwali, the industry will observe a greater degree of normalcy,” says Bhasin.
The early trends are promising. “With Ganesh Chaturthi, we have seen a healthy demand and gradual normalcy with most advertisers willing to spend at pre-COVID levels,” says Ashish Sehgal, chief growth officer, advertisement revenue, Zee Entertainment Enterprises.
According to industry executives, IPL will not hamper the revenue prospects of other national broadcasters. The entire industry will see an influx of advertising, not limited to IPL, as brands may wish to opt for less premium properties with which they can associate.
To woo advertisers, Zee will be launching new fiction and non-fiction shows during the festive season across several of its channels. “We are also launching and re-launching channels with a brand campaign refresh amongst others,” Sehgal said. Other broadcasters like Viacom 18 and Sony Pictures Networks are launching their flagship shows such as Bigg Boss and Kaun Banega Crorepati during the same period.