Chinese smartphone makers such as Oppo, Vivo, Xiaomi and OnePlus spent a total of around Rs 2,700 crore on advertising in FY19
The on-going scuffle with China may not be limited to just at the borders and spill over to the media and advertising world, as Chinese companies may look to tighten their purse strings. According to industry estimates, the media and advertising sector may lose upto Rs 2,500- Rs 3,000 crore in terms of ad spends. “Premium properties such as the Indian Premier League (IPL) will suffer to a great extent and will need alternate sponsors,” Shashi Sinha, CEO, IPG Mediabrands told BrandWagon Online. According to industry estimates, the Chinese smartphone brands contribute to about 3%-4% of the overall advertising business, which stands at over Rs 70,000 crore in India.
As per the business intelligence firm, Tofler, Chinese smartphone makers such as Oppo, Vivo, Xiaomi and OnePlus spent a total of around Rs 2,700 crore on advertising in FY19, registering a 6% growth as compared to FY18. Media planners believe that Chinese brands’, with their deep pockets as well as a larger share in the smartphone market in India, hold a strong foothold in the advertising sector. “Home-grown brands or for that matter other companies may not be able to compensate for the loss in the advertising expenditure especially in the short run,” a senior media planner said on conditions of anonymity. Market intelligence firm Counterpoint’s report for Q1,2020 stated that Chinese smartphone companies have taken over 50% of the market share in India. South Korean company Samsung has about 16% market share while Indian smartphone companies have a minuscule 0.2% market share.
When approached, Xiaomi, Vivo, OPPO declined to comment, while a mail sent to OnePlus remained unanswered till the time of publishing the story.
To be sure, Vivo alone contributes Rs 440 crore annually to BCCI for a five-year deal for IPL title sponsorship that ends in 2022. Meanwhile, the brand had also signed a five-year deal with Pro Kabaddi League worth Rs 300 crore in 2017. Industry analysts observe that the Chinese brands will not move out completely – but in the short term there will be a dent on ad spend, given their silence in the media. “Given that most of these brands are large spenders – with Vivo and Oppo being big investors in cricket – I would expect a drop of between 4%-6% on overall AdEx during this period,” Lloyd Mathias, angel investor and business strategist, said.
As for the news genre, Chinese handset brands are medium-sized advertisers, hence it won’t be a big loss in terms of ad revenue, a leading broadcaster said. “Moreover, other companies in the same categories won’t mind picking up their advertising space on television. So, from a news network’s perspective, Chinese smartphone companies are not significant enough advertisers that their loss will worry the networks in any way,” he explained. Whereas, others believe that the ban may impact the larger interest of the country as a sizeable portion of the components are manufactured here. “A ban will hurt Indian employees as well,” Satbir Singh, founder, Thinkstr noted.
India banned 59 Chinese apps in the country last month. Even as calls for boycotting chinese products remained unfruitful in the past, one wonders if the ‘vocal for local’ phase might just solidify the citizen’s call for the ban this time around.