Coronavirus Impact: How ad industry is headed for a tough time

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Published: March 30, 2020 7:34:52 AM

With consumption dropping to nearly zero in several categories, some brands have brought advertising to a complete halt and are reevaluating their advertising spends

Brands have begun withdrawing ongoing and planned advertising campaigns, and rejigging media plans to conserve advertising spends. Brands have begun withdrawing ongoing and planned advertising campaigns, and rejigging media plans to conserve advertising spends.

As per various reports, the advertising industry was all set to register around 11-12% growth in 2020 a few months back. But the outbreak of coronavirus in India and the government-mandated 21-day lockdown may result in single-digit growth for advertising.

According to Ashish Bhasin, CEO, APAC, and chairman, India, Dentsu Aegis Network, “We would be lucky if we register zero or low single-digit growth. A lot will depend on how long the current situation lasts and the recovery period too. Therefore, 2020 may not be a great year for the advertising industry.”

Brands have begun withdrawing ongoing and planned advertising campaigns, and rejigging media plans to conserve advertising spends. “Some brands in categories like automotives and beverages are cancelling their committed advertising campaigns, whereas others in the FMCG, pharma and e-commerce categories which are still advertising, are planning to postpone their campaigns to April,” points out Ashish Sehgal, chief growth officer – advertisement revenue, Zee Entertainment Enterprises.

With consumption dropping to nearly zero in several categories, some brands have brought advertising to a complete halt and are reevaluating their advertising spends. Industry insiders say airline majors, travel and tourism brands, electronic goods, real estate companies and even some companies that were obtaining goods from China have cancelled television commercials as they battle the crisis due to the contagion.

The Indian Broadcasting Foundation has written to advertisers and agencies that members of the foundation will not entertain cancellations that are not within the cancellation policy agreed upon by the broadcaster, agency and advertiser. Compliance to this directive has been low. “We are accepting cancellations and extending credits to clients,” informs a television ad sales executive. With liquidity in the market also impacted, industry watchers believe that there will be a delay in payments from clients to agencies and eventually to media owners.

“We are appealing to brands in product categories that have not been heavily impacted to continue advertising or even increase spends. Keeping in mind the impact on certain categories, we are accepting some withdrawals voluntarily on grounds of compassion. We have not accepted certain cancellations from FMCG brands,” says Sehgal.

Broadcasters are approaching a range of BFSI companies, including life and health insurance brands, and touch-free banking companies to advertise during this phase. FMCG companies, including hand wash and hand sanitiser brands, are being asked to continue and ramp up advertising.

As ad revenue runs dry for television broadcasters, Sehgal says that the government and its various ministries and bodies could broadcast public service announcements on television channels which have a wide and deep reach in India. “While they are advertising on TV, they could surely improve the quantum of advertising,” he says.

Parle Products, which is currently running an advertising campaign for one of its products, has not withdrawn its campaign with about 10 days left. “That said, this is not the best time to start a new campaign on any medium because supply chain and consumption have been hit,” said B Krishna Rao, senior category head – marketing, Parle Products. He added that during this time a brand can only hope to build equity, and not advertise to derive sales.

Other than television advertising, OOH and print advertising have been hit, too. In Mumbai, the Municipal Corporation of Greater Mumbai has mandated all hoardings within the corporation’s jurisdiction to display only Covid-19 awareness and prevention campaigns.

Bhasin said that every medium is bound to be hit both in the short and the medium term. “Gaming and digital are among those mediums that could be hit to a smaller extent than others,” he added.

Furthermore, the shooting of television and film content has come to a halt. This too is bound to impact advertiser interest in GEC channels that are broadcasting reruns and running out of content banks faster than they can replenish them.

Read Also: How brands can remain thoughtful and relevant in times of a global crisis

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