Warc Blog

Diwali ad budgets slashed

30 September 2013
NEW DELHI: India's current economic difficulties will result in a halving of company advertising budgets during the festive months from October to December, the Associated Chambers of Commerce and Industry of India (ASSOCHAM) has said.

The figures were based on an ASSOCHAM survey of around 1,200 member companies in the cities of Delhi, Mumbai, Chennai, Hyderabad, Bangalore, Pune, Kolkata, Ahemdabad and Chandigarh. Most respondents said their advertising expenses had declined by 45% to 50% on a year-on-year basis.

Mr DS Rawat, ASSOCHAM Secretary General, speaking as he released a paper entitled To Slash Or Up Ad Expenditure This Diwali?, claimed the total ad budget for print, television and radio during the next quarter could see a cut of more than 50% year on year.

He said television and radio networks faced tough times ahead as advertisers cut back on budgets for brand marketing and promotions.

No sector appeared exempt, but the paper noted those worst affected by the slowdown were consumer durables, gems & jewellery, FMCGs, electronics, automobile and real estate.

"They will be spending far less and will keep a tight leash on their budgets," the survey said. Automobile and consumer durables in particular could see a 65% slump in advertising spend.

One consequence of this is widespread rate cutting, especially in print, where packages are being offered at a quarter of the normal price rate. And the paper added that as this also included the processing costs of the ads, the total cost had fallen to a fifth. TV channels and radio networks were also reported to be offering heavy discounts, Rawat noted.

In a further finding the paper revealed that brands were diverting funds from large-scale advertising campaigns into "quick win" promotions, including coupons and POS discounts, as they sought to attract cash-strapped consumers.

The growing use of couponing in India has been noted before, with surveys indicating that this is driving online retail, while entrepreneurs are setting up new mobile couponing systems.

Other reports have revised adspend downwards in the light of prevailing economic conditions, although none have been quite so apocalyptic as the ASSOCHAM data. Earlier this month, for example, media buying agency GroupM changed its 2013 growth forecasts for India from 9.9% to 8.5%.

Data sourced from ASSOCHAM; additional content by Warc staff

 
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