MUMBAI: Indian companies have cut their adspend by some 50%, blaming the credit crunch and sparking fears of an ad industry meltdown, according to research published by the Times of India.
While some commentators believe the slump is likely to be short-lived, others argue that rising oil costs and the perilous condition of the US economy could have deleterious effects over the longer term.
Nakul Chopra, the ceo of Publicis South Asia, said: "In the end, the whole marketing business is about funds and optimism. Corporates will hunker down for a brief period."
"Big clients have cut back their marketing spends by fairly large amounts in the US and Europe this year. This is bound to have a cascading effect in India."
Prahlad Kakkar, regarded as one of the founding fathers of Indian TV advertising, was similarly pessimistic: "Just as the boom has had a disproportionate effect on the economy, its suffering will have a similarly large impact."
“Corporates have already cut down 50% of their adspend due to the oil crisis. The total advertising spend by major corporates is 6% of turnover. If inflation is 13%, where does that leave advertising?"
Data sourced from The Times of India; additional content by WARC staff