What inflation in India means for advertising

Rising commodity prices could lead to product price hikes of between 10% and 15% later this year, according to the CEO of Carat India, who warns that advertising is seen as the easiest cost to cut back on at such times. 

Speaking to IndianTelevision.com, Anita Kotwani pointed out that, for example, faced by high aviation fuel prices, domestic airlines have cut television advertising by as much as 27% during the first few months of the year.

Why it matters

High inflation leads to reduced volume growth and hits margins, with consequent pressures to reduce costs. While advertising is often seen as a soft touch, cutting back here would be a mistake and Kotwani argues that it is “imperative” that media agencies and partners educate brands as to why this is so. 

Takeaways

• When a brand is in its growth phase, it is inadvisable to reduce ad spends, even during times of inflation. 
• If a brand is sensitive to media ad spends, which consequently drive movement in business impact, it should not cut ad costs. 
• Consider 360-degree media campaigns, which combine the most effective and efficient mediums that drive business impact for the brand and further boost media outcomes to the best possible, depending on the category.
• Explore newer options like addressable TV, geo-fencing on digital, digital out-of-home (OOH) and interactive print. These can be more efficient and more targeted, so avoiding wastage and minimising costs.

Key quote

“It is imperative for brands to understand that the focus of cost-cutting should be on reducing wastages and not reducing activity that can generate future sales or build a brand” – Anita Kotwani, CEO, Carat India.

Sourced from Indian.Television.com [Image: Getty]