Ad industry revival ahead, say media buyers
After an 18-month slump, the advertising industry is poised for a revival, say media buyers.
The revival, expected in another three to six months, is expected to be on the back of a step-up in advertising by telecom companies, automobile (particularly two-wheelers) makers, insurance companies and other firms in the financial services sector.
The advertising industry grew by 10 per cent in 2001, but shrunk by 5 per cent in the last quarter of the year. It has reported a growth of 20-30 per cent in the past.
Over the next six months, the picture looks promising. Several telecom companies will start operations in new circles, the operations of insurance and financial services companies will gain momentum and automobile and pharmaceutical companies are expected to launch new variants and products.
"The advertising industry's growth will be fuelled by sectors like telecom, insurance, automobile and pharmaceuticals, which will double their expenditure on commercials," said Ashutosh Srivastava, managing director of Mindshare. "The growth will be healthy from the second quarter of 2002-03," said Tapan Pal, president and chief executive officer of Zenith Media.
Bharti Televentures is launching cellular services in Mumbai and Maharashtra in June, Hutchison in Chennai, and Idea Cellular -- the Birla-Tata-AT&T combine -- in Delhi.
Each operator spends Rs 200 million a year on advertising in the metros, but they will have to spend hefty amounts in the first few months to dig their heels in. Some telecom specialists reckon Bharti will spend about Rs 100-120 million in the first two months of its launch in Mumbai.
Basic services providers like Tata Teleservices, Hughes Tele.com and Reliance plan to launch wireless in local loop from September. All will have to position their brands.
The insurance industry may double its advertising expenditure this year. "This will happen with increasing competition," Treman Ahluwalia, vice-president of Om Kotak Mahindra, said. Last year, insurance companies spent Rs 1.87 billion on advertising.
Ashish Bhasin, president of Initiative Media, concurs. "Advertising expenditure is easy to cut when corporates foresee a downturn. We now smell growth from June, to be driven by the services sector, not so much by manufacturing."
Sectors like telecom and insurance have so far contributed relatively small amounts to the Rs 85-billion commercials market. Hence, they are expected to shell out more.
The beneficiaries are expected to be the print and outdoor media, and radio too. Pal thinks the telecom and insurance companies will advertise more in the print and outdoor media than on TV.
(Fast-moving consumer goods companies and consumer durables manufacturers account for 60-70 per cent of the total TV advertising spend but just around 30 per cent in the print media).
"Radio is highly underrated and accounts for less than 2 per cent of the expenditure in India against the international average of 6 per cent. A 300 per cent growth rate can be expected," Bhasin said.