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The Meltdown: Digital media no longer buffered; looks for profitability – Part 2

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The Meltdown: Digital media no longer buffered; looks for profitability – Part 2

The economic slowdown has started affecting the digital media as well. In the first part of this report, exchange4media tried to understand in what ways and how far digital media was being impacted by the slowdown. In this second part, exchange4media speaks with industry leaders to find out how they intend to stay ahead in tough times and what their expectations are from 2009.

Road ahead

Amardeep Singh, Vice-President, Interactive Avenues, noted, “Our guess is that from a long term perspective, this will have a positive impact on digital media. This slowdown has made advertisers seek more accountability for their ad spends, which the digital medium has always provided. Although most of our advertisers have cut down their ad spends on traditional media, they have not reduced their spends on digital media.”

He continued, “We expect the sentiment to start changing for the better after the Lok Sabha elections in India sometime in May 2009. The industry is already seeing a lot of layoffs, as I had said, businesses are now looking at profitability rather than valuations. The worst is not over yet.”

According to Gourav Rakshit, Group Head - Online Marketing, People Group, “So far, the current recession is the fourth longest in the past 80 years. However, we are still a long way from the Great Depression, when the recession lasted for 43 months or more than three and a half years. We do see the current phase lasting up to Q3 of 2009. Though, we do not believe that this period will have any significant negative impact on the digital businesses as the Internet industry in India continues to grow – with approximately 50 million Internet users in India and an increased penetration of home computers from the current 5 per cent of households to a high 20 per cent in a few years – which would prove to be strong drivers for growth.”

Rishi Khiani, COO, Web18, pointed out, “Some categories will be clearly hit, for instance, finance and travel. However, the market will still see growth, and with an offering like the Web18 bouquet of websites, the future seems very bright. Our hiring policy remains as it was before. We are looking at getting quality people in for critical functions as we ready to scale up our business.”

Sanjeev Bikhchandani, CEO,, observed that the second and third quarters of 2009 would only get tougher and things would start easing up only later.

Pearl Uppal, Director - Sales, Yahoo! India, said, “With marketing spends under pressure, we are seeing more brands test digital for the display and brand engagement value as digital has gained the scale to offer optimum reach amongst key consumer segments and its ability to engage is far superior to that of traditional broadcast media.”

Bruno R Goveas, Head - Marketing and Product Management, Akamai, noted, “Today, the industry is more worried about profitability. The impact is certainly positive as it will only remove the noise or the mess in the industry and clean up the system and eventually it will be the strong ones that will survive.”

A word of advice to the industry and young aspirants

Goveas pointed out, “Earlier, nobody was prudent with their spending and there was a lot of unnecessary expenditure. However, today, looking at the circumstances, the industry needs to be careful with its spending.”

Bikhchandani’s advice to the industry was to sharpen its value proposition and stay focused.

Singh opined, “Businesses should conserve cash and focus on business basics like profitability, collections, etc. Businesses delivering value to their clients with sound business practices and ethics will definitely survive and emerge much stronger from these times.”

Rakshit of People Group said, “For the young aspirants I would say, the recession has not only had an impact on business across sectors, but on the psyche of the common man as well, who now looks for a profession that can provide growth with surety and security. A lot of youngsters now keep abreast of the latest financial and political news over the Internet. There is a need for these youngsters to communicate, learn and continue to develop themselves as individuals throughout this downturn. Endeavour to do so will lead them to economic safety.”

Khiani of Web 18 remarked, “Youngsters need to have a steady head on their shoulders, focus on their skills and develop the same. Also, it is time to use the tough times as a challenge, to learn new skills and deliver more as pressure increases. A lot of youngsters have not seen a slowdown before as the entire India story has been up and up, therefore, they need to gear themselves as industry steadies itself and corrects itself. Also, do not pay too much heed to rumours and focus on the job at hand. This experience will stand you in good stead going ahead in your careers.”

Yahoo! India’s Uppal felt that people with talent and business acumen to create new business models would always be an asset, and added, “Customer advice, innovation and strategic consultation are the key to meet the current client requirements”.

The digital industry is a mere 2 per cent of the market share in India. The global economic slowdown has certainly proven that nobody is buffered from global crises, not as long as they are part of the global village. The digital industry in India has also been impacted by the slowdown, however, in the long run it will only clean up the system and the toughest would survive. Whether the impact would lead to layoffs in the industry is still difficult to answer yet. It is only after the Q2 or Q3 of 2009 that the dust will begin to settle.

Also read:

The Meltdown: Digital media no longer buffered; looks for profitability – Part 1

IndustrySpeak: Digital media remains buffered from market meltdown


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