Have you noticed that financial services are not being pushed in your face of late? In the last few months advertisements for mutual funds, home loans, insurance and specifically IPOs have taken a drubbing.
While earlier marketers were laughing their way to the bank due to aggressive ad spends by various financial services, new Sebi guidelines in the pipeline, RBI rulings and turbulent markets have ensured a conservative approach.
DLF is said to have had a budget of around Rs 100 crore for their IPO advertising and spent as much as Rs 25 crore on the India-Pak DLF Cup for cricket. With the markets taking a dive and DLF embroiled in a legal issue, not only has the IPO been delayed but the advertising effort has also long disappeared from public memory.
Advertising agencies and media planners say that around 100 companies are at various stages of IPO preparation waiting for the situation to stabilise. "There is a total slump in the IPO advertising space due to the reduced activities in the primary market," says Madan Bahal, CEO of Adfactors, a financial advertising firm.
Open-ended MFs on the other hand are not allowed to amortise their advertising expenses over five years to avoid being unfair to investors. While some funds, such as Fidelity, launch only open-ended funds, they charge their investors an entry load of only 2.25% with the asset management company bearing the rest of the expenses. "Since each launch of a new fund offer is like a brand launch, it fuels advertising investments by mutual funds. With launches being deferred there is a slump in this market as well," says Manish Porwal, executive director (west) of Starcom Worldwide, a media buying agency.
Fidelity plans to launch a new fixed-income fund later this year and is currently concentrating on educating consumers about staying invested over a period of time. "Through the market volatility of the last two months we have remained focused on investor education in our campaigns," says Ashu Suyash, MD and country head, Fidelity Fund Management.
With the RBI wary of an asset bubble in real estate, interest on home loans have gone up by 25-50 basis points, over the last two months, making credit more expensive for retail consumers. Data from Starcom Media has seen spends from banking services go up by about 15% from last year between the months of March and June.
On the other hand, the first half of July has seen spends go down by 59%. While this may not be indicative of a trend, it reflects the market sentiment post-interest hike. However, some players, such as ICICI, are not unduly concerned.