Whether it is the budget cuts, guerilla ideas or a shift from above-the-line (ATL) to below-the-line (BTL) activities, the signs of an imminent economic slowdown are evident in the advertising industry. At exchange4media, we have been constantly monitoring the heat on slowdown and its impact on the advertising, media and marketing fraternity as part of our ‘The Meltdown’ series.
This time, exchange4media speaks with some ad honchos in Delhi on their take on the economic slowdown and its impact on the Capital’s market. Sushant Panda, Director, Euro RSCG; Ranjeev Vij, Business Director and VP, BBDO India; and Sandeep Madan, Executive VP, Rediffusion Y&R, speak at length on the current market situation, the counter-measures, and the challenges ahead.
On how tough the economic slowdown is on Delhi players
Said Sandeep Madan, “I do not think it’s just the Delhi market which will become tough, we shall see the impact of this economic slowdown across geographies in India. Some sectors like real estate, insurance, finance, banking and mutual funds will face a big challenge going forward as liquidity crunch becomes tougher. However, with the strong banking principles in India, we should be in a far better shape than most western countries. I also think that the Government is doing enough and more to ensure that the country’s financial institutions continue on the growth path, though these institutions may face declining growth.”
According to Ranjeev Vij, “Recession tends to impact few people a lot and a lot of people only marginally. However, what changes for almost everyone is the buying mentality. This makes consumers include more steps in the purchasing process, plan more and require more justification for every single purchase. Predictably, they demand greater value and the same goes for clients. So, if you show that extra value to your clients, you would only gain their confidence.”
Sushant Panda felt that the Delhi was as tough as any other market. “Companies across industries, save a few, are now beginning to get impacted by the slowdown. I don’t think the economic slowdown has a geographic bias. It is industry defined. Some of the fringe players will be wiped off. It is going to be tough to invest in new markets, you would rather maximise your strong markets,” he added.
On the effect on agencies and likely counter measures
On the initiatives taken by Euro RSCG, Panda said, “Currently, we have a couple of clients who have had some sort of a pull-back. Else we haven’t been impacted that much. We have grown as per plan and we have added separate streams of business during the year. However, this is a situation that is bound to last for a good part of next year, if not the entire year. There are watchful times ahead. You can’t project 25-30 per cent growth budgets. But you can still plan for growth at 15 per cent.”
Sounding confident, BBDO India’s Vij opined that the slowdown would not affect India too much. “There may be some ripple effect, but India is still projected to grow at over 7 per cent in GDP terms. Even when globally people are expecting just 3 per cent growth, Asia still is considered to be the likeliest source of growth for most multinational clients. And, agencies are no different,” he observed.
On the other hand, Rediffusion Y&R’s Madan said that the slowdown in India, and the current and projected world economic conditions made 2009 really challenging. He, however, added that India would continue to grow (a little below expectations) as most of their significant clients had remained fairly untouched by the prevalent conditions and had fairly healthy growth outlooks for the coming years. “However, we are keeping our eyes on the ball to ensure costs are under check (not cut down); right investments are made in knowledge, talent, and we build newer skills and capabilities. We will continue to deliver the value beyond just traditional landscape/ charter with these right investments and newly developed skills and capabilities in coming years. I am an eternal optimist and believe that right efforts under the circumstances will yield better results and value for our clients and, therefore, us,” he added.
On whether the Delhi businesses/ operations were accomplished in 2008
Panda replied in the affirmative when asked whether Euro RSCG had achieved its target for 2008, and added, “in 2009… well, we hope we will”.
Vij said, “We have not set any specific targets. Our focus currently is to set up our Mumbai operations and build digital and interactive capabilities. We want to make sure that we have the best talent and produce some great work. Our belief is that growth is the natural outcome of quality.”
Madan added here, “In 2008, we have beaten the industry growth rate by miles and Rediffusion Y&R India should be able to post a significant growth. With some new wins, including LG, this year, Delhi in particular has about doubled in size and people. This growth demands us to push forward with our collaboration agenda within our group companies on our businesses. We will deliver on these new initiatives and build new capabilities for our teams across.”
On the expectations from 2009
Stating that the aim was to set far more realistic targets, Panda added, “The 25 per cent growth rates are not going to be accepted. It is going to be ‘get the business, then invest’. There are categories that are degrowing, such as automobiles. And there are a lot of industries that are growing at a slower rate like insurance. So, from an agency perspective, it depends on what your client mix is. But yes, the economic slowdown is a context for everyone to get a better deal from cost suppliers.”
Vij affirmed, “The joy of the environment that we are facing is that creativity has never been more important. Every rupee spent must work. We must be more passionate than ever about the power of creativity to transform business. So, you could only expect some outstanding work from us. We are a part of the best communications network in the world and our job is to show that to India.”
On a cautious note, Madan said, “It’s a challenging year ahead. The 2009 market outlook is predicted to be quite tough. Many reports (in media and otherwise) have said that 2009 will be extremely challenging in the wake of global meltdown, and sectors getting badly affected by the prevalent circumstances. However, each slowdown provides opportunities and I am optimistic about India’s growth potential. Even in times of economic meltdown across many western countries, India has all the right ingredients to grow at around the 6 per cent level.”
So far, so good. The slowdown has not proved to be a dampener on growth so far and the advertising industry is determined to keep it that way. With 2008 nearly coming to an end, it remains to be seen how far the industry optimism remains, faced with some tough times ahead in 2009.