The mood in the advertising industry is upbeat, with the sector finally expecting to register a double-digit growth at 13.5 per cent in 2004 (last year it was 9.5 per cent). According to estimates compiled by AdEx India, the industry is expected to rake in revenues of Rs 11,800 crore compared to the previous year's Rs 10,400 crore.
The major drivers of the industry this year, as per the AdEx report, are the political parties, which incurred huge spends on their campaigns during the elections. "The political parties during these elections adopted a scientific approach in terms of packaging their campaign strategy. Their ad spends may not have substantially added to the revenues of the industry but has surely given visibility," says Mr Kaushik Tiwari, Branch Head, Grey Worldwide, Chennai.
Mr Tiwari also observes that almost all the leading advertising agencies recruited a lot of people this year, which according to him is an indication of the industry being on a high.
The industry, according to Mr S. Subramanian, Business Director, MindShare, has witnessed a 10-15 per cent growth in the number of advertisers.
"The consumer durable companies have clearly overtaken the FMCG spends this year. This is due to new players such as Haier launching their products in India and companies such as Hyundai launching personal computers and so on," says Mr Tiwari.
Similarly, Mr Jayraj Rau, Vice-President and Client Services Director, JWT, says the other categories which stepped up ad spends and substantially contributed to the industry's revenue are the retail and financial services sectors.
Mr Subramanian of MindShare observes that 2004 also witnessed a sharp rise in the number of recruitment ads, as well as ads placed by educational institutions in the print media. "Almost 10-12 per cent of the advertisements in most leading newspapers consist of either recruitment ads or advertisements of educational institutions."
However, the most significant trend, which the industry witnessed this year, is brands experimenting with newer media, or what is commonly called below-the-line activities. Industry observers feel that brands are beginning to assign a substantial chunk of their advertising budget for these activities. The media could be as varied as a news channel such as NDTV putting up its logo on an Air Deccan aircraft to brands getting the radio jockey of the local FM channel to speak about them. These exercises are distinct from the regular mass-media advertising.
"With mass media costs being constantly on the rise, brands are increasingly looking at non-advertising media to promote their brands," says Mr Subramanian. "The clients are getting more and more focused on integrated advertising," says Mr Tiwari of Grey. "They insist on having a single creative idea which can be used on both the conventional and non-conventional media. Companies are trying to get acceptance for their brands faster and this can only be done if they approach consumers through multiple media," he adds.
Mr Gopinath Menon, Vice-President, TBWA, says advertising today has become much more realistic with marketers trying hard to connect with reality.
Mr Rau of JWT says that because of the focus on below-the-line activities, the returns are getting tougher and tougher. "Though we are growing in terms of business, the returns in terms of percentage are much lower compared to the kind of inputs put in."
He adds, however, that below-the-line activities would clearly be the driving factor in the coming years. "Brands will set aside almost 40 per cent of their budgets for advertising on non-conventional media."
Talking about the preferred TV channels this year, Mr Menon of TBWA says news channels have begun to attract a lot of viewership, and consequently more advertisements. "The news programmes have become serialised and slots such as 7.30-9.30 p.m. and 11p.m. have been attracting lot of viewership."
As far as the TV channel rates are concerned, an eminent industry observer says that while big brands such as Star Plus, Sony and Sun TV have become stronger with their ad rates touching the sky, channels such as Sahara, B4U, Udaya and Star World have slashed their rates.