Bigger Telecom wars will drive higher ad spends in 2018

The trifurcation of the telecom sector will result in severe competition and higher ad spends

e4m by Venkata Susmita Biswas
Updated: Jan 5, 2018 9:00 AM

The overall shakeup of the telecom sector in 2017 reflected in a slow growth in ad spends from the sector. The advertising industry is expecting the telecom wars to intensify in 2018 leading to higher spends. “We can expect 11 – 20 per cent growth in ad spends from the telecom sector in 2018,” said a senior media planner who works closely with telecom brands.

The Indian telecommunications industry, one of mainstays of the advertising world, makes up for around 7-8 per cent of the total AdEx. According to TAM data, the share of television advertising from the telecom sector (service providers and mobile phone manufacturers) fell from 5 per cent in 2016 to 3 per cent in 2017. Vodafone, which was among the top 3 advertisers on TV in 2016, fell to the fourth spot and Reliance Jio did not appear in the top 5 TV advertisers list in 2017. As per internal audits by a broadcaster, the overall share of advertising from the telecom sector dropped to 6 per cent in 2017 owing to the constant flux in the industry.

Be it the Vodafone-Idea merger, Bharti Airtel’s acquisition of Tata Teleservices or the most recent acquisition of Anil Ambani’s Reliance Communications by Mukesh Ambani’s Jio; 2017 was a transformational year for the telecom landscape in India. The uncertainty in the industry coupled with Jio’s disruptive strategy resulted in losses for both Airtel and RCom and a slow growth in advertising spends.

The slow down notwithstanding, 2018 will see steady spends, felt Ashish Bhasin, Chairman & CEO South Asia, Dentsu Aegis Network. “There will be ups and downs for every sector, but I think the worst is behind them. It is a highly competitive sector as well, therefore there will be consistent stream of advertising coming from the telecom companies. 2018 will be slightly better than 2017. Even though the number of individual advertisers may shrink, their spends will be on track,” he said. “Led by the consolidation the industry and Jio’s overall increase in bandwidth, the growth in 2018 will be what 2017 was projected to be. Therefore, the advertising and promotional spending has to be accordingly higher in 2018,” said a media planner who did not wish to be named.

New Products and Services

A number of factors will contribute to growth in spending on communication, advertising and promotions. In the case of Jio, the brand will continue to focus on customer acquisition and attract consumers for its newly launched affordable phone - Jio Phone. “So far, Jio has been the secondary number for many consumers. Jio will now focus its efforts on becoming the primary operator for consumers,” felt Saurabh Uboweja, Founder, CEO, Brands of Desire. Jio’s ad spend which has been around Rs. 150 crore is expected to see a significant growth. “Jio’s strategy has been to develop reach. Ultimately the company will need to monetise its reach. To monetise, the brand will need to set aside a bigger budget for advertising and promotions,” said Ashish Sehgal, COO, Zee Unimedia Ltd.

Airtel and Vodafone, which have both launched a number of new services and products over the last year, including affordable smartphones, are expected to step up ad spends in 2018. Airtel has launched a range of affordable 4G smartphones in association with Intex and Vodafone also has a 4G smartphone with Itel Mobile. Both these brands are actively trying to outshine Jio and that comes at the cost of higher ad spends. Analysts also feel that the clarity on the Vodafone-Idea merged brand identity will also fuel ad spends.

Branding Led Communication

Airtel and Vodafone will not only look to communicate about the new tariff rates of products like phones and innovations, but also look at developing a stronger brand identity.
“Jio will continue its tariff-led advertising communication with competitors and focus less on pure brand building. Airtel and Vodafone will do more brand building and less price-point based communication,” said the senior media planner. The brand story will be all about creating new experiences for users driven by technology.

This is already reflected in Jio’s philosophy: Digital Life. Jio has not specifically not positioned itself as a telecom brand and instead exists in a space where it’s a way of life. This trend in telecom branding is reflected in Vodafone as well. The brand now promises to handhold its consumers into the future with the new tagline: Future is Exciting. Ready? “Brands will need to go from being purely about technology to interpreting that technology for users,” said Ashish Mishra, MD, Interbrand India.

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