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Can the adland weather another lockdown?

Industry experts say that the extent of economic loss during the ongoing wave will primarily depend on how fast the chain of infections can be broken

e4m by Misbaah Mansuri
Updated: May 27, 2021 9:25 AM
advertising

More than a year ago, the COVID-19 pandemic had companies slashing their marketing budgets amid deteriorating economic conditions, impacting the advertising industry. With the second wave ravaging the country, the adland is reeling under yet another lockdown. 

After a difficult 2020, all eyes were on the Indian Premier League (IPL) to bring back the positive momentum in the industry and to revive advertising. But with its suspension, brands and advertisers were dealt with another blow. 

According to reports, the pandemic wiped $63bn (£47bn) in revenue from the global advertising market after last year, a decline that is double the rate of the Great Recession after accounting for inflation. The question that now remains is to which extent will another lockdown affect the Indian advertising sector.

Looming uncertainty and market sentiment

Naveen Gaur, Deputy CEO - Lowe Lintas opines that the near-term impact of the current wave is going to hurt the industry sentiment. “Like the overall macroeconomic outlook, 2021 was also poised to be a bounce-back year for adland after the de-growth witnessed in 2020. Recovery and normalcy will be influenced by how soon the second wave of the pandemic is brought under control and how soon we move towards 50-60% vaccination levels in the country,” Gaur asserts.

He contends that in the true spirit of partnership, clients however are being 100% understanding and empathetic on work creation from the creative partners. 

"Clients are aware of the scale of the calamity and understand that the consumer is currently engaged in fighting the pandemic. In IPL terms, this is like a ‘Strategic Time Out’ where realignment of marketing and communication strategies are being reviewed. We should continue to be empathetic and meaningful to the consumers for whom safety and well-being are the underlying need states,” Gaur says.

Worst hit by the lockdown are brands and stores that deal in non-essential services as they aren't even allowed to operate during the lockdown, which in turn could affect their expenditure on advertising. 

Dheeraj Sinha, CEO & Chief Strategy Officer - South Asia, Leo Burnett signals that there could be two scenarios that could unfold. 

“At this point, it is difficult to say with definiteness what the repercussions of the lockdown will be on the industry. The best-case scenario is that the situation does come under control over the next 2 to 3 months owing to hyper vaccination drives and mass immunity because of the large number of infections. In this case, demand will get postponed rather than get destroyed. 

"There is a good possibility that demand will be back with a vengeance and we will look at ending the year on a good note. In this scenario, we will witness a dip for these 2/3 months but overall we will still end up with a good year,” he remarks.

The second scenario, Sinha observes, is that if the current situation goes beyond 4-6 months, then it will have a greater and more debilitating impact on demand. 

“The demand will vanish rather than get postponed. Supply circles will be impacted, so will the jobs and incomes. This would be a tough situation for the industry and we would be in a difficult position then. Overall, a lot depends on how the infection charts shape up,” he notes. 

Debilitated economic activity  

Another year of bans on large gatherings and restrictions on movement aimed at containing the spread of the deadly virus might impact the out-of-home advertising market as well as in-cinema advertising and the various market players here.

Heeru Dingra, CEO, WATConsult admits that advertisers and marketers have clutched onto their accounts and are being cautious as ever. “They are hesitant on ad revenue because there is a level of precariousness on the return on investment. Ad spends have definitely tracked down compared to what it was before but hasn't come to a standstill yet,” she remarks.

Dingra observes that the recent suspension imposed on IPL definitely has had a huge setback on the ad and media industry economy-wise, but once resumed the spends will be back on track.  

“Currently, the brand and consumer relationship happens to be rocky but once the graph of cases goes down to a minimum, there is hope for the industry to bounce back stronger than ever before. If the spike continues into July/August then they would relook at their wallets and start pushing the spends to the festive period. 

"If I were to compare the current situation to that of last year, then health-wise 2021 has definitely been worse but the businesses have managed to advance to a more digitally- enabled environment, therefore, leading to a more smooth and virtually possible work mechanism,” she says.

On another note, the Reserve Bank of India (RBI) on Monday said the resurgence of Covid has dented but not debilitated economic activity in the first half of the first quarter of 2021-22. 

Nisha Singhania, Co-Founder,  Infectious Advertising points out that last year when the lockdown started, people were caught unaware and businesses were hit badly. However, this year it's a different story. 

“Marketeers have learnt how to conduct business in the new normal. We’ve had a very busy last few months. Ample pitches and wins. Most clients have restarted advertising. We are not only back on track with our revenue but looking at a substantial growth as well,” she states. 

Although still extremely tentative, the overall assessment is that the loss of momentum is not as severe as it was at this time a year ago, the central bank said in its ‘State of the Economy’ report which the ever-hopeful ad industry wishes remains the case

 

 

 

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