More cash in consumers’ hand & more power to digital: What A&M industry wants from Budget

The sector also looks forward to measures for business recovery and support for MSMEs & startups

e4m by Mansi Sharma
Published: Jan 24, 2022 8:55 AM  | 6 min read

Union Finance Minister Nirmala Sitharaman is all set to present Budget 2022 on February 1, amidst the third wave of Covid-19 pandemic that has possibly washed off two years’ worth of growth in Indian GDP. Several sectors and industries have faced the wrath and the common man is dealing with lesser cash in hand because of pay cuts or no increments in the salary, and inflation. In such a situation, the advertising & media (A&M) industry is expecting the government to give some relaxation to the common people in terms of taxes and support to businesses so that the cash flow can increase in the market. Additionally, they are rooting for a stronger push to the digital economy, which can support the growth of their industry as well.

Wunderman Thompson South Asia CEO Shams Jasani says that the pandemic has defined a “new normal” for businesses and consumers alike leading to an overall increase in tech spending and a boost to the e-commerce industry. He’s therefore expecting the upcoming union budget to focus on these key areas.

“We are hopeful that this year’s union budget will be growth-oriented, aimed at providing tax relief to boost consumer demand, which in turn can propel brands to increase spending across media in the coming year. Our expectations from the upcoming budget are ease of doing business for MSMEs and startups, more investment in digitization and steps for better internet infrastructure to ensure last-mile connectivity with a specific focus on rural areas. We hope that this year’s budget will continue to focus on business recovery and sustainable growth with necessary budgetary allocations and tax incentives that will give brands that much-needed impetus to increase marketing spends for their businesses,” he says.

dentsu India Chief Client Officer Narayan Devanathan highlights that among the many deep impacts of the pandemic is that more cash has gotten out of people's hands via greater expenses for healthcare, WFH set-ups, remote education for kids, inflation, no pay raises, and in many cases, pay cuts.

He continues, “This means that people will look for more cash in hand, whether through higher standard deduction rates, lower tax rates or other sops. Secondly, people will look for more cash/sources of livelihood closer to home. The migrant crisis of 2020 showcased a great opportunity to create economic hubs closer to hubs of labour availability; whether by backing MSME growth or macro industrial growth, and investments in skilling.”

“For the A&M industry, with digital set to grow to well over a third of the overall advertising spends in the country by 2023, such distributed and multiple economic engines will mean good news in terms of overall growth. Investments in growing addressable opportunities via voice, video and social commerce will be critical in moving beyond the world of search and text-based content & commerce, bringing both production and consumption within the reach of India’s vast multi-lingual audiences and truly growing the middle class beyond narrow, urban, English-aware cohorts.”

FCB Ulka Vice Chairperson Nitin Karkare says, "“The role of the advertising industry is to help our clients in their demand generation endeavours. The pandemic has adversely impacted demand, especially at the middle and the bottom end. This is apparent from the divergence in just one sector. While the demand for passenger vehicles is robust, the demand for 2 wheelers is sluggish. There are such examples across sectors. Any intervention from the Government in the budget to boost demand would be welcome. As it would have a multiplier impact in terms of increasing capacity utilization, in turn increasing the private investment, which would fuel employment and consequently boost demand.”

With digital advertising growing at an unprecedented rate and the whole ecosystem evolving on a global scale, the leaders from the digital side of the business are hopeful that the upcoming budget will strengthen the space.

Logicserve Digital Founder & CEO Prasad Shejale says, “Last year’s budget provided the much-needed boost to the digital and startup ecosystem and the industry has high hopes from the government this time. Digital is a key channel these days and is almost closing the gap with television with regards to market share and ad spends. The consumption of digital has grown multifold. We expect the government to bring in new schemes that will help enhance marketers’ skill sets. Also, considering the fast-growing digital economy of our country, there is a strong need to address issues around digital taxation and India needs to have a technology-friendly tax policy now.”

He further adds, “We surely don’t want the tax rates to go up any further and the government should look at a way to boost the overall consumer sentiment. MSMEs and startups are the backbones of our economy and there needs to be necessary support for these industries. A lot of entrepreneurs are hoping for some relief measures in the form of credit lending and subsidies at the ground level. The government should look at ways to aid the startups through policies and support mechanisms for domestic capital participation, favourable investment climate in tier 2 and tier 3 cities, incentives to line up incubators in each state, and tax exemptions on direct foreign investments. This can greatly encourage them and support the globalization of Indian startups.”

Zoo Media & FoxyMoron Co-founder Suveer Bajaj shares, “This year's budget is anticipated to be indexed towards startups, MSMEs, infra projects, and affordable housing. This means that borrowing and investing will both become more accessible and we will see a number of new Indian unicorns. Of course, this will promise increased spending on digital with a host of organizations leveraging these movements. The number of EV advertisers sees promising growth with continued support to the sector.”

mFilterIt Director & Co-Founder Amit Relan, points out that the ad-tech industry is likely to cross $10 billion in revenue by 2030, making it one of the key contributors in terms of growth, job creation and export of services. “In this view, one of our key recommendations for the upcoming budget would be that the government should subject digital advertising expenditures to auditing in the same way that it subjects other expenditures, which goes beyond determining if procedural regulations were followed. The government, with a vision of a $1 trillion digital economy and the massive shift to digitalization in recent years, should also pay attention to the ad-tech industry and take financial steps to help India's existing ecosystem chart progress that will not only make India Atmanirbhar in the domain but also globally. Moreover, launching unique output-linked initiatives for the sector is crucial for India to position itself as a worldwide leader.” 

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