Recovery finally on cards for Indian ad agencies?

Agency captains say things seem to be looking better with the upcoming festive season and IPL, & brands starting to market again for the new quarter

e4m by Misbaah Mansuri
Updated: Aug 4, 2020 8:41 AM

The complete lockdown imposed in March to fight the COVID-19 pandemic left businesses across the board in a state of uncertainty as this further derailed the Indian economy’s attempts to get back on the growth track. The Indian advertising industry, however, continued to adapt to the challenges and kept adopting new ways to keep the works rolling out.

And now there are signs of hope as some of the leading advertising agencies have witnessed recovery, albeit slow, post a sudden drop in growth in April.

The Indian government’s decision to remove most of the restrictions has provided a much-needed relief to businesses - large and small. Agency captains say things seem to be only looking better with the festive season and IPL ahead of us.

Fighting Back

To be sure, the ad industry clocks 40 per cent of its business in the timeframe between August and December. Anand Bhadkamkar, CEO, Dentsu Aegis Network India, notes that there seems to be positive momentum due to the approach of the festive period alongside IPL. “When compared to April, things have started opening up. Advertisers are finally showing interest and are having multiple conversations with us in terms of advertising. Tier 2-3 cities and rural economies are showing strong signs of growth in economic activity as compared to the metro and large cities. Moreover, even the monsoons seem to be on track at present. So there are a few positives.”

Some of the major challenges that COVID threw at agencies were halts in production, remote shooting, executional limitations, creating in remote captivity, and slowing down of brands and businesses. However, ad execs say brands are now progressively starting to confide in marketing again for the new quarter. Dheeraj Sinha, Managing Director & Chief Strategy Officer, South Asia, Leo Burnett, reveals that there’s work on the floor for clients across categories being readied for the coming quarter. Several business, service and communications ideas were borne during these lockdown times, owing to the agency’s 0-3-6 programme, he added. “At Leo Burnett, what has helped us through these tough times is having a diversified portfolio. We have clients across categories and they have all been impacted differently. We have also continued to win new business pitches and get an additional scope of work from current clients, including digital. Further, we have been quite aggressive with managing the Covid situation by launching the 0-3-6 model. Using this model, we ran over 50 workshops across clients to help them devise their short-term strategy,” he remarked.

Speaking in terms of the festive season, Sinha said: “As we head into the festive season, it’s everyone’s hope that we will make up (at least partially) for the loss of revenue in the coming quarter. My sense is that there will be an uptick in the consumption curve. Though we don’t really know the quantum of that uptick. It’s unlikely that we will recover all the way through but the festive quarter will definitely bring most categories back into the business.
It’s fair to assume that businesses are getting ready to join the recovery curve.”

Tarun Rai, Chairman and Group CEO, Wunderman Thompson, South Asia, too admits that from June onwards there has been a certain level of bounce-back. Rai shares that the agency is in the midst of executing a large number of new campaigns. “With production having started, executing these campaigns is now much easier than even a few weeks ago. The April quarter was tough for our clients and for us. No one really knew how long the lockdown would last and the impact it would have. From disrupting production and distribution to the complete lack of demand in many categories everyone was taken by surprise. However, starting June, there has been definite optimism. The government has decided that the wheels of the economy need to start moving again, even though we have not been able to defeat the virus. Lockdowns have been relaxed in most places and we are learning to manage living and working with the virus. The rural economy has been largely spared the worst of the pandemic and with good monsoons, it is showing a very robust pickup. The second half of the year is the more important year for our clients and for us,” he explained.

Road to a sustainable, resilient recovery

While the pent-up demand could give a much-needed boost to faltering growth, there are factors that could hamper the recovery process. As DAN’s Bhadkamkar says, “In July we have seen Covid cases surface again in certain states like Kerala and Karnataka. So, while we are seeing green shoots across businesses on the back of the Unlock mode, Covid is still on a rise and a vaccine is awaited to get the pandemic behind us. Thus, we will have to take it month by month and also adapt way forward. It is going to be a slow recovery in terms of both Covid and economy, but seems like we are getting there.”

Meanwhile, Rai said Wunderman Thompson has been advising clients, in most categories, to dust off their marketing plans and start spending to capitalise on the pent-up demand. “There is a bounce-back and the companies that bounce-back faster, show a greater ‘bounce-back velocity’, will benefit and gain market share. This is not the time to hold back. Our clients are listening. The second half of the year is certainly looking much better than the first.”

The epidemic may have curtailed the ad spends in the short term but it is making companies charter into unexplored areas of advertising and marketing. While digital acceleration spurred by Covid has been one of them, if the latest TAM AdEx numbers are anything to go by, a little over 2,300 advertisers and 3,700 plus brands have come on board to advertise on TV between June and July this year. Moreover, the data also says there were 56,000+ hours of advertising volumes on TV in the same period and that ad volumes have been growing month on month too with growth in FCT (free commercial time). As it turns out, average ad volumes per day in July 2020 grew by 9% compared to June 2020.

Naveen Gaur, Deputy CEO, Lowe Lintas, opines that the crisis has catalysed renewal of priorities and even created opportunities to grow.

“Hope, optimism and familiarity are significant in this fragile market. A lot of our partners are focusing strongly on the future and also gearing up for the upcoming season of festivities.
Another factor that has led to a more even split in advertising revenues is the fact that brands have understood the need for year-round engagement with the consumers vs. skewing all spends towards only the festive season. Brands are feeling more confident and the future looks bright for the festive season. We continue to go beyond driving consumption and towards making more purposeful statements. Increased focus on ‘Quality’ and ‘Hygiene’ are key driving factors too. We have all become more introspective. Giving time to your family, connecting with your loved ones and self-management are top priorities. Brands continue to focus on behaviour change as the world adjusts to the new normal. They want to be seen as allies in this time of uncertainty and play a much deeper role in the lives of consumers,” he exclaims.

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