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Under, over or rightly spending on advertising?

04-April-2011
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Under, over or rightly spending on advertising?

Are we an under-spending economy when it comes to advertising monies? Is the Indian frugal mindset holding back companies and brand owners to optimally spend on much needed marketing, promotion and advertising initiatives? Or do companies overspend on advertising, and if so, what is the right amount?

Praven Tripathi, CEO, Magic9Media and Consumer Knowledge, observed, “As an economy, India is ranked the 75th country on ad expenditure per GDP ratio. The may be due to various reasons such as a large basket of our services are B2B. We have bypassed manufacturing, but have not yet invested enough in consumer understanding and research. There are stellar examples of MNC and Indian brands that have effectively used marketing and advertising and built brands.”

One of the shining examples of a brand built from scratch in the past few years is that of cellphone maker Micromax. Rahul Sharma, Executive Director and Co-Promoter of the brand, pointed that there weren’t enough global brands coming out of the country. Sharing his experience, he said “Two and a half years ago, we did our research, and when we entered a market that was fiercely competitive worldwide, we too went the youth way. By offering differentiated products such as long battery life phones, dual SIM phones, a Querty phone, a woman’s phone, Bling, we tapped into markets.”

He added, “It depends on the vision of the brand, and companies and entrepreneurs need to decide if they want to play a regional or a global game. We have cutting edge products as a country, and creating aspiration and a tonality for the brand by investing in advertising and marketing is how Indian companies can increasingly have an international presence.” Today, Micromax products have entered about four countries and will soon be available in Brazil.

What then, separates companies that spend from those that don’t? Coming from a background of having worked with Unilever, an MNC and one of the biggest spenders, to Indian brand Airtel, and now at STAR India, Sanjay Gupta noted that companies did invest in brand building and added that Indian companies were more aggressive on that front. He pointed out key issues that the industry as a whole needed to address, which were “a brand to be viewed as an asset, is what companies must look at. The way we value brands on our balance sheets have to be looked at, so as to better justify to all stakeholders. Two drivers that fuel brand building activities are belief from the top management and the need to look into our measurement system, so as to see a more informed return on investment.”

Gupta also pointed out that as media had gone deeper from a nation to a regional scale and businesses were springing up in different parts of the country, one needed to see if they had enough marketing capability in the country as most agencies and services were based in cities. He also emphasised on the need for better consumer segmentation based on lifestyle measures to better target the market.

He stressed, “A more robust measurement of the media is required to better measure ROI so that companies can make informed choices. At the moment, we are under investing in building brands and it is not due to an Indian or MNC mindset. We need to implement a better manpower and marketing ecosystem and ways to sharply target to get better bang for the buck.”

As Chairman and Editor-in-Chief, exchange4media Group, Anurag Batra had some entrepreneurial insights to share. He said, “Traditionally, brands spend about 5 per cent, which will move to about 10 per cent as we go along and local media options become more affordable. Indian brand owners have a clear understanding of their brand and are rightly investing. Private treaties are another important aspect, which are not factored in spends. Another increasing trend is of brand owners acquiring assets in the media. Quality of talent is another space that needs attention in order to instil confidence in brand owners for allocating more spends.”

Sharma of Micromax added here that companies and brand owners needed to understand the power of the brand and have a vision that was more away from short term goals, something that would help in brand building.

The speakers were at the 11th CII Annual Marketing Summit, hosted in Mumbai on April 1, 2011, which was the second day of the Summit. This edition was chaired by Radio City 91.1 FM’s Apurva Purohit.

 

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