Advertising Industry Has Overcome the Blues
Experts claim Print and TV Industry were heavily affected by the move whereas Digital made hay
Demonetisation blues hit the advertising sector hard last year and its effects were seen in the first two quarters of FY 2017-2018 as well. The move sent businesses and the common man in a tizzy overnight, impacting daily life and the business sector. The advertising industry has made a comeback and recovered from the blues.
In immediate response to demonetisation, a number of advertisers especially in the FMCG sector, postponed activities and cut down spends. Decline in sales translated to a decline in spending on promotional activities for FMCG companies. Nearly 20-25 per cent of ad spends were affected because of the demonetisation of high value currency.
Since demonetisation came right in the middle of the festive season, a huge chunk of ad spends was also impacted. Spends to the tune of Rs. 2,000 crore are estimated to have been affected in 2016. The print industry was the worst hit by demonetisation. Ad volume index dropped from 208 in October to 113 in December, according to TAM. There was a consistent decline in ad volumes across media from November 2016 until February 2017.
“The impact of demonetisation was the worst in the months of November and December 2016 and it was very much present in the first quarter of the calendar year of 2017. But it started petering out by April. So, in my mind, the impact of demonetisation was over and done with by April this year,” said Ashish Bhasin, Chairman & CEO South Asia - Dentsu Aegis Network. India's leading advertiser, Hindustan Unilever Limited, has loosened its purse strings and increased ad spends by 20 per cent YOY during Q2FY18.
While all traditional media channels saw a decline in ad volumes, print and TV were worst hit, some said. "Any time of uncertainty first impacts the advertising sector, so it was a big glitch for them. TV and print were impacted. However, ad spends have bounced back but not yet reached the level of 2015-2016. Advertisers and agencies are still watching the market carefully and hoping for a stable 2018 and no more disruptive decisions by the government,” noted Dinesh Vyas, VP, PHD India.
While ad spends may not have bounced back, the festive season is showing signs of recovery within the industry. “Earlier growth estimates for this year were at 13 per cent, but the growth is less than what we had anticipated. Our revised estimate is around 10 per cent. We will end the year at about 10 per cent more than what it was last year in absolute terms,” said Bhasin. According to Saurabh Uboweja, CEO Brands of Desire, “In the mid to long term, unless there are any further unwarranted shocks to the industry, ad spends will continue to show a steady growth of 5-10 per cent year on year as the economy rebounds.”
Ad Spends Declined
Advertisers tightened purse strings in view of demonetisation, creating a sudden dip in the industry. Leading FMCG company, Hindustan Unilever Limited saw a 3.8 per cent YOY decline in ad spends in the quarter that ended on December 31, 2017. Home-grown FMCG firm Dabur deferred ad spends and reported a 20 per cent YOY decline in ad spends. P&G India also registered a 12 per cent decline in ad spends during Q3FY17 when compared to Q3FY16.
In the case of HUL, the gap in ad spends closed during final quarter of FY2016-17, with the FMCG major spending just 1.4 per cent less on advertising during Q42017 as compared to Q42016. Being the robust company, HUL’s spends did not reflect the imbalance that other FMCG companies like Dabur and P&G faced. Dabur’s expenditure on advertising continued to feel the pinch of demonetisation in Q4FY2017 with a 21 per cent decline in ad spends over Q4FY2016.
A number of sectors reigned in their ad and promotional spending. Vyas said that even the automotive sector saw a decline in ad spends, because brands became cautious after demonetisation. Even ads from the education sector saw a decline.
Revenue Growth Slowed Down
Media companies registered a decline in revenue from advertising in the wake of demonetisation. Most companies saw low single digit growth figures. ZEEL’s advertising revenue for Q3FY2017 was Rs. 9,55 crore, recording a growth of 3.4 per cent over the same period last year. DB Corp reported advertising revenue growth of 4 per cent year on year to Rs. 453 crore in current period from Rs. 435 crore in Q3 of last fiscal.
Jagran Prakashan Limited revenue from advertisement was up only 3.91 per cent to Rs. 352.12 crore in Q3/FY 2016-17 as against Rs. 338.85 crore. HT Media’s advertising revenue de-grew by 5.7 per cent from Rs. 542 crore to Rs. 511 crore.
Interestingly, Zee Media Corporation Limited (ZMCL) reported a 10 per cent increase in advertising revenues. They increased from Rs. 103.46 crore to Rs. 114.43 crore. But Q3 FY17 wasn’t profitable for the print operations of ZMCL (DNA). The segment sustained a loss of Rs. 13.89 crore on the back of rising expenses and falling revenues. The end figure for expenses was Rs. 39.86 crore up from Rs. 26.88 crore while revenues were down to Rs. 25.97 crore from Rs. 28.03 crore.
-- With Inputs by Naziya Alvi Rahman, Abhinn Shreshtha and Ruhail Amin
Read more news about (internet advertising India, internet advertising, advertising India, digital advertising India, media advertising India)For more updates, be socially connected with us on
WhatsApp, Instagram, LinkedIn, Twitter, Facebook & Youtube