Supply-side disruptions forcing FMCG marketers to stay agile: Harsh Deep Chhabra

As geopolitical tensions and supply-chain disruptions begin impacting businesses across sectors, FMCG companies are turning cautious on advertising spends while recalibrating media strategies, according to Harsh Deep Chhabra, Global Head – Media at Godrej Consumer Products.

In an interaction with e4m, Chhabra said the impact of the current “war-like situation” had already begun reflecting on business operations and media planning, forcing marketers to adopt a month-by-month approach to spending.

He also weighed in on India’s television ratings ecosystem, backing the continuation of a single ratings agency framework, while arguing that the focus should be on improving reporting quality rather than expanding the number of agencies or TV meters. 

Chhabra further defended transparency-led reverse auction processes in media negotiations, saying companies always retain the power to walk away from unviable deals.

Edited excerpts:

With the current geopolitical tensions and the government’s push towards austerity, do you expect advertising and media spends to reduce further?

The effect has already started and it was pretty immediate. The impact was not just on predictable areas but also on several unpredictable aspects of the business. A lot of shipping lines got impacted and situations emerged that companies were not necessarily prepared for in the immediate term.

The escalations happened very suddenly. As a result, not just us, but even our competitors have started taking prudent calls on spending. That cautiousness will continue for some time because the situation remains unpredictable.

This is not a demand-led challenge; it is a supply-led challenge. Unlike Covid, consumer behaviour has not changed. People still want the same FMCG products they wanted earlier. During Covid, categories like sanitizers suddenly became very important because habits changed. That is not the case here.

What has helped us is that we have consistently invested in building brands over a long period of time. Those memory structures continue to support brands even when spends are moderated temporarily.

There are certain categories that are heavily dependent on inputs such as LPG or aluminium cans, and those are impacted in the near term. So, companies are evaluating where they need to increase spends and where they need to cut back.

Has the reduction in spending been significant?

I would not want to put a specific number because we are a listed company. But there has been a meaningful impact. April was far more stark, while May has been relatively better.

The government has opened up the television ratings ecosystem to multiple agencies. How do you view this move?

My view has remained consistent from the beginning — we should continue to have one ratings agency.

As a marketer, I do not want to compare multiple panels and then try to make sense of conflicting data. One of the basic principles of research is that you should not compare one panel with another and derive conclusions from that comparison. Multiple panels create significant chaos.

Instead, the industry should invest in making the existing ecosystem stronger — whether in terms of reporting accuracy, reporting depth or reporting width.

To my mind, BARC is already doing an extremely good job in measuring what people are watching. The debate is more around how many people are watching. But that challenge can exist with any agency.

BARC still represents a strong ecosystem because all key stakeholders are involved and equally invested in ensuring the system functions properly. I believe the right approach is to continue backing one agency comprehensively.

Do you think increasing the number of TV meters from 80,000 to 1,20,000 will solve the problem?

Even today, BARC remains statistically very robust. It gives a fairly representative and accurate view of what is happening on the ground.

I do not think the issue is simply about increasing the number of meters. If you compare BARC’s relative error margins with global benchmarks, it still performs strongly.

The challenge emerges when you start slicing data too narrowly — such as looking at a very small age group in a very specific town and socio-economic segment. Naturally, the error margins increase in those cases.

But at a composite level, statistically speaking, the system remains fairly representative.

‘Industry bodies already collaborate when needed’

Do you think the broadcasting and advertising industries need an umbrella body to collectively represent concerns before the government?

Each industry body is already representing issues that matter to its stakeholders and businesses. Organisations such as the Indian Society of Advertisers, IBDF and Advertising Agencies Association of India are all fairly strong institutions.

There are several instances where these bodies have come together and made joint representations to the government on issues of common concern.

I do not know if there is a need for another dedicated umbrella body because these institutions already seem to be doing a good job individually, while also collaborating when required.

‘Every negotiation comes with the power to say no’

Advertising agencies have raised concerns around reverse auctions, especially in PSU tenders. How do you view the issue?

In every negotiation, there is always the power to say no.

If an agency believes a deal is detrimental to its business, it can choose not to participate. Every organisation has certain non-negotiables and can decide the point below which it will not work.

As long as the process is transparent and the rules of engagement are known from the beginning, I think it is fair.

This does not happen only in PSU tenders. Similar negotiations happen across the industry. At some point, if a broadcaster or agency feels the deal is not viable, they always have the option to walk away from the business.