What does the ad industry and OOH think about Budget 2018?
Exchange4media asked a few players, both media owners and OOH agency heads, about their perspective on this year’s annual fiscal statement and found that one of the major topics of discussion is lead in digital
The Union Budget 2018 concluded with a sign of relief for many industries especially buoyed by the measures announced for the Digital India program. The steps being taken, like provision of free Wifi and other forms of internet to all parts of the country, will be extremely beneficial in the long run for the digital sector.
Exchange4media asked a few players, both media owners and OOH agency heads, about their perspective on this year's annual fiscal statement and found that one of the major topics of discussion is lead in digital.
Sam Balsara, Chairman, Madison World said that Demonetization and GST have caused headwinds. "But you can't keep advertising, or for that matter, the Indian economy down for too long. So we are cautiously optimistic about 2018 and project a growth rate of 12 per cent for 2018 with Digital again growing by 25 per cent.
Pramod Bhandula, Executive Chairman, JCDecaux India was of the view that this year's budget looks promising for the advertising industry. "Although in 2018, Digital would continue leading, but growth is bound to happen in all the advertising sectors. Especially in the OOH sector, where growth forecast of 15 per cent looks very encouraging."
"The long term capital tax on sale of shares again acts as a deterrent for investments in shares," said Noomi Mehta, Chairman & MD, Selvel One.
"The triple tax on dividends- first income tax on the company's profit, then the dividend distribution tax and once again in the hands of the recipient, makes no sense of investing for gain in a company. There will be less initiative on the part of the disorganized sector to enter the mainstream of the organized sector since the profits are so severely taxed in order to reach the individual. The extremely complicated GST with three taxes in six slabs and monthly returns combined with an obdurate on line system which denies access at the drop of a hat, will ensure that even the natural migration from small to medium will be halted. The migration from medium to large sector is further penalized by a 5 per cent extra income tax burden. There will perhaps be an emphasis on making multiple small units to avoid the complicated regime of control imposed by the government. All this badly affects brand creation and promotion. The negative outlook on business has been reinforced yet again," he said.
Abhijit Sengupta, CEO, OAP agreed with Mehta and said that this year, the growth has slowed. "We expect next year to be good with an overall increase of outdoor spends, anywhere between 7-10 per cent. Few dominant factors are expectant Banking and Financial sector, with newer and better services. GDP forecast is good which will augment higher consumption, with FMCG and household items having a silent year, that segment might be seen to be more active in the coming year. With higher expenditure in Rural and Infra, the overall mood will be better," he said.
Hiyav Bajaj, Managing Director, TDI International India believes that the budget will benefit the advertising ecosystem. "As we have seen the 2017, AdEx( advertising expenditure) was low because of demonetization and GST. We are expecting it will grow in 2018. Government has allotted Rs.3075 Cr. in budget to digital India programme; it will help in strengthening the Digital footprint of India. Government's plan to setup five lakh Wi-Fi hot spots in rural areas will bring 50 million Indians under the digital Universe. Now the Marketers will be able to tap the huge rural market and get more traffic. We are expecting the higher expenditure by E-commerce also. This will over all benefit the Advertising sector. Also, 5 per cent reduction in the corporate tax for the companies with a turnover of up to Rs. 250 crore will enable them to look forward to expansion," Bajaj said.
Talking about the growth of OOH sector, Dipankar Chatterjee, Director, Street Talk, said, "Last year we have seen many brands becoming very aggressive in OOH space and they have got encouraging return on their investment in terms of staggering increase in market share. I hope this year will also see a series of big launches and OOH will get its share too along with other mediums of advertising."
"This budget clearly shows that the govt, the PM and the FM have kept the General Election 2019 in mind," said Mukesh Gupta, Chairman & Managing Director, Graphisads. He said that they have announced many schemes which will increase the business opportunities.
He also said that the industry is thrilled with the push for digital. "What everyone in the advertising industry was delighted about was the government's push towards Digital India initiative and its plan to spread the internet to rural India through Wi-Fi hotspots. The Finance Minister has doubled the budget for the Digital India Scheme, emerging as a major move towards assisting the nation to progress further. The second development of investment of Rs. 10,000 crore for rural Wi-Fi hotspots, giving five crore citizens access to broadband speed internet by the deployment of five lakh Wi-Fi hotspots should help bring more consumers online, increasing digital consumption of services like OTT, entertainment, banking, and e-commerce. 2018-19 will be the year of General Election. Therefore, the govt will definitely increase advertising of various ministries for its achievements. We are hopeful that the Advertising budget of the govt will be double in this financial year," he said.
Rahul Kakar, Chief Operating Officer, Ignitemudra, felt that plans to raise expenditure in the agricultural sector could result in more disposable income and boost consumption. " Reduction in corporate tax to 25 per cent for MSME companies with turnover up to Rs. 250 crore is a welcome move. Capital infusion for the public sector banks, in line with the recapitalization roadmap should contribute to stronger investment. With a view on the above points, higher spends on advertising seems to be a definite," he said.
"With growing economy the ad spends are also likely to grow," said Geetika Gulati, Director, Alakh Advertising. She further added, "Our fortunes are tied up to that of clients. The budget is focused on facilitating growth in the economy. The significant outlay on expenditure on infrastructure would have a multiplier effect on the economy. Additionally, the push on rural economy will also spur demand for goods and services. This year will also see elections in eight states and with an eye on the next general elections, the political parties are expected to significantly invest in building connect with the electorate," said Gulati.
Ajaz Memon, Director, Network Media Solutions said that while overall advertising industry's expectation of lower GST has not been fulfilled, there is significant excitement around the Digital India initiative, the allotment for which was virtually doubled this year to more than Rs. 3000 crores.
"Hence, the Digital advertising sub-industry was the most positively impacted with this year's budget with emphasis on AI, Machine Learning, Big Data and Robotics for enhancing sectors like education which will get a big fillip. With stock markets now hovering around the all-time high mark, there definitely seems to be added confidence among investors and consumers, which in turn will spur companies to push sales through higher advertising and marketing spends. One of the biggest opportunities for the advertising industry is the proposed installation of half a million Wi-Fi hotspots across the rural hinterland which will provide impetus to hitherto untapped small town segments through internet-related and digital targeted options," said Memon.
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