Industry expects 15-20% increase in ad spends this festive season

Early estimates put the total spending during the upcoming festive season at Rs. 24,000-25,000 crore. It is being said that it still won’t be enough to make up for the losses of H1

e4m by Naziya Alvi Rahman and Venkata Susmita Biswas
Updated: Aug 21, 2017 7:47 AM

The advertising industry is hopeful for a truly festive season this year after a curtailed festive season in 2016 and a dip in ad spends in July.


Demonetisation had heavily impacted ad spends during the second half of the festive season last year. This year the implementation of the new tax regime has come ahead of the festive season, affecting ad spends during July by nearly 20-25 per cent. Therefore, advertisers are gearing up to infuse more capital into their ad campaigns during the festive season.


The estimated expectations alone reflect a 15-20 per cent increase in ad spends for 2017 from 2016. The market will now be infused with all the monies that advertisers set aside for the first half of the year. Therefore, ad spends during the festive season are expected to make up for the slow spending during the first half of 2017.


As much as 40 per cent of the year’s ad spends come during the festive season beginning with Ganesh Chaturthi, peaking at Diwali and sustaining right until the end of year with Christmas and New Year. “This year we are expecting the overall ad spends during the festive season to be around Rs. 24,000 – Rs. 25,000 crore,” said Ashish Bhasin, Chairman and CEO South Asia, Dentsu Aegis Network. In comparison, the estimated overall ad spends from last year was around Rs. 20,000 crore. 


The sentiment this year is positive for a healthy festive season. Bhasin hopes that a good monsoon, effective implementation of government schemes and infrastructure development will bolster spending in rural India. Ashish Sehgal, COO, Zee Entertainment Enterprises Limited, also said that he is hoping for a bullish spend during the festive season this year. “I expect a 15-20 per cent increase in ad spends this year over last year,” he said. Now that the country has recovered from the low of last year’s demonetisation, “I assume that will help the low base of last year to show growth in the coming months,” he said. 


The market saw a slump in July due to GST but it has begun to recover and is showing signs of making a strong come-back during the August-December period. Juhi Ravindranath, Vice President - Advertising sales, South Asia, Turner International India, has seen a growth in the market since the beginning of August. “We expect a further strengthening through September leading up to Diwali. After a sluggish June - July, we now see indicators of new launches and campaigns. Early indicators are pointing towards a strong festive season coming up,” she said. 


While the industry believes that locked up capital and inventory will now come into play, experts also say that this season will not help make up for the losses of the year. A rather short festive season beginning in late August and wrapping up in two months by the third week of October is also expected to impact spends this year. A short season would mean fewer spends and therefore low growth.


Pawan Jailkhani, Chief Revenue Officer at 9X Media, who has seen 12-14 per cent growth this August over last year (same month) is hopeful to see a similar percentage of growth for the second half of the year otherwise the yearly growth will get hampered. But with that growth, he is doubtful of recovering the loss of the first half (January-June 2017). “Two reasons of why we won’t be able to achieve a higher growth than previous festive season are the short festive period and the change in category mix from last year,” he said. 


A degrowth in the print industry, in addition to a nominal 9-10 per cent growth in the TV space and around 18 per cent growth in the digital medium, all indicate that the losses that were incurred during the first half of the year cannot be recovered during the festive season, said Anita Nayyar, CEO India & South Asia, Havas Media. She said that spends last year, prior to demonetisation, were not particularly high and the same trend will continue this year too. “Spends will be as they generally are, I do not expect to see any spike in the spends,” she said.


Mobile phone manufacturers, e-commerce giants and automotive companies that are the mainstay of the festive season will continue to spend heavily this year too. Chinese handset manufacturers like Oppo and Vivo, that have been spending significantly on promotions, are expected to make a splash over the next couple of months. According to a study by International Data Corporation on the Indian Smartphone market, “The market is preparing for the biggest quarter so far. Offline channels have already cleared the old stocks, eTailers are getting ready for mega online festivals and vendors are set to launch new models in the Diwali festive period.” Real estate spending on print will also see an upward mobility during this period.  


In 2016, was one of the top brands that advertised heavily on television during August-December 2016, as per a study by TAM Axis. The top two advertisers of 2016’s festive season were the undisputed leaders of advertisers: Hindustan Unilever, followed by Reckitt Benckiser. Industry experts believe that the global trends will remain the same and companies across categories will loosen their purse strings over the coming months. 


-- with inputs from Madhuwanti Saha

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