Guest Times: Digitally ahead agencies will thrive but many legacy agencies will see beginning of the end

Ashish Bhasin, Chairman and CEO, South Asia, Dentsu AegisNetwork, foresees a 12 per cent compounded annual growth rate from 2018

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Guest Times: Digitally ahead agencies will thrive but many legacy agencies will see beginning of the end

Ashish Bhasin

The broad trend you can see when you look at the last five years or so is that we have had a compounded annual growth rate of about 12 per cent for the advertising spends. Last year was a bit subdued due to demonetisation. This year saw demonetisation carry over impact and GST. But in spite of that we have seen double-digit growths in every single year. I see a 12 per cent compounded annual growth rate going forward, starting from 2018.

The ad growth as a rule of thumb is about one-and-a-half times the Indian economy’s growth. So if the Indian economy grows at 8 per cent then advertising will grow by 12 per cent. It works the other way around as well. In a downturn, the first expense to be cut off is advertising.

Different Growth Rates: Earlier, all media used to grow at similar rates. Now there is a big difference in growth rates. For example, digital grows almost thrice as fast compared to the average of the other media put together. So if the market is growing at 10 per cent, then digital ad spends growth is about 30 per cent.

Mobile’s Importance: Our Dentsu Aegis Network Digital study shows that by 2020, nearly one fourth of the entire ad spends will be digital. This is also being catalysed by some macro factors. For example, because of the Jio launch, the cost of data has fallen significantly, almost by 90 per cent. More and more consumers will be consuming digital video because it is now more accessible to them. Secondly, handset and smartphone prices have fallen significantly and continue to do so.

We are nearing a billion mobile phone connections. Once the smartphone penetration rises to 40 per cent it will become attractive for mass brands trying to reach people. Earlier digital was seen as niche. I predict that in the next couple of years it will become integral to every single business and will no longer be niche because we will see some inflection points. When we have half a billion smart phones, which we will in 18-24 months, it will be one such massive inflection point.

Print: English print will grow much slower than regional print. People will get more interested in local news and literacy levels will increase and so more readers will come into the fold. However, India will remain a rare market where print will still continue to grow.

Television: India will be one of the few countries in the world where all media will grow, albeit at different rates. This is unlike other parts of the world where TV and print are decelerating or even slowing negative growth. Television will hold its own as it is an impressive and an influential medium in India. It will continue to grow for a while. Distribution will increase further with things like Free Dish. With BARC now measuring rural, hopefully more and more information will come from that this will drive. TV will keep increasing for the next few years at least.

Outdoor: As a medium, it will really do well because as we build infrastructure with new airports, bridges, metros, etc, more opportunities will come up. I hope that outdoor becomes more standardised and professional. If it does then it can become a strong medium as we are a young country, on the move, with slow traffic. Digital OOH will start emerging as well.

Radio: It will not have spectacular jumps nor will it disappear. It will continue to occupy a niche place.

Cinema will be important. Tier-II and III towns will attract more single screens to upgrade to multiplexes.

Thinking Digital: Digital is no longer a medium. It is a way of doing business. It is how consumers interact with brands. E-commerce is gaining more prominence. A digital transformation has happened and is affecting every business. Agencies and marketers who don’t recognise this will be left behind like dinosaurs.

Digital is a behavioural change not just a way of building a brand. This is a critical difference that a lot of agencies and marketers are not getting. Several of them are lagging behind. Some agencies will lead the digital curve and others will struggle to cover ground. The old legacy agencies will struggle as they operate in silos. Here is where the Dentsu Aegis Network’s One P&L philosophy scores over any other agency group

Rural: Penetrating deeper in rural will become very important for advertisers as will the tier-III, IV cities and towns. That is because in the Metros brands have reached a high level of penetration. For their growth they will be forced to go further down. Luckily we have had a relatively good monsoon this year. With beneficial government policies also, there should be more money in the hands of the rural consumer.

Measurement: It is key for any media to grow. You have two media – print and television – that are well measured with IRS and BARC. Some other media are unmeasured or poorly measured. Outdoor needs better accountability beyond what we at Dentsu Aegis Network do. An industry measure needs to evolve. Outdoor needs to get its act together. One medium that can gain the most by bringing in measurement is outdoor. A lot of people are on the move. Traffic is slow moving at least in the urban areas and the outdoor medium lends itself to that. As market leaders with dominant market share in OOH, we have invested heavily in this area but it needs to become an industry-wide initiative.

Radio is poorly measured and digital has no consistent currency, though it is the most measurable. There needs to be a cross-media measurement system because a consumer is exposed to everything at once. We need to look at multi-media measurement rather than single media measurement. We are four to five years away from there.

The Challenge of Talent: The big challenge for advertising and media is getting and retaining good quality talent. The talent going out is better than the talent coming in. Many years ago advertising used to be one of the preferred professions. Today it is not so, especially at the entry levels due to remuneration constraints. We are not able to attract top notch talent and if we do then we are not able to retain them. So poaching becomes a norm. All of us are guilty of it. We are not growing the talent pool the way it should be. The quality of talent pool needs to improve. This is the biggest challenge facing the industry in the next five years as I see it.

Overall, I think 2018 will be a great year for advertising, but there will be clear winners and losers. Agile, digitally ahead agencies will thrive while several legacy agencies will see the beginning of the end.

(Disclaimer: The opinions expressed in this article are those of the author. The facts and opinions appearing in the article do not reflect the views of and we do not assume any responsibility or liability for the same.)

Guest Times Ashish Bhasin Dentsu AegisNetwork