How the economic slowdown has become a testing time for India's creative industry

India is going through an interesting phase where the mass product-based material economy isn't picking up. On the other hand, new products and experiences are being lapped up by consumers, especially in urban markets.

Mass car brands such as Maruti Suzuki are seeing sales plummet. At the same time, new entrants such as MG Motor are being overbooked.

This signals that the consumer appetite is still alive in urban segments.

Experts believe what brands currently need more than ever is a valued marketing resource that isn't only creating ads on their briefs but is also doing strategic assessment of the barriers to demand realisation or final purchase and tackling it through innovative ideas across platforms and provide the antidote to consumer inertia.

Vivek Srivastava

Vivek Srivastava, Joint Managing Director, Innocean Worldwide India, believes that this is the period for agencies to stand up and be counted as a valued marketing resource. “The need of the clients is a strategic assessment of the barriers to demand realisation or final purchase and tackling it through innovative ideas across platforms and provide the antidote to consumer inertia," he said.

Expanding roles of creative agencies

It's a challenging time for agencies as clients are no more coming with a brief for a campaign that doesn't immediately deliver performance results.

The problem is that consumers aren't buying as many products. And the agency's brief is very clear; generate consumer interest.

Srivastava said, “From a creative agency’s perspective, the effect is felt both ways. There are campaigns curtailed or scaled-down or simply called off. But what also happens is that progressive brands seek interesting ways to generate consumer interest and seek a result orientation in the communication being rolled out. And this can lead to added gains.”

Anish Varghese

Anish Varghese, Chief Creative Officer, Isobar India, said, “Whenever there is a slowdown in business, it’s going to affect the creative aspect. Most of the time they even cut marketing budgets.”

According to Varghese, during the slowdown phase, brands are opting for digital advertising to stay connected with their targeted groups. “I feel the client is spending on digital. Not on the higher side but at least they are maintaining a range so that they can be connected to their TG through the digital medium,” he said.

Santosh Padhi

Speaking on the effect of the slowdown, Santosh Padhi, Chief Creative Officer and Co-founder, Taproot Dentsu, said, “The minute anything impacts a brand or a company, the first thing they do is cut down their advertising budgets because it’s a secondary preference for them. The first is manufacturing and production, they won’t stop it unless they are in a complete debt of trouble. The slowdown had happened earlier in 2008-09 too when Taproot just started. Having said that, not every brand does cost-cutting. There are certain categories that are facing the impact of the slowdown. But others are in a balanced state or doing well.”

Kapil Arora

Kapil Arora, Co-Chairman and CEO, 82.5 Communications, said, “It’s a mixed bag, in some categories it’s been business as usual, in others we have seen a postponement of plans and some have even seen a bolstering of short-term demand generation work.”

“The teams at Innocean are brainstorming with clients and generating creative ideas. These include brand-driven ideas that reinforce the choice drivers or tactical interventions that offer incentives to consumers,” Srivastava added.

“There are campaigns happening despite the slowdown. I don’t think the agencies are sitting idle, they are already in the process of coming up with new things,” Varghese added.

According to Padhi, brands are always in a tight hand phase for every single penny because slowdown is the flavour of the season. They have a better excuse to not pay advertising agencies enough.

Festive season would boost business

The October-December festive season contributes 35-40% of the annual sales for most consumer companies, which stock heavily for this period to make the best use of the biggest shopping opportunities of the year. The season starts with Ganesh Chaturthi, followed by Onam, Navratri-Durga Puja and peaks in Diwali.

Speaking on the growth around the festive season, Varghese said, “There would be a 10-15% increase in profits in the next couple of months. Digital agencies may boost their results in coming months.”

“I believe the festive season should see similar spends, as marketers will be banking on the period to revive demand. Agencies’ revenues are traditionally SH heavy (second half of year), but this year, given general elections, IPL and World Cup, distribution should be more even,” said Arora.

“It’s early yet to put a number on the increase or decline kind of scenario. But an interesting phenomenon has been seen across buzzing categories: new product launches or a steady upgrade of consumer experience at intervals is a big driver of consumer preference and buying decisions. Our view at Innocean is that new launches by key players in their respective categories will keep the action going. Budgets may get rationalised but marketing activity will persist,” said Srivastava.

“I think the festive season has immense power to overshadow the slowdown because the sale of every consumer durable will happen during the festivities, which did not happen much in the previous quarters of this year. I think growth will be on a par with previous years,” concluded Padhi.

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