Adex recovery could be phenomenal once Covid-19 crisis is over, say experts

Before the coronavirus pandemic broke out, various forecasts had pegged India's total advertising expenditure to be over Rs 90,000 crore in the year 2020.

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And as the pandemic spreads its web and the economy remains under a lockdown, there's widespread fear that adex may even be lower than last year or even go to the 2018 levels.

But experts suggest that it may not be as bad as thought because there isn’t likely to be any lingering effect once the coronavirus is under control and the economy starts opening gradually.

MK Anand

MK Anand, MD and CEO, Times Network, said, “If the pandemic settles effectively and economic activity starts even partially within Q1, I expect advertising to surge right back very quickly even though recovery will be lumpy and sector-wise.”

Vijay Kaul

Vijay Kaul, Deputy General Manager at Yamaha Motor, said, “While the next few months will be tough, no doubt that everyone will get through them. Pre-festival, mid-August onwards, the market will stabilise. India being a growing market will bounce back quickly. Hope the government initiatives and growth of new category will boost the advertising segment. The auto segment normally sees an upward trend during the regional festive season starting Onam, Ganesh Festival, Durga Puja and till Diwali. We might revisit our advertising strategy. But entire industry will be banking on the festival season, which we can’t miss. For the auto category, the second half of the year is an important business period with many tactical campaigns. We will continue with advertising with different media mix and strategy, addressing key challenges and objectives.”

Shivam Ranjan

Sounding optimistic, Shivam Ranjan, Marketing Head, Motorola Mobility India, said that assuming and hoping that the crisis settles in the first half, the recovery will be faster and more obvious for certain media vehicles such as digital and TV, which are already seeing a huge spike in consumption.

However, traditional media vehicles such as print, OOH, cinema and radio may see a longer recovery cycle due to the changing consumer lifestyle and behaviour as an impact of this crisis, he said.

“I am very optimistic of the growth of advertising in the second half. Quite simply, products and services will continue to be sold to consumers if economies need to survive; and advertising will continue to play a key role in generating demand. However, the impact may be seen on media dynamics as well as communication themes, which may evolve to address changing consumer behaviour and business objectives better,” he added.

Could be a long road to recovery

RS Sodhi

As many advertisers still contemplate the situation, RS Sodhi, Managing Director, GCMMF, said it is too early to decide about the future as it all depends on the severity of the corona crisis.

A drastic impact on discretionary spending is already being observed at large not only in India but globally, which is going to impact the business of large spenders, including automobiles, home appliances, etc. Thus, impacting their ad spends.

B K Rao

B K Rao, Senior Category Head, Parle Products, said there could be almost 40-50% dip in advertising revenue as there would hardly be any sale in many sectors, including real estate and automobiles.

“In the second half of this year, the growth of advertising would be definitely slower than 2019 because from January to June (this year), there will be massive hit in terms of advertising revenue. If we assume that three months from now, things are much better starting June, there will be a constant possibility of the pandemic coming back again and again, which will disrupt the entire supply chain. Real estate will take a big hit. The auto sector, which is a key spender around festival time, will also take a big hit. However, essential category brands, including FMCG, will possibly have a big role to play. They will continue to survive and advertise well during this situation. From July onwards, we can expect FMCG to start advertising,” he added.

With the lockdown and three months off-air for most of the categories, missing on big sporting properties like IPL etc, 10-15% of the investment will be down this year at an overall advertising level compared to 2019. This can be attributed to demand slide and production slowdown, impacted by low sentiments.

Anand added, “However, I am not sure that we can start assuming that the medical crisis will settle quickly, unless the lockdown strategy is continued well into Q1. And that will mean wider economic damage, which will certainly damage H2 advertising. I think it’s a circular reference situation."

Roshan Abbas

Roshan Abbas, Founder at Geometry Encompass, said the road ahead is long and winding and the crisis is far from over.

“I don't see a recovery this year for OOH, live and radio business. TV and digital will get a boost. Advertising spends will focus on the essential, audience sentiment is low and only those who can offer unique engagement shall survive. Recovery will be in 2021," he said.

Rao said the revival of the industry entirely depends on the business and revenue of the companies and how quickly brands recover, which depends on sector to sector.

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