India's adex to shrink by 15%, full recovery may take 18-24 months, cautions DAN's Ashish Bhasin

The Covid-19 pandemic has had a cascading effect on India's advertising industry. Ashish Bhasin, the India Chairman and Asia Pacific CEO of Dentsu Aegis Network (DAN), says the pandemic has set back the industry’s growth by at least two years and full recovery may not be possible before 2022. 

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In a conversation with BestMediaInfo.com, Bhasin said, “Roughly what this means is the advertising industry is going to lose Rs 18,000 crore-Rs 20,000 crore this year over the projected adex for 2020. It will take us two years to get back to normal. I believe we will get back to 2019 levels around the mid of 2022. We have to grow by 25% to reach that level.”

India’s overall advertising expenditure in 2019 stood at Rs 68,500 crore. As per a Dentsu Aegis Network report, which was released in January this year, the adex for 2020 was expected to grow by 10% to Rs 76,000 crore.

However, with the Covid-19 outbreak and the lockdowns, advertising on mediums such as print, outdoor and events came to a standstill for almost four months. TV and digital did continue to get advertising but the ad rates took a massive beating.

According to Bhasin, India is likely to see a 15% reduction in adex as compared to the 2019 levels. “India is a complex country; there can’t be a straight answer for everything. In the short term, it will improve month on month but we won’t have a V-shaped recovery and we will end the year at -15%. It has put us behind by 18-24 months,” he said.

As soon as the lockdown was announced in late March, advertising started shrinking. In April, it was down by almost 65%.

Cautious optimism in market, month-on-month recovery visible 

Bhasin said while month-on-month recovery was visible; there were still not enough reasons to rejoice. India’s economy in the first quarter of the current fiscal shrunk by a little less than 24%. According to several reports, the overall fall in the GDP for the current fiscal might be between 12% and 14%.

The same is likely to be reflected in the advertising expenditure of brands. “According to me, every month will look slightly better than the previous one. If you remember, April was really bad as communication spends had fallen by 60-70%. Things slowly started opening up in May and the month was slightly better. Similarly, June was better than May and thereon,” Bhasin said.

 According to Bhasin, more recovery will be possible around Diwali. “Some normalcy will come around Diwali. But, overall if you compare year on year, it will be -15%.”

Bhasin hinted at cautious optimism.

“Cars and bike sales are increasing. Property sales will also increase during the festive season. Cinemas are expected to open up. So gradually things will improve. However, there is no overnight V-shaped recovery. The increase in volume does not necessarily mean increase in value,” Bhasin said.

“On a positive side, we have had a good monsoon and India doesn’t live in Mumbai and Delhi. It lives in Bharat and even though GDP-wise it accounts for 14-15%. Directly or indirectly, almost 50-55% people are dependent on agriculture. The sowing of kharif crops is 8% higher than last year, which is a big number. Agricultural demand will pick up and by Diwali we should see an upswing as more money will go into rural consumer’s pockets and rural areas will start driving demand,” he said.

Talking about the likely recovery across mediums, Bhasin said, “Different mediums will get different responses. While there is an ongoing rush on TV and digital media, print will slowly come back as sales will increase in the festive period but still not back to where it was.”

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