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Auto, handsets and e-commerce to drive ad spends in 2020: GroupM TYNY 2020

Given last year was slow for the auto category, what could be the reasons for the expected increase in ad spends in 2020 from the sector? GroupM leadership explains

India will continue to be the fastest-growing major ad market in the world, GroupM’s ‘This Year, Next Year’ (TYNY) 2020 has predicted. The report said sectors such as auto, handsets and e-commerce are likely to lead advertising spending this year.

The auto sector, which was mostly dull during the year that just went by, will see a major uptick in the ad spend on the basis of the changing policy landscape.

The report has said that to communicate policy-level changes and clear the inventories, the auto companies would be advertising more. According to government regulations, the sale of BS-IV emission vehicles will be banned after March 31. The auto industry is currently advertising to clear the BS-IV engine inventory. The ad campaigns for BS-VI engines have also started.

The proposed scrappage policy, which would mandate selling of vehicles that are older than 15 years for passenger vehicles and 10 years for commercial vehicles, is also likely to be notified soon. The auto companies would increase their communication budget in light of the scrappage policy as well. The launch of new models will also push the auto sector adex.

Given last year was slow for the auto category, what could be the reasons for the expected increase in ad spends in 2020 from the sector?

Sidharth Parashar

Sidharth Parashar, President, Investments and Pricing of GroupM, answered this by stating that the slowdown was a ‘cyclic’, which will revive during the pre-festive season this year.

The emergence of hybrid and e-vehicles and vehicles with relatively affordable prices giving high-end experiences will fuel the growth of the sector, Parashar said.

Other than the auto sector, e-commerce will also add to the overall ad spends growth in India with its expansion in tier two, three markets.

Edtech, fintech, e-pharma, gaming, e-travel and physical retailers will also be spending more on adex this year, the report stated. 

The report, however, said brands need to focus more on immersive and integrated approach while communicating with customers.

Ashwin Padmanabhan

“Most of the e-com players like Pepperfry and Urban Ladder are coming up experience centres; it has become an important part for the players in this space. With evolving technology, their approach has become more immersive for customers. Brands like Lenskart are presenting an opportunity to the customers to try the product online via applications. The same trend is with beauty, fashion and cosmetic brands. Such experiences are as good as real. Experience zones along with the technology will drive more trust among the customers,” said Ashwin Padmanabhan, President, Partnerships and Trading of GroupM India.

The report has said that brands will move from trend-spotting to culture creation by becoming content creators both in the online and offline world. The brands will try to build trust in the age of conscious consumers, the report stated.

Padmanabhan said, “Brands now will play an active role in creating a culture around what they stand for. The culture they create through advertising, products and services. For the same, they will spread their spends across modes and mediums.”

But how can brands develop trust among ‘conscious’ consumers who can see through the claims and fake promises?

Padmanabhan said in this age, consumers will tend to trust a brand that is honest, transparent and vulnerable.

“Brands who own up to their mistakes and not try to cover themselves will actually earn the trust of customers,” he added.

The report also stated that there will be a growth in handsets sales in India on the back of 5G technology.

The report states that FMCG will have increased spends in advertising with H1 witnessing moderate and H2 witnessing robust growth due to monsoon.

Stable oil price, a possible decline in unemployment and a longer festive season are a few other factors driving ad spend growth, the report said.

Prasanth Kumar

Prasanth Kumar, CEO, GroupM South Asia, said that some initiatives from the Government’s end will boost customers’ spending and the year will witness longer festive seasons, thus boosting the overall FMCG sector.

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