Advertising revenues saw a dramatic decline during the 2020 lockdown and, according to a BCG-CII report, spends were 16% less compared to that of 2019. Now with lockdowns mostly lifted across the globe, economies recovering, and vaccines in sight, people are optimistic about the year ahead, which experts say will directly reflect on advertising spends in 2021.
Anand Bhadkamkar, CEO, India dentsu, said, “By the end of 2020, there had been a slight recovery. There has been a huge reduction compared to last year; the overall media spends have gone down by around 18-20%. Still, the recovery has been sharper than anticipated and that's a positive sign. I think the coming four-five months will be slower because Covid is not away yet, but overall it looks like there will be around 12-13% increase in 2021 over 2020.”
He says though television and print have seen growth compared to 2020, the recovery has been largely driven by digital and is set to continue in 2021. “Clients are looking to invest more or make better use of digital. They are using it much more efficiently. The growth of digital will be much sharper than the overall growth. In print, regional has played a good role in the entire bounce-back,” he said.
Shekhar Banerjee, Chief Client Officer and Head, West, Wavemaker India, said, though print advertising is still lagging, local ads are making a comeback on the medium. Cinema and OOH remains badly affected.
Rajiv Gopinath, CCO, Starcom, said he expects the prices to be higher in the summer of 2021. “Supposedly the index of television and print is 100. That index went below 50 in the April-May-June quarter. If I was selling inventory at Rs 100 per 10 seconds, it came down to below 50. The recovery started at the end of July where the index started going up to 60%, in August-September, it became close to 75%, and then in the festive period, it was about 100 on television. I expect it to continue for television and actually going higher than last year when we hit April-May-June with IPL and summer returning when durables and other categories get active. I see the pricing going 5-10% higher than last year in this period.”
According to Gopinath, the recovery in the industry was visible from July last year and the Indian Premier League in September gave an additional boost. “If you look at the overall off-take of television today, we are talking about a very good festive season backed on a sports event that happened in September-October and part of November. However, the recovery started in July. If I benchmark it to July in the previous year, the levels were still 60% of the previous year. That number improved and reached 75% in August. September-October was much better because you had IPL in that period. If I look at December, it was still 85% of the previous year.”
He said large categories like auto, durables and services had a festive spike in spend with December levels back at 60%. Within FMCG, F&B seems to have recovered and personal care is at 85%.
DAN and Wavemaker have made similar observations. Bhadkamkar said, “After the IPL, there was some positivity and consumer sentiment started coming back. So that helped the media agency business as well. As clients started spending, media investments started coming back. IPL was a good booster for that purpose and I think that's where the confidence started coming back.”
Banerjee said, “We saw a strong rebound during the festive season. Diwali clubbed with IPL witnessed nearly Rs 3,000 crore worth of advertising. The volume of advertising on television is back to normal and overall adex net positive in October-December quarter of 2020 versus 2019.”
The IPL not only helped boost consumer sentiment but is also likely to help the media pricing recover.
“Starting Q2, with vaccine rollout and two big media events, IPL and T20 World Cup, we expect 2021 to be a good year for us,” he said.
Bhadkamkar believes that pricing is going to change because the way brands and agencies work has changed. “The way people or business or brands or agencies were working has undergone a change. In that perspective, pricing would change because companies have seen more automation and process efficiencies. People will be looking more from the aspect of how to drive more efficiency and to that end, the spends get curtailed or brands try to extract much more from the same dollar spent,” he said.
With everything becoming virtual, the way agencies pitch has changed. The brainstorming, discussions, ideation, presentations and even selections have moved online.
“It’s been a new normal for the entire business, including the pitching process. In 2020, we did all our pitches virtually and won a lot of them, including Domino's business. Face-to-face meetings have slowly started and over the next 3-4 months, I expect them to become more regular,” said Mohit Joshi, CEO, Havas Media Group India.
However, Bhadkamkar believes even after normalcy is restored, pitches will continue virtually for some time as everyone has found it more efficient. “While in-person pitches have its advantages, I think it will be selective now. Maybe critical and unavoidable ones will be in person, but other pitches will continue to be virtual,” he said.
Banerjee said pitching remotely requires meticulous planning and that’s something that agencies should adapt to even after they go back to offices. “One big lesson for the industry is that pitching remotely is about effective project management, it is no more about the brilliance on the night before but meticulous planning, something that all of us need to adapt even after agencies are back in the office,” he said.
Speaking on pitches, Gopinath said there has been a 60% decline. Many of the big pitches happened before the Covid pandemic began and were announced between January and March. He said there were 160 pitches in 2020 compared to 270 in 2019. “Among the 160 pitches in 2020, 60 were from first-time advertisers. That makes it a 35% from first-time advertisers. Even among these, most of the larger ones were from e-commerce or app economy-focused players.”
Bhadkamkar said, “Last year, the pitches had slowed down and there were no large or strategic pitches. We didn't see much activity for large pitches and client focus was more on a short-term or immediate basis where clients wanted some quick, execution, ideas or thoughts. But now we are seeing much larger pitches opening up or clients wanting to evaluate long-term relationships.”
According to Banerjee, even at a reduced intensity, 2020 was no different when it came to pitches for them. "Fortunately for us, it has been a year of multiple wins and pitches too. Wavemaker India won new business worth Rs 700 crore, making it an exceptional year for us despite the lockdown. We won new business such as Mondelez (E-comm mandate), Sun Pharma, Religare Insurance (now Care Health Insurance), Ustraa, Chumbak, Lectro E-cycles, Lido Learning and McNROE Consumer Products (owns Wild Stone deodorant). We retained media mandate of Perfetti Van Melle in India and won the additional mandate of Integrated media services. We won the media mandate for Perfetti Van Melle worldwide. And lastly, Wavemaker was ranked as the most successful media agency of the year globally by COMvergence Global New Business Barometer," he said.
"One big lesson for the industry is that pitching remotely is about effective project management. It is no more about the brilliance on the night before but meticulous planning, something that all of us need to adapt even after agencies are back in the office," Banerjee said.
To remain profitable, agencies are streamlining their services. dentsu is continuing the focus on digital and content as that’s what is the current need and on which clients are seeking support.
“We are looking at focusing more on customer experiences or creating those experiences, commerce capabilities and developing those commerce platforms or delivering those experiences to the clients,” Bhadkamkar said.
Joshi said, “We have to keep reinventing our business on the basis of changing client and consumer requirements. At Havas Media, we added more capabilities over the last one-and-a-half years. A lot of acquisitions have been added to our group capabilities.”
Differing on this, Banerjee says they do not need to streamline practices for short-term profitability. “Treat Covid as a disruption and don’t overlearn. Fundamentals have not changed, only some trends have accelerated and for the right reasons. We are sticking to our plans. As Wavemaker, we strongly believe there is always a better way to grow our client’s business and in turn ours. Our scope is only expanding and we are centred around how we make our client’s future fit. We are relentlessly focusing on helping our clients decode their consumer’s journey, identify new growth channels, deploying proprietary tech, AI/ML to measure better and learn faster,” he said.