As second Covid wave hits us, agencies wary about business but say situation won't be as bad as last year

In 2020, the advertising industry took a severe hit during the Covid pandemic as brands were cautious about spends. According to GroupM’s TYNY report, India’s adex saw a decline of 21.5% last year. But just when the advertising agencies were on a path to recovery as the nation progressed towards unlocking and economic activities opened up, the second wave hit us.

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Experts caution that if consumer sentiment is hit, it may affect advertising spends once again. But, at the same time, they are optimistic the situation won’t be as bad as last year as everybody is better prepared to deal with the situation. 

Anand Bhadkamkar

Anand Bhadkamkar, CEO, dentsu international India, said there would be some effect as retail outlets in most places are shut and people are not able to venture out of homes because of which brands might be cautious about their spending in this environment. However, compared to last year, there are a few positives to look at, he said.

“This is affecting the business environment. With lockdowns in multiple places like Maharashtra, people will not be able to go out for regular shopping. However e-commerce continues, so the digital push will be there and companies are aligning with that. With this (lockdowns) happening at multiple places, the supply chain also get disrupted.”

“Brands are going to be cautious against advertising aggressively. However, it's a bit early for that because there are a lot of positives at the same time. Last year, we just knew that a pandemic was going on and there was no other cure than breaking the chain. Today we have vaccines available and 10 crore people are already vaccinated. The government is clear they don't want to stop economic activities to an extent unless it's critical. They are taking efforts and action to allow some economic activities to continue. It won't be like last year. But we need to see that the spread this time is very acute and we need to see how quickly this is curtailed. The government is also trying to get the health infrastructure back in shape. This will help break the chain.”

Ashish Khazanchi

According to Ashish Khazanchi, Managing Partner, Enormous Brands, while there may be some dullness, there will be a recovery once the lockdowns open up.  He said the ICC Men’s world cup scheduled in August will bring in a fair amount of advertising.

“One of the big catalysts for all advertising has been the IPL, so a lot of advertising that is going to happen in the next two months is put in place and ready to roll. While there is a temporary dullness, we know that through the course of the year, after every lockdown, it did return to a fair amount of normalcy. One of the other big events this year is the world cup towards the end of the year, and it will bring in a fair amount of advertising. At least 60-70% of the shoots have already happened. Many of our clients who are reducing scale are shooting in other cities. While Mumbai and Delhi are a problem, there are cities where there is infrastructure available and it’s not so bad.”

He said ad agencies are better prepared to deal with such situations compared to last year. “People are working in a way that the economy is going to rebound and come back at a fairly decent level of what it used to be pre-Covid. It will take a couple of months at best. It's only the beginning of the financial year, and people can plan for the entire year and plan their spending, and not get overly worried as last year. Businesses are planning for the IPL, world cup, and possibly a good festive season as well. Despite all of this, there is enough resilience in the economy to not really crumble, especially the advertising industry.”

“Revenues did get impacted for everyone last year, no matter what they put out as a public face. However, this year there will be some recovery. We might surpass even pre-Covid levels this year. Ad agencies this year can pack in much more this time,” Khazanchi said.

Raj Kamble

Raj Kamble, Founder and CCO of Famous Innovations, said he is still optimistic about the recovery and said many countries that experienced a second wave have bounced back. “The Covid situation is not going to disappear overnight. I think this is the time where agencies and clients can build their relationships and support each other to move forward together. All FMCG clients are paying full money, they are not cutting back anywhere because the products are still selling like hotcakes. Some businesses might be hurt and are growing slower. However, I am optimistic that this phase will go away soon.”

“People are going to buy, this is a phase. For example, in New York, all the small companies have restarted. Even in London, 70-80% of people are vaccinated and the Prime Minister has announced that they will not do the lockdown again. So, I think this phase will go soon and businesses will rock again. When the western world was going through the second wave, we were far behind in numbers so eventually, we will also be fine,” added Kamble.

Sajan Raj Kurup

“We have seen the second wave in most parts of the world and are perhaps a little better equipped to see it through. At this juncture, it’s all hands on deck. Fortunately for creative businesses, our mind is the biggest office and as long as that is open, work will go on,” said Sajan Raj Kurup, Founder and Chairman, Creativeland Asia.

How are agencies planning to deal with the situation?

The digital transformation pushed by the pandemic has led to brands and agencies get equipped with digital solutions and rely on data. “We at Dentsu think about continuing that digital adoption by brands and the entire ecosystem and working with them. Last year has some learnings for agencies. However, Covid is such a scenario that it throws some new surprises every time. This strain is much more potent. It's definitely about working with digital transformation, data and personalised experiences. That's something agencies have been working on and I think it will continue,” said Bhadkamkar.

According to Kamble, new-age and hybrid agencies are the future and will shine. “Lots of pitches are going on and I think lots of clients are selecting new-age companies, which is refreshing to see. Clients are selecting agencies that are agile and transparent. They are selecting agencies that are young and understand the new media. The transition is happening from old-age agencies to new-age agencies and strategically driven agencies. The only way to deal with these tough times is creativity. So one can only focus on good creative work. Even the client should be hungry for a good creative agency to do creative work and the work will sell. Creativity will help in these tough times.”

What are the sentiments of advertisers?

“Some parts of the UK had a bad second wave, but it did emerge. The vaccine production will be doubled by some players. I expect a fair amount of the population to be vaccinated. There is a certain impact on secondary sales, which are direct to the consumers, as all malls and most retail outlets are shut. However, business is moving at a fairly decent pace and there are conversations about newer accounts twice every week,” Khazanchi said.

Bhadkamkar said clients are going ahead with the current pitches and evaluation but spending will get scrutinised. He said just like last year, the current sentiment is cautious optimism. “Everyone has the experience of last year; not only us but clients as well. With the kind of cycle we had gone through last year, clients are prepared in that sense.  If it becomes very large, then we will have to see it at that point. Right now, it is manageable. So we will need to see the situation in the next two months and hopefully, it should get curtailed. There are two or three positives such as vaccination and Sputnik being approved by the government. People are again cautious about social distancing.”

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