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Auto, consumer durables, real estate, luxury ad spend may take a beating as Covid-19 wreaks havoc across country

Though the media and entertainment industry is hopeful of a decent growth this year as compared to the last year, it is bracing for a sector-specific impact as more states announce lockdown restrictions

The second wave of the Covid-19 pandemic, which till very recently was considered as a temporary blip in terms of adex growth, may now end up doing more damage than expected. 

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With more states either announcing or extending lockdowns, certain categories such as auto, consumer durables, consumer tech, real estate and luxury goods have already started feeling the pinch. 

In the last one week, the states of Karnataka, Goa, Uttarakhand and Himachal Pradesh among others have either announced full curfews or partial curfews. Some states, including Delhi and Punjab, have extended restrictions. 

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Though the media and entertainment industry is still hopeful of a double-digit growth over 2020, it feels the situation ahead will entirely depend on the vaccination drive and how the governments respond to the health emergency. 

Jai Lala

Jai Lala, CEO, Zenith India, “If within a month things start to get back to normal and optimism prevails, the industry will have a higher double-digit growth. Currently, things are dynamic and if the same situation continues till July or August, there will definitely be a bigger impact and repercussions on overall adex,” he said.

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He said that with the second wave of Covid-19, print might again come down a little bit since the categories (like auto) that spend big on the medium will be impacted. TV and digital may not have any impact though. The media and entertainment industry had seen a 24% degrowth last year. 

“In days to come, categories such as auto or consumer durables that saw recovery probably might again slow down. Most of the other categories such as FMCG, BFSI, Education and health more or less will continue in the same way. Although this time, companies are a lot more prepared and not taken by surprise. There will be no impact on the ad spends of essential categories since the demand for those products is there. Luxury products-related categories will continue to bear the brunt,” he added.

Anand Bhadkamkar

Anand Bhadkamkar, CEO India, dentsu, said, “We will still have to observe the impact on the economy since lockdowns have started across multiple states. However, there is no lockdown at the national level. Yet, it will definitely have an impact on M&E spends and growth. But the exact effect of the second wave is too early to call out.”

If the lockdowns are extended, supply chains will be disrupted and the overall market will be disrupted, affecting the consumption and resultant spends. 

In terms of categories, he said, “What we have started seeing from the last year is that start-ups, including the e-commerce sector, fin-tech, ed-tech, online gaming segment and the health sector, are performing well. Thus, these segments led by digital will contribute more to the overall M&E growth.”

Asheesh Chatterjee

Asheesh Chatterjee, Chief Financial Officer and Chief Business Officer, Big FM, said commerce is still carrying on, both on the demand and supply side, and business and operations are being conducted continually compared to the situation in the first wave. Hence, he feels the lockdown and curfew will have a limited impact for the short term.

“We are hopeful that it will bounce back as per the situation, especially with vaccination drives being conducted across the country. Additionally, once the situation improves, consumer demand is expected to bounce back, as we will see the pent-up demand surge, which will lead to an increase in volume and revenue,” he said.

In the case of radio, the ad rates are almost back to earlier levels for most businesses across industries. Categories such as services, banking/finance/investment, food and beverages, auto and retail are the top categories consuming 69% of radio ad volumes.

Radio has already beaten expectations with March 2021 ending more than 20% higher than March 2020.

Chatterjee said regional and local brands have been the game-changers for radio in recent times where emerging markets today are driving growth in business over metro markets.

More and more brands are leveraging radio’s mass-local reach and influence in local markets nationally. Radio’s share in these spends is upwards of 10% of the budgets.

While the metro markets are expected to be impacted in the short term, the regional markets are expected to show some encouraging growth.

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