Despite lockdown relaxations, brands to remain cautious on ad spends

When the country opened up after two months of strict lockdown last year, brands opened their purse strings and increased their ad spends. As the festive season kicked in, followed by the Indian Premier League (IPL), there was a strong surge in ad spends. A year later, India is in the same stage after the second wave of the Covid-19 pandemic.

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As several states relax their lockdowns at this moment, will there be a similar surge in ad spends this year as well? The festive season will soon be here and the remaining IPL matches will be completed in UAE in a few months. However, industry experts feel that after a brutal second wave, the brands may not spend in the same way as they did last year.

“Brands will be more cautious this time around. We have seen a particularly bad second wave. We are expecting a third wave and vaccinations are not likely to ramp up all of a sudden. All this will add a certain amount of cautiousness among advertisers for sure,” said Anand Chakravarthy, former MD, Group M.

Anand Bhadkamkar

Anand Bhadkamkar, CEO, dentsu India, had similar views. “Brands definitely are cautious. Unlike last year, there’s going to be a structured way of brands going out in the market. But it also depends on how the pandemic plays out. We need to wait and watch.”

Rohit Ohri

However, Rohit Ohri, Chairman and CEO, FCB Group India, says brands are looking forward to moving on and they are better prepared for the uncertainty that lies ahead.

“The second wave has been brutal but now everyone wants to move on with greater caution on the health and wellness front. The ad spends this year haven't dipped as sharply as last year because there has been no national lockdown like the one we had last year. The need to get back to normal life is acute. People are exhausted with the long lockdowns. Most of our clients are optimistic about the rest of the year. With IPL, the World Cup, and the festive season yet to come, brands will find platforms that will deliver great ROI,” said Ohri.

“We will see demand and confidence returning because everyone is keen to get back to normal. Nobody wants to be crippled by Covid for a long period of time. The caution will now be more from the health and safety perspective," he added.

Dheeraj Sinha

According to Dheeraj Sinha, CEO and Chief Strategy Officer, South Asia at Leo Burnett, this year the lockdown wasn’t as long as last year’s. So the spike may not be as high. “We opened with blockbuster properties such as IPL, Big Boss, etc, and straight into the festive season last year. Therefore the spike was much higher. This time we've been away only for a month or two. So I don't expect such a huge spike. But most brands will go about with their usual marketing plans that they had put on hold for some time,” he said.

While a dip in ad spends was registered in May, it was nothing compared to the total washout last year. As the number of cases continues to reduce, several states are preparing to unlock. And with that, brands are preparing to resume advertising.

“Brands across categories are looking at opening up. Shooting is going to resume in a controlled way in Mumbai now. So we are now devising plans to get our brands back on air. We expect an upswing towards the latter part of June and July,” Sinha added.

Unlike last year, when the entire nation was under strict lockdown for over two months, this time rules are subjective to states. While states with a high caseload are still extending their lockdowns, others that have managed to get the situation under control have relaxed their restrictions.

Anand Chakravarthy

“We may end up seeing a lot of regional activity happening through digital, print, etc. Especially since certain parts of the country are in a worse condition than the others. In states where the lockdown is not as severe, brands will continue to do local or targeted activities,” Chakravarthy added.

Monaz Todywalla

Usually the festive season brings a surge in ad spend. Monaz Todywalla, CEO, PHD Media, India, said brands are going to spend on launches and innovations close to the festive season. "We have a large number of cricket days that might have good traction from a viewership standpoint. For a lot of brands, the impact is a good way to talk to new and light consumers, so we will be seeing some spending there. Plus the big e-comm sales are around the corner. Response to those may be a good way to gauge how brands will respond to consumer sentiment,” she said.

However, this year things may be a bit different as some predictions estimate that the third wave would coincide with the festive season.

“The category mix may be very different from a normal festive period. The high-value categories will wait and watch. They will take decisions closer to when the season starts gauging whether consumer sentiment and the overall environment is conducive to advertising or not,” said Chakravarthy.

Todywalla said, “Unlike last year, where we saw revenge buying behaviour from consumers once the lockdown eased, this year the sentiment seems to be of cautious optimism. It's not like there is no latent demand, but the emotional setback that consumers faced in the second wave of Covid-19, makes me believe the recovery may be a slower one in some sectors. Of course, some sectors will leapfrog more than others, but I can foresee more value for money buying by consumers. I think some relief measures for businesses from the government, more vaccinations, coupled with a positive sentiment among consumers may help fuel the ad spends engine.”

The coming of the third wave is a difficult situation to predict and it has brought in an element of uncertainty. A lot rides on its severity and on the extent to which India manages to vaccinate everybody.

Ohri said, “The third wave timing and intensity is anybody's guess. We are only hoping that before the festive season kicks in, the vaccination drive picks up and we'll have a lot more people fully vaccinated. Most of the senior leaders in the corporate world have said they are going to move ahead with caution. The fear of the third wave is not going to paralyse the market and prevent brands from spending. It's only that our guard will not come down very quickly this time,” he said.

Sinha expressed a similar sentiment, “It's difficult to predict anything. So most brands that we work with are playing a short-term strategy and we are trying to capture the momentum at this point in time while preparing for what life brings. The future is about being fluid, so strategies have to be more fluid than fixed. Most brands are realising that and we are factoring in uncertainty and fluidity as part of the plans.”

Chakravarthy said there will be two types of clients—one where the consumers are still cautious and the purchase intent has been impacted and the other category where the demand will return in the short term.

“The consumer demand hasn't come back fully for all categories. For example, consumer demand may not bounce back immediately for high-value products. Those categories will probably wait and watch and spend in shorter bursts versus the way they would normally spend. Whereas, there will be certain categories that will be much more bullish about the situation,” he said.

He said categories such as FMCG, e-commerce and fashion will continue to spend. “Certain categories will wait and watch. I think spends on big-ticket items such as automobiles and white goods may be subdued. Also since people will be hesitant to travel, there will be a dip there. Consumers are going to be a lot more cautious,” he added.

“In India, in a normal year, festive season spends (mid-Aug to mid-Nov) account for about 35-38% of the adex, which is approx Rs 75k crore. This year if the third wave does not impact the economy potentially, the share could be higher. But it is quite likely that adex itself reduces on account of the slower spends in April-June," he added.

Bhadkamkar feels this year's ad spends will be similar to last year and will be largely lead by digital. “Ecommerce, online education, gaming and FMCG will drive spends. How things come back in the next two months will be quite crucial. We should see interest levels start returning post-June. At dentsu, we had earlier predicted around 11-12% growth overall. We should still see that double-digit, but we need to wait and watch.”

Karthik Nagarajan

Meanwhile, Karthik Nagarajan, Chief Content Officer, Wavemaker India, said it is critical for the industry that shooting resumes at the earliest. “This will have an impact on not just TV and TVCs but also OTT content and branded content on digital platforms. Original content has a direct relevance on profitability across mediums (not to mention the livelihood of many millions) and hence the engine needs to be running around the year ideally. While there were a few exceptions, the industry went through the unlock restrictions in a reasonably safe and compliant manner when shooting began in H2 last year. We need to get back to that stage as early as possible. Since a disproportionate amount of production is centred in and around Mumbai, the restrictions in Maharashtra will have a reverberating impact across the country.”

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