Maruti Suzuki to up ad spends by 10-12% in 2022, says Shashank Srivastava

The auto industry has been plagued by supply chain constraints for the past few months. And having witnessed quite a dull festive season, it is now upbeat about growth in the next year. This will also help revive the sluggish growth of the adex by contributing up to 8% to its growth, said Shashank Srivastava, Executive Director, Marketing and Sales at Maruti Suzuki India.

The auto manufacturer also plans to up its ad spends by 10-12%.

Srivastava said, “Our ad spends for next year would roughly increase by 10-12%. In automobiles, there is a large amount of advertising when the new launches take place. Other than launches, we also spend on sustenance advertising which is for the existing brands. Thirdly is corporate advertising across all models. Lastly, the advertisement on the final mile, which is on the conversion at the lower end of the funnel, is done more plainly at the regional level. Next year we will probably have a higher expense across all because we will have more launches and a larger portfolio for sustenance. We would continue with the conversion at the lower end of the curve. There would also be a drop in the waiting periods that would mean that even at the tactical level for the conversion we will have to advertise more.”

The company has been increasing its spending on the digital medium for some time. Digital today is about 27-28% of its ad spends, which used to be about 20-23% last year. The same would increase by roughly 30% of the total budget in 2022, which is about a 5% increase.

“Television is roughly about 31-32% and print 27-28% and the rest is spread across the radio and OOH. Digital will go up, OTT expenditure within television would go up. Within the television budget, the OTT budget should go up compared with linear television,” he said.

Talking about the growth of the advertising industry, he shared that the same would probably show a CAGR of about 6% in the next few years, although next year will probably be higher provided there is no Covid-19 adversity.

“The growth will come back next year, the long-term growth is expected around 6-7%. The factors which are helping are the economy (GDP) itself and the growth of the service sector. The advertising spends by the service sector is higher than compared with manufacturing or agriculture. Ad spends should go up disproportionately and with digitalization, there would be newer product categories. The industry will witness new players who will need to increase spending on the initial awareness and brand salience,” he added.

The auto sector contributes around 6-7% to the overall adex.

Srivastava expects that the sector will contribute about 8% or so to the adex growth.

He also shared that auto would be contributing not only to the digital growth next year but also the traditional mediums including print.

“Auto spends at the lower end for the conversion at the hyperlocal level, both on the digital as well as print. The bottom end of the funnel expenditure is actually print that is done at the regional level,” he said.

Discussing the trends in the advertising space for the next year, he said that other than the growth of digital and OTT, vernacular will go big with print and TV too. 

“Other than personalisation in digital, it is now also being seen in television and also print via vernacular. So it's not just that digital enables you to go local. OTT definitely is the category to watch out for,” he said.

In terms of the growth, Srivastava shared that the industry in the H1 this year was up by 57% over the last year.

However, the last few months have been slow because of the supply chain constraints.

He added that the industry is expecting to sell 3.1 million units. Last year, it was 2.71 million. So, the year will witness around 15.5% growth over last year.

For 2022 growth, he said, it is still a question mark since supply chain constraints are still not clear.

“Maruti Suzuki is quite upbeat in the long term. Long term prospects seem to be good and experts are looking at a long term future in the range of about 7 to 8% CAGR. Our growth should be similar or slightly less because we have been more impacted by the constraint than the other people,” he said.

The company has also already started with the on-ground launches while also facilitating the virtual launches.

Last month, it had organised a full-fledged on-ground launch for the New Maruti Celerio. The hatchback has also received over 15,000 bookings since its launch in India last month.

Talking more on the growth of hatchbacks for the company, he shared, “Hatchbacks is about 46% of the market, which is the largest segment. We have almost 66-67% market share in hatchbacks. Since it's a very strong segment for us, we, therefore, would like to keep spending on advertising and building brand salience and preference.”

It has also announced its plans on the EV front recently and Srivastava said that the company plans to bring in EV before 2025 and preparations will definitely be going on in that direction.

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