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India's ad-ex growth for 2022 shall not surpass single-digit: Shashi Sinha of IPG Mediabrands

As per Shashi Sinha, CEO, IPG Mediabrands, the country's ad-ex growth for January-December 2022 will defy the growth projections made by agencies as the funding-strapped digital companies have created a vacuum

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Shreya Negi
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India's ad-ex growth for 2022 shall not surpass single-digit: Shashi Sinha of IPG Mediabrands

Shashi Sinha

The first half of the festive period, this year, has come to an end and companies have spent big bucks on advertising during the first new-normal (-ised) festive celebrations of the post-pandemic world.

According to the advertising growth projections made by IPG Mediabrands’ MAGNA for the current fiscal year, the overall ad-ex was forecasted to grow by nearly 15% and reach Rs. 75,500 crores from last year’s Rs. 65,746 crores.

As per Shashi Sinha, CEO, IPG Mediabrands India, the ad-ex growth projection for the current fiscal year shall remain muted and exhibit only a single-digit growth in the Indian subcontinent, defying the two-digit ad-ex growth forecasts made by several agencies.

GroupM’s This Year Next Year report forecasted this year’s ad-ex growth at nearly 22.25%, Madison pegged it to be at 21.62% and Dentsu predicted it to be at 14.5%.

On a cumulative ground, all the agencies forecasted a double-digit growth in the ad-ex of FY22 as compared to last financial year.

“The overall ad-ex for January-December period this year, is most likely to witness a muted growth as compared to last year. It’ll be a single-digit growth and will not be very dramatic as forecasted by major agency players,” Sinha ascertained.

When asked as to whether the tanking of FMCG players’ ad-spends in the second quarter of FY23 was one of the reasons behind the ad-ex growth projections going haywire, Sinha said, “The FMCG ad-spends have been facing a slight-hit due to inflation, but it is the digital companies who are in their start-up phase that have impacted the ad-ex and have created a vacuum in the advertising growth.”

He also emphasised that the FMCG players might have curtailed their ad-spends for a short duration of time, but they continue to be one of the major spenders in advertising and are thus the backbone of the Indian industry.

“It is the digital companies, including startups, ed-tech companies and gaming companies amongst others which have muted their advertising owing to being stripped off their fundings, something that they highly depend upon for managing their expenditures,” he said.

According to multiple industry veterans, the ad-ex growth would fall between 7-8% in the January-December period, this year.

FMCG players squeeze ad spends

The FMCG players which had posted an increase in the advertising spends in Q1 of FY23, have lately been witnessing a quarterly ad-spends decline in the current fiscal year, despite the festive period of the current year.

In Q1 of FY23, the ad spends of Hindustan Unilever Limited was up by 29.64%, Emami’s by 10.96%, Marico’s by 13.71%, Godrej Consumer Product Limited by 36.82% and Colgate-Palmolive by 1.78% on a year-on-year basis while Dabur had reduced its ad spends by 16.55% on a YoY basis.

But, on a quarterly basis, it was Colgate Palmolive which saw a 11.04% rise in ad spends in Q1 FY23 as compared to Q4 of FY22 which stood at Rs 14,679 lakh.

Emami’s Q1FY23 ad spends witnessed a decline of 2.24% as compared to the spends of Q4 FY22 which stood at Rs 10,835 lakh. Marico saw a decline of 2.51% as the ad-ex for the last quarter of FY22 which stood at Rs 204 crores.

Dabur’s ad spends saw a decline of 16.55% in Q1 of FY23 on a YoY basis, but on a quarterly basis, its ad spends grew by 4.57% when compared to the Rs 150.33 crore it spent in Q4 of FY22.

Additionally, in the second quarter of the current fiscal year, the advertising and publicity expenses of Dabur once again took a hit of 24.91% and fell to Rs 151.80 crore, from the corresponding quarter of last year which stood at Rs 202.17 crore.

Colgate Palmolive, which had earlier seen an increase of 11.04% in the ad-spends during the first quarter of the current fiscal year on a YoY basis, has also reduced its ad spends by 14.60% in Q2 of FY23 on a YoY basis.

When questioned about the decreasing ad-ex of FMCG players, industry sources revealed that the quarterly decline in the ad-spends has only been a preventive measure for the company to remain profitable while coping up with the continual inflationary trend in the country.

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IPG Mediabrands Shashi Sinha India's ad-ex growth
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