Advertisment

Indian adex in 2024 will be more stable: GroupM's Ashwin Padmanabhan

In an interview with BestMediaInfo.com, Padmanabhan, President - Investments, Trading and Partnerships at GroupM, discusses IPL advertising on TV vs digital and how the industry can address key challenges

author-image
Sakshi Sharma
New Update
Indian adex in 2024 will be more stable: GroupM's Ashwin Padmanabhan

Ashwin Padmanabhan

“Startups are poised to increase their advertising expenditures this year but in a more sustainable manner. This will contribute to the expanding Indian advertising expenditure (adex), which experienced some stability in 2023 after fluctuating between highs and lows since 2020," remarked Ashwin Padmanabhan, President of Investments, Trading, and Partnerships at GroupM.

With digital advertising claiming the lion's share of incremental ad spend at 70%, traditional platforms can continue to remain relevant by embracing digitisation and leveraging technology to innovate, Padmanabhan told BestMediaInfo.com.

Specifically pointing at TV as a medium, he said, “Embracing technology will keep TV relevant, while avoiding it may result in reaching fewer people over time, reducing opportunities for brands to participate.”

As IPL 2024 approaches, unlike last year, where the debate was about TV versus digital, Padmanabhan emphasised that advertisers noticed that both TV and digital performed exceptionally well and helped them reach out to a larger audience base.

Excerpts:

What are emerging trends in media spending that you foresee in 2024?

From the perspective of media spending, the year 2023 stood out as relatively stable compared to previous years. Since 2020, there have been periods of both high and low spending, with no single year showing consistent stability until 2023. In 2024, we anticipate this trend to continue, with some organic and inorganic growth. This predictability marks a significant positive shift from the fluctuations of the past four years.

After approximately 18 months of being absent from advertising since mid-2022, many startup brands and clients began returning to advertising towards the end of 2023, especially during the festive season. Their return wasn't solely due to securing new funding, rather, many had stabilised their profit and loss statements and found effective methods of acquiring customers without overspending on ads, as was common among funded startups initially.

Now, having improved their profit and loss statements, they have re-entered advertising with the clear goal of acquiring customers profitably.

This trend is positive for two reasons: Firstly, it signals the return of startups to the advertising landscape, and secondly, it reflects a more pragmatic and sustainable approach, ensuring their longevity in the market. While they may not spend as lavishly as before, their continued presence in advertising is assured.

So, this is a fresh addition to the advertising scene, making it a positive development for the industry and the economy as a whole. It marks a significant change that we can expect to witness.

Does this imply that many startups will also be investing in IPL this year?

The trend among startups is a cautious approach to spending, carefully considering where and how much they invest, with a focus on measuring return on investment (ROI). Rather than acquiring customers at any expense, they now aim for profitability in customer acquisition.

If the IPL aligns with their ROI goals, they will invest in it. Many brands are expected to recognise the ROI potential of opportunities like the IPL, leading to increased participation. In short, yes, we anticipate more start-up brands joining the IPL, regardless of whatever medium they choose.

With digital advertising increasing, how can traditional platforms continue to stay relevant?

India stands out as a unique market where all forms of media are experiencing growth. Unlike anywhere else globally, every medium is on the rise here. Although digital advertising claims the lion's share of incremental ad spend at 70%, in contrast to other markets where it captures 100%, the growth trend across various media remains evident. This growth signifies more than just survival—it reflects a thriving landscape in India's advertising industry.

The rapid digitisation happening across various sectors, from payment methods to local stores' use of point-of-sale terminals and centralised inventory management systems, to the integration of technology into traditional media like print and television, demonstrates significant shifts in consumer behaviour and sales strategies.

This evolution presents opportunities for all mediums to remain pertinent in a diverse consumer landscape. By embracing digitisation and leveraging technology to innovate, brands and platforms can continue to thrive and connect with consumers effectively. This proactive approach ensures continued growth and relevance across different mediums.

Is it right to compare TV adex to digital ad spends?

This isn't about comparing things. It's about understanding where the money goes. For example, out of Rs 100 spent on advertising, approximately Rs 57 go to digital media, around Rs 29 go to TV, and about Rs 7 or Rs 8 go to print. So, it's not a comparison; it's just a statement of facts.

When does it become a comparison? It happens when someone questions why digital is growing while TV is not. The answer isn't about comparison; it's about each medium assessing how to align with its audience. How do we stay connected? What innovations are needed?

Digital isn't one thing; it encompasses various media types like search, retail, branding on YouTube, and audio platforms. Unlike traditional media, where spends is categorised across radio, print, TV, outdoor and cinema, digital doesn't have such categorisations. Instead, digital comprises multiple entities, each serving different client needs.

Therefore, comparing digital and TV isn't a question of comparison, but more about how each evolves based on actions taken.

Do you think brands are over the TV vs. digital debate in terms of IPL? Is there a clear winner?

There is no winner here. To begin, this conversation or debate is artificial. Last year's question revolved around digital becoming free. The debate asked: Would digital's growth come at the expense of TV? However, when observing consumers, we find that TV experienced some of its highest ratings ever in 2023, and its reach was among the highest as well.

Additionally, digital penetration reached its peak during the IPL compared to previous years because more people consumed content once it became free. Yet, it wasn't a matter of one surpassing the other. Both mediums experienced growth.

In India, the market boasts an abundance of consumers, making it an attractive investment ground for those aiming to tap into new consumer bases through technology. This approach doesn't involve acquiring customers from competitors but rather attracts entirely new ones. Both TV and digital platforms have contributed to the expansion of consumer reach for events like the IPL.

This was evident in the increased advertising investments during the World Cup, where advertisers spent on both TV and digital platforms. Rather than shifting away from TV, advertisers notably increased their TV spending to unprecedented levels during the World Cup. Similarly, investments in digital advertising also reached record highs during the event. The growth in both TV and digital advertising reflects the significant audience presence across these platforms.

Why does the ad spend ratio to Indian GDP continue to remain low in India in comparison to most of the leading markets?

It's important to break down what the contribution of GDP is. In India, GDP is broadly categorised into three sectors: manufacturing, agriculture, and services. A significant portion of India's GDP comes from IT-enabled services, which are primarily business-to-business (B2B) operations without domestic customers, thus less advertising.

Similarly, B2B manufacturing and real estate/construction sectors, despite being significant contributors to GDP, often do not engage in advertising.

In India, only a few mass brands like cement or steel advertise, while most GDP-contributing companies aren't consumer brands, unlike many other countries. These companies either serve B2B customers abroad or operate in non-advertising sectors. This is why that ratio is skewed or lopsided in the case of India compared to other countries.

Which categories of brands will be the major growth drivers of Indian Adex in 2024?

Various categories, such as auto, retail, education, and SMEs, are expected to drive significant growth in advertising expenditure. FMCG companies are also expected to maintain their spending, providing a solid foundation for further growth. Additionally, startups are reemerging as important players in the advertising landscape.

Elections will contribute to the overall mix. More investment and increased participation from brands are expected in the IPL. These factors are anticipated to be the main drivers of growth.

With the World Cup, elections, and IPL falling in Q1 FY24, would brands allocate most of their ad spends to the April-June quarter?

As a brand, my spending depends on what the market needs. For instance, if I am in the consumer durable business and sales peak during festivals, I'll allocate more funds then. Similarly, if my sales are weather-dependent, I'll invest more during the relevant seasons. Additionally, brands that are consistently relevant might focus on spending on big events like the IPL to reach a wider audience and boost sales.

For instance, Coca-Cola sees summer as its peak period, coinciding with events like the IPL. Consequently, it invests during summer and explores opportunities like the IPL. On the other hand, a steel brand may spread its budget evenly throughout the year. If the IPL becomes more accessible, more brands might participate. However, brands prioritise their budgets based on business requirements for their respective categories before considering where to invest in terms of media options.

In your opinion, what are some of the key challenges the industry will face in the coming years, and how does the TYNY report address or anticipate these challenges?

Looking at it from the viewpoint of 2024–2025, there's a question about how the TV industry embraces technology. It's not exactly a challenge, but rather a significant question. Embracing technology will keep it relevant, while avoiding it may result in reaching fewer people over time, reducing opportunities for brands to participate.

In 2024, the predominant challenges are expected to shift towards macroeconomic and geopolitical factors rather than internal economic conditions or brand strategies for consumer engagement. This shift suggests a potentially more stable environment compared to previous years.

The key focus will be on effectively seizing the opportunities presented in 2024 rather than grappling with substantial obstacles. Success will hinge on the ability of companies to execute their strategies adeptly, enabling them to capitalise on emerging opportunities and expand their market share. Therefore, the primary emphasis lies not on the challenges themselves but on the preparation and execution required to navigate the opportunities effectively.

Info@BestMediaInfo.com

General Elections World Cup digital ad spends TV adex digital TV IPL Ashwin Padmanabhan GroupM TYNY Report TYNY trends GDP
Advertisment