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Ad revenues to sustain despite
of hike in excise rates
The ad
industry seems to have no qualms about the recent budget.
Industry professionals believe that the recent excise hike
that the budget imposed on several categories of goods,
among which figure FMCGs, automotive and consumer durables,
is unlikely to prove a dampener to advertising fortunes
in the coming year.
In the past a rapid rampup of prices courtesy government
levies has led to slow offtake of goods which in turn has
led to a reduction in ad spend by advertisers. Ad agencies
have in the process seen their billings dry up.
Industry professionals however
don't think the scenario will be replicated this time around.
Says Saatchi & Saatchi media head T.V. Shivkumar: "The
hike in excise rates won't in anyway have an effect on the
ad spend of companies. There is no blanket increase in the
price of commodities. The ad spend has got more to do with
the bottomline of the company, whether it is able to keep
its commitment with its shareholders."
Euro RSCG's Gautam echoed the same sentiments: "The ad budget
of a company depends more on the state of the economy as
a whole. Price rise is a common feature. I don't think there
should be any change in the ad spends."
The excise rates, which have gone up to 16%, seem to have
raised no alarms as far as the advertising and promotional
expenditure of the companies is concerned. If at all, ad
pros maintain that this may go up so as to cheer the slackening
markets.
What needs to be seen is whether consumers
will react similarly to the situation. Will they cut back
or postpone consumption like they did in the early nineties
which led to reduced ad expenditures? If they do react negatively,
the ad industry will be caught unawares like in the nineties
when they overstaffed and overcommitted resources in the
hope of good economic growth.
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