Advertising to grow 8% in 2012: Lodestar UM CEO Shashi Sinha

Advertising to grow 8% in 2012:

Lodestar UM CEO Shashi Sinha

(18 February 2012)

The slowdown pinch was not felt in 2011. It was marked by the cricket World Cup and, along with the Indian Premier League, the first eight months were healthy as brands and advertisers spent a lot.

Total TV advertising spend went up by 16-18 per cent last year. Ad growth on print, however, was slow and there were many categories that didn‘t spend on the medium. In our case, we were lucky as Tata Motors is a big spender on print.

TV and print in combine account for around 85 per cent of India‘s total ad spend. I don’t think that has changed. TV has grown dramatically because of the World Cup and other tournaments that were telecast.

The total ad spend in the country is estimated to be Rs 330 billion. The other mediums - radio, outdoor, digital and cinema - contribute about 15-16 per cent. The slowdown in 2011 had to do a lot with specific clients and industries. The sentiment definitely changed after Diwali, but the overall numbers were not really affected.

Today with so much viewership fragmentation and more channels launching to fill up niches, it is becoming costlier to reach out to the same audiences. The whole ecosystem is gaining as advertisers have to spend more money to target the same audience. It is because of fragmentation that a lot of positive things are happening.

There is much talk about digital and, though the total ad spend on that medium is just Rs 15 billion, it is occupying the mindset. I am not sure whether critical mass will come or not but a lot of people realise that the ad spend pattern will change dramatically in the future; they are talking about different forms like search, display, engagement or content.

The big change that is happening is that people have started believing that digital has to be integrated into our plans. Unlike the US and other western countries, India is outer-directed. People in western countries do lots of stuff online and they have no time for family; Indians, on the other hand, spend more time with the family and go out to consume entertainment. Radio, Outdoor, activations in malls and Cinema is going to grow. It is not that digital will grow at the expense of something else; it will all complement each other. So, unlike the west where digital grew rapidly, in India it will not grow on value terms or size because it is too small. It may grow in percentage but in absolute numbers it may not be very big.

In 2012, ad spend may grow 7-8 per cent increase. FMCG companies may not face a problem as they are seeing growth and there is expansion from the rural markets. Even in case of automobiles where there is tough competition, let us not forget that India is still underpenetrated and not even 7-8 per cent of people own cars.

Slowdown in advertising will be talked about, but large organised players will be there both in terms of value and volumes; it is the smaller companies that may be affected.

The two points to highlight here are:

  1. The ability to get the data and capture the right database in a country like India is a big challenge and it is going to multiply day by day because the country is too huge and complex. You will have to have the ability to track audiences which are across multiple touch points and multiple mediums. This will remain a big challenge because you will have to reach out to the right audiences.

  2. Convert mindset that finally you aren‘t buying GRPs. You will have to finally deliver what the client wants.

The future is in performance driven models and databases that can track complex consumers.

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