Covid2019 might push traditional advertising towards negative growth

Industry experts seek government support to pad the losses

NEW DELHI: The world economy has been brought to its knees by a medical crisis called COVID-19. The pandemic has battered the situation for even the most developed nations, and India, which was already dealing with a bruised economy for the past few quarters has found itself in a bigger soup. The ongoing lockdown has desisted liquidity across industries translating into a tough time for the media and advertising world, which has slowed down the business greatly mid-March onwards.

DAN India CEO Anand Bhadkamkar tells, “The pandemic has impacted the entire economy and the effects of it are being felt across all businesses. Manufacturing and other core businesses have been affected the most. People have stopped interacting in physical spaces. They are not moving out of their homes. Consequently, the entire economic activity has slowed down considerably. Advertising and communications tend to fuel the growth of commerce massively, thereby, accelerating its growth forward. Now, given that commerce has been badly hit, advertising is suffering equally.”

DDB Mudra Group CEO and MD Aditya Kanthy shares that advertising reflects and shapes the economy and there has been a slump in the work opportunities because of the situation. “The demand side problems are obvious. Even in categories where there is demand, there are huge supply-side/ supply chain and distribution issues. Liquidity and credit is a challenge. Advertising is dependent on all of these factors. The industry depends on marketers who have the appetite and the means to invest. That is compromised in the current market scenario. It cannot operate in isolation.”

While there has been a great surge in media consumption, both on digital and television, it is not resulting in ad monies for the platforms, given the market uncertainty. As per BARC-Nielsen data, weekly viewing minutes in week 15 of 2020, starting 11 April, grew by 40 per cent to reach 1,239 billion, as compared to 887 billion during the time period between 11 and 31 January, however, the number of advertisers dropped to 1,021, as compared to 1,378.

If Madison Media and OOH group CEO Vikram Sakhuja is to be believed, the advertising growth, which was pinned by his firm at around 10 per cent at the beginning of the year,  will take a big hit in this calendar year. “We were expecting around a six per cent growth for traditional and around 28-30 per cent for digital media. However, looking at the current scenario, traditional media might observe a negative growth, while digital will also shrink considerably. We will be lucky if we can see a 1-2 per cent growth this year.”

He elaborates, “The January-March quarter was already difficult for TV because of the NTO-2.0 and the second quarter is hit by COVID impact. Third-quarter might see a rise if we have a good Diwali season but it will depend largely on the market sentiments then.”

Bhadkamkar notes, “We were hoping that advertising spends would grow by 10-10.5 per cent in 2020 as per industry estimates. Now, however, this growth is expected to be half of that. And, if the impact continues, the ill-effects would be much larger on the calendar year.”

“The first quarter has been severely impacted, and recovery might start after h2. Q3 should return with recovery but again, that is only an assumption at the current stage and depends on how COVID 19 situation improves. Certain economists are predicting that the GDP growth (that was estimated at about 4.5 per cent) by May dip up to 1.5-1.9 per cent. If that happens, we will be slipping down by more than half almost. We just have to wait and watch how things pan out. For now, everything seems very tricky. However, from a long term perspective, the outlook for India is definitely positive, once the country starts getting out of COVID 19 downturn.”

The industry insiders are hoping for some relief and support from the Indian government to pad the losses advertising industry is facing. Recently, AAAI chairman Ashish Bhasin had written to union minister of information & broadcasting Prakash Javadekar detailing a set of recommendations to support the industry.

Bhadkamkar supports the decision as he says, “The government intervention is necessary for the current situation because the pandemic has affected the advertising industry severely. The letter stresses on how the Government can help in providing the stimulus to the advertising industry and not for any add-on benefits or expecting any specific fiscal measures. At present, the liquidity is getting tighter and there is a lot of slackness in the market. Hence, we need to protect the businesses by providing more liquidity as well.”

He adds, “Right now, what is needed, is to protect the entire ecosystem because as an industry, advertising generates a lot of employment and more importantly acts as a catalyst for the growth of businesses. In my view, the letter is trying to address this and seek action towards this more so in this immediate period. Once, this lock-down ends and hopefully, we get ahead of the COVID-19 challenge at the earliest, things will come back to normal. But till then, the industry would need that additional support.”

Kanthy also believes that the government will have to extend support to the whole ecosystem. “The government’s intervention in all parts of the economy is necessary at this time, whether it is on the stimulus or on the tax side. There is a need to put some extra cash in the hands of consumers as well to stimulate some demand. From an industry perspective, it will help us in access to liquidity and credit.”

Sakhuja adds, “Government support will be really helpful right now so that brands treat advertising as an investment. Also, the government owes a lot of money to media and advertising companies. They need to pay that back as well.”

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