Zeel’s Ashish Sehgal's positive ad outlook for Q1'23

Ad spend growth this festive season will be 7 to 8 per cent but will accelerate in 2023.

Mumbai: Ouch! Speak to any senior advertising or media agency official or even a broadcast sales executive, and they all seem to be yelping in pain, courtesy the evaporation of premium ad spends by innovative and new age digital startups. Forced by investors to tidy up their operations and balance-sheets, the latter have been focusing on consolidation, rather than going berserk spending big on giddying growth through advertising and marketing.

However, this is not causing broadcast major Zee Entertainment Enterprises Ltd (Zeel) chief growth officer of ad sales Ashish Sehgal to have any sleepless nights. A sales veteran, he’s witnessed the ups and downs that the media industry goes through periodically – needless to say, he’s seen it all.

Sehgal believes that the silver lining of the advertising drought is that the fast moving consumer goods (FMCG) category has to an extent, come to the rescue and is cushioning some of the blows. He estimates that TV ad spends during the festive season, which is on currently, will show a growth of seven to eight per cent.

Those used to the heady growth figures of 10-20 per cent may consider this too low, but one has to remember that this growth is coming in at a time of economic upheaval, crashing of global currencies, high fuel costs and rising inflation.

“The way things have been while it was good, the festive season could have been better. The absence of new clients has made a difference. E-commerce has also reduced spending a bit. While inventory has been going jam-packed, the premium money has not come in the festive season. This has been made up for by the FMCGs to an extent, and TV will see an ad revenue growth during the festive season. This is a good sign as this category will continue to spend even beyond the festive season.”

He also notes that the TV industry has gone in for a rate hike across the board, which was long overdue. TV viewership was affected in June and August. But post August, the number of eyeballs glued to TV has grown, which is why the FMCG category is spending a lot more.

Sehgal highlights that general entertainment channels (GECs) are starting to get the reach that they were delivering earlier. Categories like beauty will count on the festive season heavily with the top five advertisers on TV coming in from FMCGs. He feels that the latter’s contribution to overall TV adex could rise by five per cent this festive season compared to the previous year.

The scenario for 2023

Sehgal believes that the situation can only improve going forward in Q1 '23 with spends going up for television advertising and overall ad expenditure. “Every category may come back,” he reiterates.

He says there are enough signals emanating from the market. Amongst them, the expected spurt in marketing spends by the automobile sector will fire more in the coming months.  “Demand was high during the festive season but supply was low due to the earlier supply issues. So they did not advertise much,” he declares. “They will spend some money in November and December to sell the remaining inventory. That may be a small burst. But now that production capacity has gone up, they will have new launches in Q1’23. That is when they will spend it.”

“Also, for some new age categories, D2C companies like ed-tech could have digested their heady growth by then. Of course, the banking, financial services and insurance (BFSI) category - say companies like Policybazaar - will be strong in Q1’23, so some of the premium money that was missing in the festive season could come in then,” Sehgal asserts.

Then, the funding tap for startups could once again open and start flowing by January 2023.

“This year they have been trying to balance out their bottom line. How long will they continue to do that? They will have to look at growth as well. Hopefully, they will start triggering spends in Q1 '23,” he says.

According to him, with FMCG input costs going down, companies will be forced to pass on the benefits to customers through price cuts and promotions. “So they will have to advertise more to promote that,” he says. “A lot will hinge on FMCGs implementing price cuts and promotions. Right now, that has not happened, maybe due to a fear of raw material inflation returning.”

But he says the FMCG companies would benefit immensely if they slash prices. “Consumer sentiment will bounce back. More consumption will happen. Things look good for Q1’23 as long as no adverse issues come from Europe and America.”

Sehgal discloses that while travel and tourism ad spends have risen now, most of those are going into print and social media. “TV, too, will get some state tourism ad spend money whether it is on news media, GECs or on regional channels,” he says.

He feels that while ad spend on OTT platforms is growing, it is seen as an add-on to TV - especially in entertainment. “Whenever there is a TV campaign, the same person likes to also advertise on OTT. OTT helps them add on to their TV reach. It is not an either-or situation,” he explains.

For the industry's sake and his too, here’s hoping Sehgal’s forecast does come true!

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