Advertising spends seeing South

The marketing head is sending the consultants quickly get to work by asking for more data. The marketing head knows there is a slowdown, but how severe it is, one needs to have concrete evidence. The marketing head did a good job of hiding any trace of concern on his face or in his tone.
It is something which no one wants to talk about, lest they get branded as party poopers. But the murmur might soon turn into a roar, albeit, behind closed doors or over drinks with close colleagues. Marketers are slowly realizing that the smooth flight has just hit an air pocket and no one knows how long the turbulence will last.
A drive down one Mumbai’s main roads with numerous hoardings will give you a sense of impending gloom. The barren hoardings are probably the first signs of an advertising slowdown. The last two months, in particular, seem to have been lack luster with hoardings witnessing a 30% dip in occupancy.

There are no new product launches and the market sentiment is also low. The business has suffered in the last two months, with revenues down by about 20% according to Bright Advertising a prominent outdoor ad agency in Mumbai,

All key sites have also hiked prices by 25%-50 %, depending on the location. That’s only adding to the slump. Clients have now started renting out sites for shorter durations. From giving a month-long commitment to an outdoor site sometime back, advertising agencies noticed that clients now take billboards for a week or 10 days.

Zenith Outdoor managing director said April and May have always been decent months. Initially all the money had been sucked up by IPL. However, even post-IPL, the situation has not improved. An overall slowdown was noticed in campaigns and launches. The financial and the auto sectors are also going through a slump. This is rubbing off on the outdoor business of ad agencies as well.

Will this eventually translate into a larger issue for the ad fraternity, with clients across sectors grappling with rising input costs, lower margins and reducing consumer appetite. After a two year joy-ride, the advertising industry is now heading towards turbulent times with the economy hitting a speed breaker.

The slowdown has already impacted sectors critical to advertising such as financial institutions, automobile, consumer durables and real estate. In such a scenario, the first casualty is the ad budget, with clients tightening their purses and slashing ad spends.

The immediate impact is currently only being witnessed in the outdoor industry, with prime sites remaining empty for days or with clients going in for short term commitments. Given that the slowdown is just seeping in, marketers are tentative about their plans for the future.

ITC are continuing with their plans as scheduled as they don’t see any impact of the slowdown as of now. Of course, they will be watching the situation closely. The investment behind the new brands will continue as planned according to Head of trade marketing & distribution, ITC.

While marketers put up a brave face, advertising and media professionals are candid in their assessment that things could take a turn for worse in the near future.

There is definitely a cause for concern for the industry, with financial products already seeming to take a call to limit their spends. Also, if elections take place prematurely, that will further impact the slowdown. The medium term will see auto, retail, IT and the services sectors curtail their ad spends. FMCG will be the last to cut ad budgets. Marketers are already visualizing a downturn taking place in the next couple of months and continue thereafter.