Corrective action needed for advertising industry stagnancy

In the launch of Cinthol Lime, a variant of Cinthol, that went to create history at least for Godrej by achieving 5.3% market share in the premium soap market in its first month of launch and Cinthol (the whole franchise) went on to reach a share of 18% within a year of Cinthol Lime’s launch. Guess the plan that supported Cinthol Lime in the first month of its launch? Four spots on 4 successive episodes of Mahabharat, then aired on DD on Sunday mornings.

A year ago, they relaunched Cinthol and guess what was its media plan? 3,023 spots in the first month of launch, 4,901 in the first 3 months over 40 channels including DD and the market share moved up from 2.1 to 2.2 in 3 months. The power of TV advertising and all advertisers in the early days of TV — Rajni, Buniyaad and Mahabharat — the impact of television was almost magical. Pratap Roy erstwhile marketing head of Godrej Soaps used to say “Rajni put many on the mat but Godrej on the map.” We now have 400+ channels”.

Last year the advertising over half these ‘often need’ channels stood at 512 million seconds, growing by about 30% for last 5 years, every year. On an average every hour you see 5 minutes of advertising, 15-20 minutes on Hindi movie channels and News Channels. Not to speak of growing newspaper editions, magazine titles, FM Radio stations, Blogs, sms, Digital Outdoor, and what not. India boasts 17% of the global population and 1.6% of global GDP in terms of advertising we have just about 1% of the global market. The only thing certain about life is death and taxes. You can add ‘advertising’ to it.

The slowdown has given us food for thought, time to pause and reflect and contemplate corrective action. It has been a time when both the media owner and the advertiser have been unhappy. The advertiser because of dramatic ratings drop and media owner because the advertiser is only willing to pay reduced rates. The fact that both advertiser and media owner are unhappy is a serious cause of worry. Competition they say is good for the customer. But here’s a case where competition doesn’t seem to be doing good to either competitor or the customer, in this case the advertiser.

A common and mutually acceptable objective is to see that ad spend grows. We have had themes at the Goafest 2009 like ‘From 15 to 50.’ From a media owner’s perspective this can be achieved with the help of conniving agencies if advertisers agree to pay higher rates for advertising. But this is easier said than done.

However, if advertisers had to pay higher rates, and if that resulted in a sharp decline on return in their media investments, we could slide into a DOWNWARD SPIRAL, in which advertisers would continually reduce advertising spends. Roughly the size of the Indian FMCG and non-FMCG market that is driven by advertising is about Rs 150,000 crores.

All parties concerned with the advertising eco-system should spend time and effort and resources to show and prove how it is advertising that can and does most cost effectively drive this market up. In the best of times ad budgets are determined by sales volumes, and if we agree that advertising works and is a critical input for driving sales, lowering input cost per unit of advertising can help.

This would put the ad market in an UPWARD SPIRAL by controlling cost and the biggest beneficiaries will be media owners. Advertisers can help by increasingly experimenting with use of multimedia, rather than using single media. We are used to the Indian Thali which is a mixture of various dishes, which the housewife mixes and matches to turn out an outstanding meal. She does uses inexpensive ingredients, yet she stays within budget. So it is, with a media plan. I am not suggesting that lowering of input cost per unit should come at the cost of channel owner’s profit. Channel owners today spend far too much on production and distribution, forgetting the home truth that Big Ideas Always Work Better than Big Budgets.