The A&M industry has kicked off a season brimming with action. The festive season collides with the Cricket World Cup that starts this week, and media experts expect a thrust to the Indian AdEx that had a not-so-flattering H1. Not to forget, the run-up to the general elections may provide an added boost. In February this year, a GroupM report titled, ‘This Year Next Year,’ predicted India’s ad spends to grow at 15.5% in 2023. More than 6 months later, GroupM’s Global Mid-Year report suggests that India’s AdEx for H1 closed at only 12%.
But the good news is that as of now, consumer sentiment for the upcoming festive quarter is on a high, ready to go up against the relative lull of H1, or so marketers would like to believe. A report by The Trade Desk, titled, Festive Pulse Survey reveals that 70% of Indians are ready to spend more this Diwali, locking a 35% increase from last year. Moreover, according to Elara Capital, just the Cricket World Cup alone is expected to generate 20% more in TV AdEx, and 70 percent more in Digital AdEx than previous editions.
Hema Malik, Chief Investment Officer – India, IPG Mediabrands, states that a lot of money was held up in H1 because IPL did not perform very well, specifically on television, in terms of AdEx.
Ranjani Krishnaswamy, GM - Marketing, Tanishq expects a robust sentiment backed up by a great wedding season. “We had a very good Akshaya Tritiya, and that is an indication of how Dhanteras will go. Consumer sentiment is going to be positive. Our research from the early part of the year where we asked people how likely they are to buy jewellery in the coming six months threw up robust numbers. The summer weddings were a little whimper, so we expect the winter weddings and purchases to boost up. We are already seeing such a trend in the Southern markets this month,” she says.
ENCOURAGING ESTIMATES
The first half of the year has not been able to hold up the estimated 15.5 per cent growth rate of AdEx because of a few significant factors such as restrictions for advertising on IPL specific to certain categories such as cryptocurrency and betting apps. The regulations in these industries are vague at this point, and the BCCI chose to steer away from any unforeseen complications. Moreover, the decline in demand for high-spending categories due to cost inflation pressures and shortage of funding for start-ups (the emerging entrants in the contributing categories to AdEx) added to the woes.
Poulomi Roy, Chief Marketing Officer, RSH Global mentions the import crisis in 2022 that pressurized everyone’s P&L, and therefore the marketing budgets in H1 2023 had been extensively affected.
Deep Singh, National Head - Strategy, Omnicom Media Group India states that the first half was muted because the top-of-the-line clients and their revenues have been under pressure, which was also established by the financial results of public companies. Consumer demand was not as strong, however with the decline in inflation, the margins have expanded and profits have increased. According to him, “The total AdEx was expected to grow at about 16%, but in the first half, it was much below that.”
The festive season this year is longer with Raksha Bandhan and Onam celebrated in August, and Diwali slated for November, followed by more region-specific celebrations. The dull rainy season also held back CPG brands who are now looking at the festive season positively.
According to a recently launched InMobi report, the long festive season will allow 84% of Indian consumers who have increased their online shopping budgets, compared to the previous year, to spend their buck. 58% of unplanned shoppers are expected to shop closer to each festival.
Additionally, the ICC Cricket World Cup starting in October will also run parallel with the festive season, and State Elections will be closing in driving the viewership of News channels. These factors make up for a fruitful quarter considering an all-encompassing approach, and at the heart of all these events would be the festive celebrations that should drive AdEx.
Saurabh Shrivastava, Sr. Partner - Client Leadership & National Business Growth, dentsu X India believes that the three-month festive period will see the industry clock somewhere around INR 30,000cr overall.
On the other hand, Navin Kathuria, Integrated Media Strategy & Planning, DDB Mudramax estimates that the festive quarter will contribute to 37-39% of AdEx. He says, “This is a 10% jump from the previous season’s, as it was close to 30% in 2022. Surely, the ad spending this festive season will be amongst one of the highest in the past few years. The number of categories and brands active during the festive season is the highest relative to the other quarters of the year. This, accompanied by the ICC World Cup will boost the number of categories and brands in the festive season, and also the festive revenues substantially vis-à-vis previous years.”
ADVERTISERS GEAR UP
Sharing insights on the brand’s ad spending until now and the build-up to the festive quarter, Swati Rathi, Marketing Head, Godrej Appliance says that the spending was higher in H1 due to the seasonality of cooling products, and the festive season is not a continuous three-month window; it comes with intermittent spikes.
She adds, “Onam saw a thrust in Kerala, as Digital and store strategy yielded good results. It was followed by an e-commerce push for online events pan-India. Ganesh Utsav, Navratri, and Durga Puja in West and East will see localised plans, followed by a Diwali boom towards the end of October. The spending plans will be dynamic and will follow our premium product placement strategy. In terms of the percentage of annual spending, it will be similar to previous years.”
Shankar Prasad, CEO, of Plum Goodness mentions that the second half of the financial year works well for the brand because of festivities, weddings, and the pleasant weather. He says, “We spend about 60-65% of our budget in the second half of the financial year.”
Categories dominating the festive season hold the fort on the Digital medium, as Nitin Saini, VP, Marketing, Mondelez India mentions, “Our approach is to stay strategic in marketing budget allocation to maximize ROI. Digital and data remain crucial to leverage the vast knowledge of people’s wants and needs to build personal connections across relevant channels. At Mondelez, automation for CRM, content creation for Digital posts, email marketing or scalable campaigns would be key areas of inflection”.
The Growth Rate
This year Cricket World Cup comes bearing colossal hopes for advertisers for the second half of the year, and is expected to positively swing the AdEx too.
Malik mentions that the industry is heavily relying on how the World Cup performs, expecting it to drive at a growth rate of 10 to 12%. “If it does not, that would be a concern”, she adds. Shrivastava shares that the festive quarter (August-November) will contribute 35% to total AdEx. “The y-o-y growth will range from 15-20% for the same period (August-November),” he says.
Kathuria remains on the optimistic side of the growth rate and says that there will be a definite y-o-y growth this festive season to the tune of 25-30%. The estimated growth of Total AdEx that was forecasted to be 15.5% is showing signs of recovery.
Sticking to the estimated AdEx growth rate, Singh says that “while there is going to be a 16%+ growth in H2 in AdEx, versus the same period last year, some categories have a wait-and-watch approach.”
The festive season has traditionally been the biggest contributor to AdEx, steered by the myriad cultures of India, their emphasis on the period, and the holistic celebratory mood. These factors lead the consumers to spend more cash than they hold on to or even rely on debt-driven consumptions, covering sizeable expenses. Until now, IPL has been the only event that comes close to touching the festive season. While the factors for the festive season remain constant, the Cricket World Cup holds par significance in driving this quarter and even multiplying the value generated.
“India’s performance eventually impacts the final performance of the series in terms of viewership. The promises from the event build up and then it’s festive. It’s a double bonanza and therefore more opportunities for clients. A lot of our clients, that were not big during the festive have been talking about the World Cup”, shares Malik.
Shrivastava sees the World Cup as having a delta effect with the 15 to 20% growth ensuing from a combination of multiple factors - the extended festive quarter, a line-up of impact properties, elections and the CWC. “The dull rainy season led to reserved money for the festive season. All of that put together will lead to a good quarter”. Singh on the other hand feels it’s not going to make much of a difference because non-seasonal categories such as FMCG will front-load their media investments before the World Cup. “Everyone would want to be in the World Cup because it gives a massive reach, but some categories would move their plans before it to get a better incrementality. Asia Cup also did not attain the expected number of sponsors and sign-ups, and is not as big as it was expected to be”, he adds.
“Cricket and elections drive high impact and quick reach for brands. But the clutter created by brands to gain a share of voice would lead to a viewership decline of some channels, and consequently front-loading by categories like FMCG”, he adds. Higher viewership on sports channels during the World Cup would also mean a decline in the viewership of GEC and non-sports channels.
Apart from advertising during the broadcast, brands have also entered into official partnerships with the league. Arnab Roy, Vice President - Marketing Coca-Cola India & South West Asia says, “Partnership with the ICC provides us with a great opportunity to bring together our customers, consumers, brands, and cricket. Thums Up, the official beverage partner, and Limca Sportz the official sports drink for the ICC Men’s Cricket World Cup 2023 will engage consumers on their favourite sporting passion, through innovative offline and online experiences”.
Roy of RSH Global states that most of the brands will be using physical activations this year. “A combination of television plus ground, visual, and Digital activations would be used. Some brands would like to take Digital group and combine it with TV, that’s the way forward. Most of our expenditure will be followed up until February. We follow a 60:40 ratio for the year, 60% for festive and 40% for the rest of the year. The total budget grows 10-20% year-over-year, and it remains the same this year, although our first halves are always lower and second halves remains higher in terms of spends.”
The Media Blueprint
The Pitch Madison Report 2022 stated that Digital had a 38% share and TV had a 34% share. Clearly, Digital has steadily overtaken Television in the past five years, but media experts tell a different tale for this season. For Festive 2023, it has been suggested that TV will hold the largest share, followed by Digital. Malik mentions that even though Digital has taken over Television, either both would be neck-and-neck or television may overtake Digital for this specific period. “That’s because IPL is doing extremely well in terms of viewership, and reach has reinstated the confidence in Television as a medium,” she says.
She further shares that clients are warming up to conversations around advertising on TV because Digital advertising comes with its own set of challenges. According to her, especially when it comes to Sports, TV will be a bigger attraction for this festive season. Shrivastava concurs with her thoughts. “Digital definitely will be the highest growing, but TV will be the largest”, he says.
Talking of other mediums, Singh adds that TV and Digital make up almost 80% of ad expenses. But Print is something he sees making a comeback, driven by the Auto industry that invests more than other categories in the medium to target a slightly older age group with disposable income.
Kathuria states that during the festive season, clutter on almost every medium is high, but the viewership of CWC affects each medium’s share. “Given the traction of IPL 16 on both TV and OTT, with the World Cup being aired free on Hotstar this year, OTT and TV are expected to gain maximum share of the AdEx.”
Sharing the outlook for the festive season, Krishnaswamy remarks that it will be a dual-media approach of Digital and Print.
High Spending Categories & High Impact Properties
Talking about the highest spending categories, Dentsu X’s Shrivastava notes, “In terms of the highest spending categories, there will be CPGs and FMCG. FinTech, consumer durables, and automobiles will be the other big ones.”
Vanda Ferrao, CMO, WOW Skin Science mentions that a considerable amount of product demand is fulfilled online, and hence the brand strategically collaborates with marketplaces to prominently feature on the festive properties that they create. “We ensure our range of assortment, visibility, and marketing are closely connected for the activation because a lot of our demand comes from the marketplaces”.
Mohit Khattar, CEO, of Baskin Robbins says, “While we don’t directly use platforms or properties like the World Cup, we are extremely active on various online platforms, for example, aggregators like Swiggy or Zomato or e-commerce platforms like Instamart and Zepto. This allows people who are online and watching a match in their homes to order and consume our products. Being available online is the biggest trigger for them.” In addition to state elections and the World Cup, media professionals suggest that impact properties such as KBC, Big Boss, Khatron Ke Khiladi, and Sa Re Ga Ma, all of which fall in H2 and generally come along with high ad spending, will contribute to the growth in the latter half.”
Pitch Madison Advertising Report for last year expected AdEx to grow 20 per cent in 2022. However, it saw a growth by 21 per cent. As 2023 inches towards a close, the industry is hopeful that the enthusiasm over festivals and cricket will save the day, touching an all-time high. As of now, that seems like a possibility.
