Television, digital ads grow at 40% and 60% of pre-Covid levels: Experts

Media industry experts and agency heads point to a revival in TV and digital advertising in June, as big spenders such as FMCG, automobiles, and e-commerce get operations back to pre-Covid-19 levels

One of the country’s top media executives Uday Shankar, president of The Walt Disney Company for the Asia-Pacific (APAC) region, recently indicated the industry was overdependent on advertising revenue. 

But, this reliance on advertising will not go away anytime soon. Instead, media industry experts and agency heads point to a revival in television (TV) and digital advertising in June, as big spenders such as fast-moving consumer goods (FMCG), automobiles, and e-commerce get operations back to pre-Covid-19 levels.

“The earliest we will see normalcy in terms of advertising will be around Diwali,” said Ashish Bhasin, chief executive officer (APAC) and chairman (India) of Dentsu Aegis Network. “This assessment is based on rural recovery in categories such as FMCG and auto. In fact, rural recovery is already beginning to happen in these sectors. I see things gradually improving from here,” he said.

The data from TAM AdEx, sourced from the industry, showed that advertising volumes per day on TV grew by 74 per cent in June versus April, when there was a sharp decline in ad spends on account of the lockdown. 

The Broadcast Audience Research Council (BARC), on the other hand, said that TV ad insertions by the top 10 advertisers, including names such as Hindustan Unilever, Procter & Gamble, and ITC, had increased by 13 per cent for the week ended June 26 versus the previous week. BARC said this was because of renewed interest in advertising by key spenders on account of a sales revival in smaller towns and cities.

While these numbers are still lower than the corresponding period last year, experts said in terms of recovery rate, TV advertising had improved to levels of about 40 per cent in June versus April-May. This is likely to increase to 50 per cent in July and 60 per cent in August. In April and May, TV ad spends were 20-30 per cent of pre-Covid advertising levels, industry experts said. 

On the digital advertising front, experts said spends had recovered to an extent of 60 per cent in June versus April-May, and that it would touch around 70 per cent in July and 80 per cent in August.

“Some categories that are big on digital such as e-commerce, fantasy gaming, and over-the-top (OTT) platforms have begun advertising heavily since June,” said Shrenik Gandhi, chief executive officer and co-founder, White Rivers Media, a Mumbai-based digital agency. 

“More segments will turn their attention to digital advertising as the adoption rate of the medium has grown significantly, following the lockdown. This should help improve the overall digital ad growth rate for the year, though it would be lower than last year’s growth rate,” he said.

While most media agencies had pegged digital ad growth rates at 30 per cent at the start of the 2020 calendar year, it is likely to settle at 20-22 per cent by the end of the calendar year, said Gandhi.

A forecast last week by GroupM had said it saw digital extensions of TV, radio, print and outdoor advertising adding about $31 billion (or Rs 2.3 trillion) of global advertising this calendar year, which was up from $22 billion (or Rs 1.6 trillion) five years ago. 

The increase would be led by the rapid adoption of digital by advertisers in different parts of the world, following the extended lockdowns that had forced many to curtail spends across other media channels.

Mark Read, chief executive officer, WPP, said he saw a structural shift in media consumption, led by the Covid-19 pandemic, with the preference for digital channels growing sharply in a post-Covid world. “As it accelerates, advertising dollars will shift, creating pressure on traditional media,” he said during the FICCI Frames virtual summit on Tuesday. 

While traditional media owners, including those in print and TV, beefed up their digital presence over the past few years, this process would be expedited now, Read said, as advertisers increased their investment in technology.