Advertising beats slowdown blues

Data from TAM Adex show ad volumes grew faster between January and May this year than last, albeit, helped by stagnant ad rates

Advertising, as the TV-series 'Mad Men' would have us believe, is "based on one thing: Happiness", recreating it in the consumers' minds. However, fraught with unhappy budget constraints in a slowing economy, not many consumers end up buying the advertisers' products. In this downturn, advertisers are hoping that raising the visibility of their brands by advertising more will draw the reticent consumer to stores.

Data from TAM AdEx, a division of TAM Media Research, which tracks advertising across various media, show that ad volumes (includes the number and duration/space of ads) in print and TV - the two dominant advertising vehicles - grew faster between January and May this year than the same period last year (see chart).

Of course, it has helped that ad rates have not been increased by media-owners, despite inflationary pressures. According to media buyers, ad rates for prime-time on Hindi general entertainment channels hovered in the region of Rs 1.1-1.2 lakh per 10 seconds between January and May, the same as last year. In print, mainline English dailies in the metros demanded Rs 1,000-1,400 per square-cm (about Rs 4,000-5,000 per column cm), while the supplements demanded about Rs 500-700 per square cm or Rs 2,000-2,500 per column cm, same as in 2012.

Ad spot rates were maintained to encourage ad flow since sectors which are big-spenders on media such as FMCG, auto and telecom have seen moderation in their volume growth. The FMCG industry, for instance, grew at 12 per cent between January and May this year versus 16 per cent last year. Car sales have fallen by 10 per cent in January-May, with a revival unlikely in the near term.

Telecom major MTS India says the business uncertainty last year after licence cancellations led them to pare ad budgets. But with the company winning back its licences, albeit in a few of the circles, it is time to spend. "We are going to invest as much as what the company had spent in 12 months last year. On a year-on-year basis, the spends during the second half of this year are going to be double of the period last year," says Amitesh Rao, director, brand and media, MTS.

Executives at Coca-Cola India, the leading soft-drinks manufacturer, point to their need to maintain top-of-mind recall as the reason for splurging more. Especially, since rival PepsiCo went the whole hog with its association with the Indian Premier League (IPL). PepsiCo spent Rs 150-160 crore on promoting its many brands on IPL, of which it was the title and on-air sponsors.

Suresh Kumar Bandi, divisional deputy managing director, Panasonic, says it was the sheer pressure to drive sales after two consecutive lean seasons that led his company to increase ad spends this summer. The 3.4-million-unit air conditioning market in India was flat last year and fell about 15 per cent the year before. This year, it grew by 20-25 per cent in April and May, thanks to the heat-wave in the north and other parts of the country. Bandi says that his company saw sales growth in line with industry growth this summer.

The Korean chaebol Samsung had to spend to fend off competition in categories such as smartphones as the intensity of launches grew. According to CyberMedia Research, between January and April this year, 9.4 million smartphones were shipped to India, a growth of 167 per cent over last. During the period, smartphones accounted for 12.8 per cent of the cellphone market, a significant jump over last year. Samsung, the leaders in smartphones, for instance, had over 10-12 launches in the first half. "If you take all product categories in which we operate," says a spokesperson, "the number of launches would easily cross 75 in the first half of this year. Ad and promotion spends were obviously high as a result of it".

Even smaller advertisers had their reasons. Chandan Dixit, planning and strategy head, Rao Academy, a leading provider of tutorials for IIT aspirants in Mumbai, says the need to rack up student admissions is what pushed him to advertise aggressively as service providers in the space grew. "On an average we land up spending Rs 5 crore per year on advertising and marketing. The more students you have, the more you can pare your costs," adds Dixit. Thanks to its aggressive marketing, Rao Academy has increased its total student count from 2,000 last year to 3,800 this year. Dixit says that he is expecting another 200 to 400 enrolments in the next couple of months.

So, advertisers with their enthusiasm are hoping that their promotions will reassure the consumer in these uncertain times to make that purchase after all.