Triple whammy for durable goods

ADVERTISING: Newspapers set to raise ad rates steeply.

Advertising is soon going to get dearer for businesses as media houses, especially in the print space, are expected to hike rates.

Consumer durable companies are likely to be the most affected by the increased cost of visibility. The firms are already battling spiralling input costs and a slowdown in demand.

Newspapers are expected to increase rates by 20 per cent, as newsprint prices are rising. At least two leading national newspapers are expected to raise rates by 40 per cent by mid-August.

The consumer durable category accounts for a big chunk of print advertising which was estimated at Rs 10,000 crore in 2008.

According to KPMG, ad spends for FMCG companies are 7-8 per cent of sales, while material cost ranges between 68 per cent and 72 per cent. He adds a cut on ad spends is not advisable now as only a strong brand could afford to pass on any rise in input prices to customers.

“Attempts are bound to be made to get greater bang for the buck,” says Ravishankar, adding, “Yet, durables at the premium-end (LCD and plasma TVs, or high-end refrigerators) that rely on features and technology for differentiation will continue spending on print media as it provides a better opportunity to showcase innovation.”

Advertisements for refrigerators and ACs might be withdrawn from niche or low-reach media, some experts said.

Others said companies will spend more on advertising the umbrella/ mother brand as opposed to spending on specific products to retain brand appeal, while consolidating spend across all products.

Kamal Nandi, Godrej & Boyce, vice-president (sales and marketing), said: “We don’t plan any cut on our ad budgets. In lean times there we need to bring more excitement in our campaigns to attract the consumer. But, we are shuffling with the mix of spends across mediums.”