Business Standard

Economic slowdown: Realtors slash ad spends by over 50% as sales plunge

Real estate have moved a portion of their ad spend to the digital space to cut cost

Big listed real estate companies drive profits home in a dull market

Press Trust of India Mumbai
The real estate sector, one of the biggest ad spenders during festival season, has slashed its ad budget by over 50 per cent as the sector is facing slowdown in demand due to various reasons including tight liquidity situation.
According to advertising industry experts, the real estate sector which is grappling with liquidity issues and large inventories since demonetisation in November 2016, has massively reduced their ad spends on TV and print media, and have moved a portion of their ad spend to the digital space to cut cost.
"Realty sector has been sluggish since the last two years and deepening general slowdown has only exasperated it," media and digital marketing communications company Dentsu Aegis Network chief executive for Asia Pacific Ashish Bhasin told PTI.
Today, most developers are struggling with financial constraints mainly because of plunging demand.
"Due to this, they have either delayed or defaulted their payments to media agencies, which are now wary to work with such developers," he said.
Bhasin further said real estate companies will be spending more on performance, marketing and sales related efforts than building brand and accordingly have cut their ad spends by almost 50 per cent.
Havas Media Group chief executive for India and Southeast Asia Anita Nayyar said, pre-Navratri is the time when developers spend hugely on advertising. But this time around it has just crashed.
"Since liquidity is an issue, developers are resorting to barter private treaties by entering into brand capital deals with leading news dailies. These treaties could be in the form of publisher picking up some stake for the ad money value by or developers offering space a project to the publication. But neither that is happening this year," she said.
Unsold homes have increased 7 per cent to 1.3 million units at the end of June 2019, according to an independent real estate research firm Liases Foras.
Mani Rangarajan, group chief financial office at Elara Technologies that also owns, and said advertising spends, not just in the real estate sector but overall, have become lean.
"Real estate has been hit very hard since the last couple of years which has impacted their advertising spends and also the media mix. The most telltale signs of this are the drastic reduction in the number of pages in real estate supplements and front page jackets, full page ads, etc, in the print versions of various publications," he said.
Digital media on the other hand is increasingly eating into the profit margins of the print media, he added.
A city-based realty player requesting anonymity said his company has already brought down its marketing and ad spends by over 75 per cent over the last two years.
"We would prefer to offer certain discounts to our customers rather than spending on ads," the developer says.
Transcon Triumph vice-president for sales and marketing Sarojini Ahuja said her company has increased its digital media spends from 35 per cent last year to almost 50 percent this year and have reduced the marketing budget from 15 per cent to 10 per cent.

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First Published: Sep 29 2019 | 5:50 PM IST

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