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Companies hiking ad spend this year – Survey

Faced with a hard -sell situation, corporates are gearing up to spend about 25-30% more on advertising this festive season as compared to the last year in consumer durables, electronics & auto taking the lead, according to an ASSOCHAM recent paper.

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The feedback from corporates suggest that the marketing teams of the companies engaged in the Business-to-Consumer (B2C) have already lined up plans for their ad campaigns which will begin from Navratras and run through Durga Puja, Diwali and right up to Christmas. The period is also considered busy season for the Indian economy with the policy makers and the RBI expecting pickup in consumer spending to rev up the overall GDP growth in the current financial year to 5.5-6%, ASSOCHAM General Secretary Mr D S Rawat said while releasing the paper.

“Though the corporates are facing higher cost pressure due to high interest rates, rising raw material costs and wages, marketing expenses mainly through advertisements in television, newspapers and the social media have become unavoidable with the companies in the media sector becoming the main beneficiaries”, adds the survey.

By increasing their ad spend by upto 30% this festive season, the corporates are hoping for a commensurate rise in their sales hoping that the consumer confidence will return with the new Modi government taking incremental measures to boost the economy, adds the paper.

The traditional media sector has been hit by the recent shift in promotions and sales to ecommerce platforms. Ecommerce players typically allot a large part of their spending to digital advertising, unlike brick and mortar players who advertise more in traditional avenues like TV and print. Print has been the hardest hit, as TV has still been able to attract some ecommerce advertising.

According to ASSOCHAM feedback, big time and attractive discounts are expected from the main players in the e-commerce space in tie-up with the manufacturers of mobile handsets and other electronic gadgets. In the brick and mortar model, the companies engaged in manufacture of TV sets, washing machines, microwave ovens will do some hard sell.

“They will be required to really go for hard push since the consumer durables and consumer goods sector have not been performing well, as was clear in the June IIP numbers”, said Mr. Rawat.

Seeking to build on robust sales in the past few months, supported by lesser excise duty, the car manufacturers are expecting a real growth in sales, though they would need to spend more on their advertising and marketing costs, points out the paper.

At least 40% of the ad budget of the corporates is typically earmarked for the busy season which coincides with the change of weather and several festivals. The rural market also remains in focus, though the response this year around may not be encouraging because of scanty rainfall.

While TV remains a preferred medium for the FMCG, consumer durables and car and bike ads, the increasing penetration of the social media will also attract the marketing and media planners. The social media is far more focussed when it comes to target audience. Besides, the age profile of those using social media is a big temptation for the media spenders, points out the paper.

Nearly 69% of the marketing heads said that companies see in the festive season a perfect time to advertise their products. Even as the media cost has been rising, companies want to work closely through consumer touch points in retail outlets.

“Some of the marketing schemes will come up bundled with financing options like interest free loans, easy EMIs and extended periods of warranties”, highlights the paper.

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