Is the spike in Indian ad spend a sign of rising consumer confidence?
Indian cricket captain Virat Kohli at an Audi car launch. The Indian advertising market is poised to report a growth of 23.2 per cent after a sharp decline in 2020.Courtesy: ANI

Is the spike in Indian ad spend a sign of rising consumer confidence?

The Indian advertising and marketing industry has a major role to play in soothing frayed consumer nerves during this cycle of uncertainty.

India’s advertising market is showing promising signs of a strong rebound from the lows of pandemic-hit 2020, reflecting not only a buoyant domestic industry but also the surge of retail activities across the country – spurring the rise in ad demand.

According to media agency GroupM, the Indian advertising market is poised to report a growth of 23.2 per cent after a sharp decline in 2020. The agency's ‘This Year, Next Year' (TYNY) report for 2021 says that the ad market will soar to $12 billion in terms of size, recovering from its fall to nearly $8.5 billion a year ago.

Of course, digital is the biggest winner in the bargain, with an overall ad spend for 2021 at 35 per cent, while TV is at 45 per cent and print is 16 per cent. Fast-moving consumer goods, e-commerce, auto, telecom, retail, and durables will be growth drivers of ad spends in 2021, the report found.

A 2021 handout illustration shows Unilever beauty products without the word 'normal' on its product packaging. The value of digital expenditure in advertising was estimated to grow exponentially by 2023, with advertising in the market far exceeding the value of subscriptions.
A 2021 handout illustration shows Unilever beauty products without the word 'normal' on its product packaging. The value of digital expenditure in advertising was estimated to grow exponentially by 2023, with advertising in the market far exceeding the value of subscriptions.Courtesy: Reuters

Return of consumer confidence

The return of consumer confidence in the Indian retail, hospitality and real estate segments is evident from the clutch of brands across categories that have started creating campaigns around restarting and resuming daily life in the country.

Herbal soap and personal care brand Medimix, coffee brand Nescafe, Castrol Oil and Yes Bank have launched new campaigns – aiming to instill hope among people and give a positive message to the society that it’s possible to adapt to the new normal through collaboration and restart not just lives but also the country's economy.

That’s a long way off from the forecast of 2019, where India's digital advertising spending had a 30 percent growth rate – which was estimated to decline to about 15 percent by 2023. However, the value of digital expenditure in advertising was estimated to grow exponentially by 2023, with advertising in the market far exceeding the value of subscriptions.

A Reliance-Jio hoarding in Ahmedabad. With evolving tools for audience tracking and measurement on digital platforms, digital ad spends are projected to get a bigger share of the pie in the coming years.
A Reliance-Jio hoarding in Ahmedabad. With evolving tools for audience tracking and measurement on digital platforms, digital ad spends are projected to get a bigger share of the pie in the coming years.Courtesy: Reuters

Sharp growth in digital spend

A surge in internet penetration, widespread availability and affordability of 4G services along with a growing popularity of smartphones have given stimulus to the digital advertising market in India – and the pandemic has only exacerbated those parameters. Moreover, cheaper ad rates and an ability to track the returns on investment have made it easier for even small business owners to craft their own ad budgets.

Of the available digital media options in India, social media ads garnered the highest share of digital advertising expenditure in 2019, followed by the paid search format. This is justifiable when over 351 million Indians could be reached via social media that year. With evolving tools for audience tracking and measurement on digital platforms, digital ad spends are projected to get a bigger share of the pie in the coming years.

But the post-pandemic marketing universe in India has also brought good tidings for print platforms.

Fans of Bollywood star Salman Khan display hoardings and placards ahead of a film release. The TYNY report projects digital to grow the most in 2021. The report says that print is expected to have a far better run this year, with a total ad spends upswing of 23 per cent.
Fans of Bollywood star Salman Khan display hoardings and placards ahead of a film release. The TYNY report projects digital to grow the most in 2021. The report says that print is expected to have a far better run this year, with a total ad spends upswing of 23 per cent.Courtesy: ANI

Recovering from pandemic slump

As the country shut down to fight the coronavirus, consumption also came to a halt, resulting in brands cutting down their ad spends. While print was among the worst impacted with a 43 per cent decline in advertising revenue, TV advertising de-grew by 14 per cent and digital by 2 per cent. TV and digital managed to make up some lost ground in the second half of 2020 when the markets began to open, and consumption picked up. Movie theatres, which had reported a robust 25 per cent growth in 2019, de-grew by 83 per cent, while outdoor advertising declined by 69 per cent last year.

The TYNY report projects digital to grow the most in 2021. The report says that print is expected to have a far better run this year, with a total ad spends upswing of 23 per cent.

The imagery of people resuming work with necessary precautions aligns with the metro (cities). There is also a strong desire to resume normal life among people and advertising content of this kind legitimises and normalises it.
- Santosh Desai, MD & CEO, Future Brands Ltd.

What conventional wisdom says

This is in keeping with conventional marketing wisdom that encourages marketers to spend more on advertising during a downturn in order to build trust and bonding with consumers. But the pandemic-induced lockdowns created a strange situation in India when companies' supply chain mechanisms came to a complete halt – when their products were not able to reach the shop shelves, brands shied away from advertising.

“The imagery of people resuming work with necessary precautions aligns with the metro (cities). There is also a strong desire to resume normal life among people and advertising content of this kind legitimises and normalises it,” said Santosh Desai, managing director and CEO of Future Brands Ltd, a brand consulting and management firm.

Just the presence of advertising is the signifier of the fact some optimism has set in as brands are finding it worth to invest in ads, he told the Mint.
Indeed, with the pandemic swinging back and forth between a sharp rise and a steep fall in cases across India, the advertising and marketing industry has a massively important role to play in soothing frayed consumer nerves and convincing people to continue with the spending process through this cycle of uncertainty – however big or small it may be.

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