Ramanujam Sridhar, Chief Executive Officer, Brand-Comm, Bangalore, knows of technology companies that have frozen recruitments over the last few weeks. The mood is one of extreme caution and circumspection, if not complete depression, he says. “Everyone wants to wait and watch,” he says, adding that in the real estate sector, it is no longer a seller’s market, and it would have to advertise more.

“In Bangalore, especially, there are very few takers. Infrastructure companies are also suffering from the lack of liquidity. My clients are asking if there are other ways to achieve the same advertising and marketing objectives with less money. So now there is greater importance being given to PR. On our part, we are trying to deliver better for the clients - the onus is on PR which becomes more critical now. The accountability of ad agencies in terms of what they are delivering now will be key,” he says.

The consumer durables sector will be affected, but not to the extent of sectors such as IT, real estate and automobile. As consumers may downgrade or cut back in some sectors, there will be heightened interest in media that can deliver more impact with smaller budgets. Chandan Nath, President, Mudra Advertising, Ahmedabad, says both above- and below-the-line advertising will have to be used as different categories will be affected differently. “Any category where the consumer can postpone his buying decision will be affected, such as upgrade of consumer durables, automobiles and real estate. While the food industry, over-the-counter products, apparel, telecom and FMCG cannot remain untouched by the meltdown, they will be less affected.”

However, Ambi M. G. Parmeswaran, Executive Director and CEO, Draftfcb+Ulka, says “Some amount of diversion of advertising budgets to tactical and promotional spends may happen, but in a vast, spread-out country such as India, and for mass-marketed brands, there is nothing to beat press and TV. So those media will continue to hog the limelight. In fact, marketers may even shy away from niche media.”

According to him, Indian ad spends are correlated with economic growth and market sentiment, more than anything else. The Sensex has no real effect except for the dampening on the sentiment. “If we expect the economy to grow at over 6.5 per cent next year, there is no reason that why ad spends should not grow by about 9 per cent,” he says. He points to danger signs, though. “Inflation is at over 11 per cent but is showing signs of coming down. The dramatic drop in the Sensex has led to a perception of wealth destruction. The rapid increase in interest rates has made home-buying and car-buying a lot more expensive. A high dollar is going to make many durables more expensive.”

Sukhpreet Singh, General Manager (Brand Marketing) of consumer durables company Whirlpool of India, says the choice of media (conventional/digital or above-the-line vs below-the-line) could be altered, which would depend on campaign objectives and effectiveness of each media to deliver results. “Whirlpool believes in investing in the brand and consumer communication. Our advertising budgets are in line with our growth strategy. However, growth expectations have slowed down in the past few months and we are taking that into account. Our spending will be in line with the same,” he says.

Fast moving consumer goods companies cannot afford to cut back on marketing right away, says Ramesh Viswanathan, Executive Director of Chennai-based Cavin Kare. “There’s no slowdown in the overall FMCG market. The rate of growth of most categories is continuing and our growth is in line with our past performance. But, there is pressure of escalating costs so there’s lowering of profit. We need to see how sales go in the third and fourth quarters, see how costs progress and take a call by December.” Viswanathan says advertising and marketing is the last thing an FMCG company would touch; the focus will be on cost engineering and pricing.

Chennai-based retailer of consumer durables, Vivek’s, is being a “little more careful” with its advertising and marketing plans. “I may plan to release 10 ads, but I may release eight or nine or maybe all depending on the need,” says B. A. Srinivasa, Director, Viveks. According to him, there will be some impact, however small, of the worldwide economic slowdown. Consumer spending sentiment does seem to be poor, he says, adding, however, that Diwali sales for Viveks in upcountry Tamil Nadu have been almost the same as last year. Over the last year, finance companies have withdrawn personal loans and two-wheeler loans as well, though credit card spending has gone up, he said.

As far as the question of retrenching goes, there are mixed responses. Srinivasa says he does not see signs of retrenching in retail and that his company would certainly not do it. Ditto, says Nath of Mudra, adding that the company was looking for copywriters as it plans to expand. According to him, agencies that dabble in a wide range of communication services could spread the risk and not be affected that badly. Meanwhile, public relations firm Hanmer MS & L’s Partner and Member (Corporate Leadership Team), Amit Desai says all agencies would have to maintain status quo. His company was looking to redeploy staff and get in more efficient people. “Recruitment at the middle and senior levels will definitely be hit but junior levels need not worry too much,” he said. As companies’ budgets shrink, advertising and marketing is bound to be hit, lowering the profits of agencies in turn, he added. Nath of Mudra says corporate communication has been hit hard as, with the withdrawal of IPOs due to dampened market sentiments, all pre-IPO events have been cancelled.

Some agencies, however, see the slowdown as an opportunity. Such as the upcoming 50-employee-strong Saints & Warriors. Arjun Dutta, copywriter with the agency, says this crisis might actually be an opportunity to grow on the back of innovative ideas. “If we look at this the other way round, the agency whose competition is not being received too well can actually make use of this opportunity to get a leg in, provided it is creative and able to provide a workable solution,” he says.

Time will tell, watch this space.

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