Marketing

Ad Outlook: It’s a digital show in 2021, too

Vinay Kamath and Chitra Narayanan | Updated on December 27, 2020 Published on December 27, 2020

Fresh innings IPL 2020 — which saw 150 new brands advertising — changed the pitch, signalling a bounceback.

Agencies are optimistic that ad volumes and spend will rebound

As annus horribilis 2020 — a year when media and advertising got ravaged — comes to a close, a few trends will remain irreversible as the industry looks ahead with optimism in the new year.

Digital will continue to dominate; new categories such as edtech, online gaming and wellness products have emerged this year as top advertisers. Lastly, the pandemic has tilted consumers towards e-commerce and digital payments more than any blandishments by the government or retailers.

The ad industry had closed 2019 on a high note with overall ad spend of ₹68,475 crore. It had projected that in 2020 adex (ad expenditure) would surpass ₹75,000 crore. Alas, the overall spends fell to ₹56,400 crore (see chart). Says Anand Bhadkamkar, CEO, Dentsu India, “Ad spends were shaved off almost 15-18 per cent overall this year.”

The projections

As a spate of slickly made year-end ads hit the screens from companies that seem to be aggressively investing in brand building, a question on everyone’s lips is: Will 2021 see the industry bounce back to 2019 levels?

Bhadkamkar shakes his head. Although Dentsu expects significant pick-up next year, he says the past high will not be attainable before 2022.

The projection is a 10-12 per cent growth over 2020, when the base plunged dramatically.

But the positive indicators in the third quarter of this year are spurring optimistic sentiments among agencies. Says Tarun Rai, Chairman and Group CEO, Wunderman Thompson, South Asia, “I certainly see a bounceback in advertising spending next year. Many clients had asked for a reduction of fees during the worst period of the lockdown. These will also be reversed to their original amounts, at least.” However, Rai admits the real momentum may pick up only from the second quarter of next year.

Nandini Dias, CEO of Lodestar UM, too foresees recovery only in the second half of 2021. “In many countries, the second wave of the pandemic has started. Unfortunately, businesses have become globally interdependent; therefore it is not enough for your country to see revival but for other countries, especially where we import from, to be open too.”

Besides a rebound next year, Prasanth Kumar, CEO, GroupM, South Asia, believes we would witness more innovative products and platforms as well as clients reaching out to consumers through digital media. “Scaling up will happen because of the mass reach of digital, especially mobile,” he says .

“In 2020 we witnessed many categories driving digital volumes. We have also seen digital first and, in some cases, digital-only product launches without traditional brand-building funnels.”

Platform shift

Digital has indeed emerged the hero of the pandemic. The trend of clients shifting budget allocations across media was evident even before the pandemic, says Wunderman Thompson’s Rai. The crisis fast-forwarded it. “We can expect more focus on digital spends at the cost of traditional media. However, I firmly believe that there are so many ‘Indias’ that the role for traditional media will still be relevant,” says Rai.

Talk to clients and they do seem to be returning to traditional media, though their digital budgets have bloated. Mayank Shah, Category Head, Parle Products, says before the pandemic the biscuits major spent only 10-12 per cent on digital. “In the first two quarters of this year, we spent upward of 40-45 per cent on digital,” he says. This came mainly at the cost of print and TV.

However, Shah says by the third quarter it started returning to other media. “Today, our digital spend is 20-25 per cent, which is still 2X of last year. This will continue in 2021,” he says.

During the lockdown, and even after, Parle stopped spends on cinema, radio, outdoors, and reduced it on TV and print. While it is still not investing in the first three, it has returned to print and TV, now attractive again with fresh content. He says that while Parle’s media research shows that print enjoys the most credibility and trust, as a marketer what holds him back slightly is the inability to gauge how many subscribers have returned to newspapers post the opening up.

Shah is emphatic that companies will spend aggressively on advertising next year. All plans that were on hold during the pandemic will take off, and require communication, he points out.

The big drivers

Which are the categories that will help the industry rebound? Dias picks out auto (four-wheelers), e-commerce, toilet soaps, washing powders, and two-wheelers as the five segments that will spend big in 2021. Edtech, which is now in the top 20, and Fintech will keep up the momentum as they got a huge jumpstart and are seeing adoption.

Bhadkamkar says while 2020 saw more spends from the non-core advertisers (online gaming, edtech ), next year the traditional advertisers, especially FMCG, will be the ones to provide stability to the ad industry.

His final thoughts on 2021 are that, even as digital continues fast-tracking, data protection and privacy concerns will gather momentum. The ad industry will have to work around those.

 

Follow us on Telegram, Facebook, Twitter, Instagram, YouTube and Linkedin. You can also download our Android App or IOS App.

Published on December 27, 2020
This article is closed for comments.
Please Email the Editor