The new financial year has begun on a note of shock as two events — one global and one local — are expected to impact the advertising industry.
Trump’s tariffs, announced on April 2, have led to uncertainty among brands and advertisers not in the US alone, but the world over. The tariffs may lead to increased cost of products everywhere, which means a squeeze on advertising budgets. The first cut by companies is usually on ad spending. American companies are already girding up in the US. As S4 Capital chief Sir Martin Sorell told mediapersons, “Clients are in a state of turmoil... and will be hesitant to spend.”
In India, agencies are in a wait-and-watch mode. As Naresh Gupta, Managing Partner at Bang in the Middle, says, “No one knows how the Indian government will respond to the tariffs. One possibility is that there can be a higher tax on digital media brands when they remit money to their parent company; this can lead to an increase in digital media rates, and so a decline in spends. The other is a more scary possibility. The prices will go up for many items, including auto and electronics. That will have an impact on demand and thus on spends. The next month or so will tell us something.”
Meanwhile, in the US, Ford Motor Co has got off the block quickly with a nationalistic ‘From America, For America’ campaign, which spotlights its American origins, even as President Trump’s 25 per cent tariffs on imported vehicles take effect. Brands certainly need to think on their feet.
In India, the Competition Commission of India’s (CCI) raids on ad agencies and broadcasters just before the IPL cricket matches began, over alleged price-fixing and discount manipulations, will have an impact on media buying, according to experts. CCI’s investigations could lead to more transparency and a change in pricing models. While it may usher in fairer practices, it could also lead to increased costs for brands.