FMCG ad spends are expected to see mild recovery in 2024, as brands push for visibility of their premium products. This comes even as FMCG ad expenditure has seen a drastic reduction in spends in the recent years.
Indication of a mild recovery was noted in Zee’s analyst call for Q4FY24. Speaking to the investors, Punit Goenka, noted that they were noting recovery in ad spends for the FMCG vertical. Consequently, Zee saw a 10.6 per cent growth in ad revenue year on year in Q4FY24.
FMCG vertical is the most crucial vertical for broadcasters since it accounts for nearly a third of the commercial ad spends in the TV industry. In the past few years, FMCG brands have cut down spending drastically. FMCG brands usually spent 7-12 per cent of their revenues on ads, that number has gone down to 5-7 per cent in 2023.
Karan Tuarani of Elara Capital had the following to say about ad spends, “in the near term, for the next two years, linear TV ad revenues could grow by 6-8 per cent, as FMCG brands increase spends. This is marginal recovery, however, and there is a long way to go to reach the hey-dey’s of FMCG advertising.”
FMCG advertising is the bread and butter for linear tv broadcasting. One of the reasons why the broadcasting sector seems to be struggling to improve their revenues at the moment.
Even revenues of FMCG brands continues to grow, pandemic induced inflationary trends followed by the rise of quick commerce and e commerce companies have prompted FMCG companies to reduce their ad spends.
“Quick commerce firms such as Blinkit and Zepto are eating into FMCG companies margins, prompting them to reduce their advertising. This has prompted them to focus on their premium product inventory where they can earn better profits. The rise in FMCG ads that we are seeing at the moment is because these companies want to improve visibility for their premium brands,” Ajimon Francis, Managing Director of Brand Finance said.