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Note ban brings down ad spends; but experts see growth rebound

Amrita Nair Ghaswalla Mumbai | Updated on January 13, 2018 Published on March 06, 2017

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Massive withdrawal pangs experienced by advertisers due to demonetisation have ensured that growth in the Indian advertising market slumped to 12.5 per cent in 2016.

Though the Tsunami in the form of demonetisation knocked off ₹1,650 crore from advertising expenditure (ADEX) in November and December 2016, according to the recently released Pitch Madison Advertising Report, advertising executives insist the worst is behind us.

Sam Balsara, Chairman, Madison World, says most advertisers failed to anticipate the dramatic negative effect demonetisation would have on primary sales and consumer offtake, with several advertisers postponing or cancelling their campaigns altogether.

Adding that growth rates from now on were bound to vary widely from month to month, Balsara, however is optimistic.

For 2017, the Pitch Madison Advertising Report has forecast growth figures pegged at 13.5 per cent.

Stating that the market is slated to grow by just 8 per cent between January to April 2017, Balsara said growth would shoot up to 14 per cent from May to October 2017, and 24 per cent in November and December 2017.

“In itself, this is a bonus,” said Balsara, “since the market had de-grown by 8 per cent in November and December 2016.”

The report says that India’s total ADEX is set to cross ₹50,000 crore this year, touching ₹56,152 crore. Television (at ₹21,296 crore), print (at ₹19,869 crore) and digital (at ₹9,144 crore) are set to be the top three categories in 2017.

Ambi Parameswaran, brand strategist and founder, Brand-Building.com, says though things are picking up, ad spends are still lagging behind. “It can take another two months. Could be earlier if monsoon predictions are good, and UP gives a clear verdict, and GST moves fast,” he added.

Balsara, too, highlighted several factors for his confident forecast. “Our optimism for good growth in ADEX starting this May comes on the back of several government initiatives like high government investment in infrastructure, lower corporate and personal taxes for small and medium companies and the masses, good government support for the poor and consequently the wide-scale expectation of yet another year of high GDP growth.”

Prahlad Kakkar, CEO of Genesis Films, is also bullish on ADEX growth this year. “Mark my words. This is going to be the best year ever in a long time, because everything is going to come out in the open now with demonetisation. Even if we say 25 per cent are criminals, 75 per cent of the economy is set to function well,” he adds.

Kakkar maintains growth in the economy and ADEX growth is “going to come back to mainstream soon, since the ethical verticals of the economy are set to do very well, going forward. Companies like Tata, Godrej, Birla, Mahindra, L&T and Reliance make up for this 75 per cent and will keep growth intact.”

His confident tone is underscored by Mythili Chandrasekar, JWT’s Senior Vice-President and National Planning Director, “Though there is a sense of cautiousness in the market, advertising in a few sectors is starting to come back, notably FMCG and auto,” she said.

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Published on March 06, 2017
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