The rupee at an all-time low, the dour economic crisis that’s affecting the world, the untimed but compulsory downsizing. How are various media, agencies and advertisers in India rising above these difficult situations and looking for positive growth opportunities? Shobhana Nair finds out
This year will perhaps go down in history for all the not-so-pleasant reasons. The rupee depreciation and the debilitating economic situation have rattled the confidence of corporates in India, including the big players in the advertising, media and marketing industry. The worst phase of the economic slowdown was during the months of August and September, when the rupee sank to an all-time low of 68.845 per dollar.
There’s an acronym that describes such a dire crisis — VUCA, which stands for Volatility, Uncertainty, Complexity and Ambiguity. And this is not unique to our country — other parts of the world are going through worse, more recently the US, which experienced a temporary government shutdown, primarily due to funding issues.
“Whether it is a crisis in Syria or the shutdown in the US, the events which happen thousands of miles away now affect our working environment too,” explains Hemant Bakshi, Executive Director – Home & Personal Care of Hindustan Unilever (HUL) and Chairman, ISA (Indian Society of Advertisers). “We have seen a lot more volatility than what we have in the past like the recent rupee fluctuations.”
A VUCA crisis affects everything — company strategies, policies, investment plans and most importantly the morale of the people, because their jobs might be on the chopping block. However, it also offers an opportunity to focus strongly on key tasks with greater clarity, and even rework certain plans innovatively. Every rupee becomes accountable and has to be justified. “The sentiments have been dampened in the last few months,” says Vikram Chandra, Group CEO & Executive Director, NDTV Group. “In any economic slowdown situation, there are concerns about the future and the sentiments tend to go down. However, I think the worst is been behind us and things are starting to look up for both the Indian economy and the Indian media.”
The beginning of October has seen a little ray of hope for business drivers, with the start of the festive season and the upcoming elections. Here’s a look at how select media and creative agencies are pulling up their socks and trying to turn around the VUCA situation within their domains.
TV networks will go through a fairly cautious festive season
From the shaky implementation of digitization, to the messy debate about the relevance of 10+2 ad cap regulations, to certain companies handing out pink slips to close to 50% of their employees — the TV broadcast industry has been through quite a rollercoaster ride this year. And the current festive season doesn’t seem to be its saving grace either. “The first six months went off well for us as IPL was in the first quarter,” says Rohit Gupta, President, Multi Screen Media, which owns Sony Entertainment Television. “However, we have seen a slowdown since September. We haven’t seen the response for Diwali like the previous year — ours will be a weaker Diwali this year after quite some time.”
Usually, sectors like consumer durables, automobiles, handsets and telecoms invest largely during the festive season, starting late September; however it hasn’t fired up the way it should. A recent survey by ASSOCHAM also predicts that consumer durables, jewellery, FMCG, electronics, automobile and real estate will slash their ad budgets and spend sparingly on promotions during the festive season. Ashish Sehgal, Chief Revenue Officer, ZEEL, too, adds that brands are not going to splurge the way they used to and one will have to see how November and December will fare. Additionally, experts in the industry believe that to see through the coming festive months, various networks and advertisers will strike ‘customised deals’, which will benefit both parties equally. While it might seem that the sector is thinking of a collective solution, it might lose advertising revenue in the coming quarter to other media platforms.
While a few networks have been in the news for laying people off because of the slowdown hit, Tarun Katial, CEO, Reliance Broadcast Network Limited, is of the belief that this had to be done, to cut down the excess initially hired for that network’s exponential growth. “There is an external pressure and there is also internal accumulation of flab that all of us in media companies in anticipation of stupendous growth have done,” clarifies Katial. “Everyone is shedding a bit of flab and I don’t think it’s ‘downsizing’, but simply ‘right-sizing’ and the environmental side will balance later on.”
However, considering the upcoming elections, most Indian news channels seem to be positive about generating desired viewership numbers. “Large corporate companies are ready to pay a premium to be on those special news properties around elections, as there is a serious viewership involved in watching election programming,” says Avinash Pandey, COO & CRO, MCCS, an ABP Group Company. “Clients are seeing value in this and are assigning premium.”
Radio will flourish; explore innovation
Radio is one sector which hasn’t gotten its due from advertisers, but experts believe it hasn’t really been affected by the economic recession, and it’ll do well because of the innovative possibilities it can offer. “Advertisers in these tough times look for media options that enable them to reach out to large audiences with reduced investments,” says Ashwin Padmanabhan, Business Head, 92.7 BIG FM. “Also, Radio helps in reaching out to audiences in specific markets. When clubbed with interactivity and localization, it can be the perfect medium. We see the downturn as an opportunity to get more advertisers to use Radio and experience the benefits.”
Channels like MY FM, which have a stronger presence in Tier II and III cities, are neither rattled by the advertisers’ cautious spending nor the competition. “In fact, advertisers have a lot of confidence in our brand and the way we handle their campaigns,” says Harrish Bhatia, CEO, MY FM. “We have been able to connect with listeners at the grassroot level and bring out the best results for them. Targets are never easy but they are never nonachievable.
Ours is a very competitive market but at the same time it’s results-oriented. Clients don’t mind paying extra if good results are assured.” MY FM has also been striving to innovate to keep their numbers up. Bhatia shares an example: “For Navratri we came up with a unique concept where on each of the nine days, MY FM aired an interview with a woman who made a name for herself in a field that’s usually dominated by men. So our listeners got a chance to listen to Sudha Murthy (of Infosys Foundation), Bachendri Pal, Mary Kom and Kiran Bedi to name a few.”
Magazines are thinking of other ways to bring in revenues
The India magazine industry has also had a pretty rough year. In July 2013, Outlook Group had announced that it would shut down three magazines Marie Claire, Geo and People. And at that time, Outlook Group Editorial Chairman Vinod Mehta told a daily, that only these international magazines shut shop because, they were “unsustainable due to high licensing fees”. Every domain comes with their own set of challenges, but the main concern for everyone is how to generate maximum revenues. Since a cautious client is a conservative spender, getting advertisers on board can be difficult. When IMPACT approached Indranil Roy, President, Outlook Group, on how they plan to improve their advertiser sentiment, he said, “Input costs for almost all brands available have gone up, and sales are under pressure. There is an apprehension… we have to wait and watch, which further makes the situation skeptical. We are focusing at short-term numbers and simple planning, while keeping costs under severe control.”
Worldwide Media (WWM), which publishes Filmfare and Femina among other magazines, has seen growth in revenues at almost 20% CAGR in the last five years. While 60% of these revenues is from advertising, the balance comes from circulation and events. However, Tarun Rai, CEO, WWM, doesn’t seem to be perturbed about wary advertisers, as long as WWM’s brands can consistently meet the demands of these advertisers and provide more bang for the buck. “For many clients we have to deliver way beyond carrying the ads in our magazines,” explains Rai. “For some, we are ‘programme implementers’ and we execute 360-degree communications solutions that include on-ground events, PR and social media activities through our magazines and their respective online verticals/websites.”
Ad agencies will continue to juggle big ideas and small budgets
Advertisers tightening their purse strings pose a challenge to their creative, media and digital agencies: how do they deliver great ads within a limited budget? “You can’t think of massive ideas that are required for a complex and big activity,” says Bobby Pawar, Director and Chief Creative Officer – South Asia, Publicis Worldwide. “You have to think smaller, but still try to figure out how to create the impact. The marketing vision narrows as you are not looking far ahead into the future. You are doing more tactical than strategic things. You can’t take a screwdriver and expect it to hammer a nail. It is not supposed to.”
For digital agencies, on the other hand, every slowdown has been fruitful and harmless, especially since advertisers are reshuffling their media mix. “Clients have taken off budgets for a large medium and have started putting that in digital; it may not be a large chunk,” says Atul Hedge, CEO of Mumbai based digital agency Ignitee. And as more and more brands prefer to shift to Digital, the biggest challenge is meeting this rise in demand both nationally and internationally. Kesavan Kanchi Kandadai, CEO, Tangerine Digital, said that they have hired specific work forces in multiple domains. “We strive to increase operational efficiencies by using the best processes and people to be at par with international standards for a successful offshore engagement,” adds Kandadai. “We have been working extremely hard on equipping technology with the current ecosystem and have developed several proprietary tools that allow seamless delivery to our clients.”
The growth of digital even in tough times can be attributed to factors like demand of content marketing, increasing presence of social media and explosion of e-commerce. In fact, ibs’ business has grown nearly 300% in the first half of the year and he’s confident that this is will be consistent. “Maybe we are in a typical position, but this year has been the best in our history,” says Sabyasachi Mitter, the company’s Managing Director. “A lot of brands have diverted significant funds from ATL, as in Television and Print, to Digital and we have seen some very large campaigns taking place.”
Media agencies will plan smartly and will also ‘narrowcast’
Naturally, advertiser and budget pressures funnel down to the media planning agencies, who are figuring out the best ways to generate maximum ROI, and ensure that every penny of their client’s money is accounted for. Shripad Kulkarni, CEO, Percept Media, is of the opinion that the challenge for these agencies is keeping costs down while ensuring even better efficiency and increased “speed to market”. Satyajit Sen, CEO, ZenithOptimedia adds, “One of the ways to get greater accountability on client’s money is not just by pushing paid but a symbiotic paid, owned, earned media. That’s the only way forward as we speak.”
For others, ‘narrowcasting’ (targeting a limited audience) is a doable solution. “We are hoping for the best but are also planning for the worst. We have been focusing a lot on narrowcasting with the help of Digital, CRM and Outdoor. More focus should be on segments, prices and markets for us as well as for our clients,” says Shashi Sinha, CEO, IPG Mediabrands.
Treading carefully during a difficult time is human and only natural. However, Ashish Bhasin, Chairman India & CEO South East Asia at Aegis Group feels that the sentiment is more negative than the reality, and while growth in the industry won’t be uniform it is imminent. “Our latest ‘Carat estimates’ show that the advertising market will grow this year,” he says. “Print and TV are growing slower, while digital, search, outdoor, retail, activation and BTL are growing much faster. While it is not going to be a great double digit growth, it will grow between 7 to 8%.”
Navigating a VUCA World –
First ever global CEO conference in India on October 30, 2013
The Indian Society of Advertisers, in partnership with exchange4media, is hosting the first ever global CEO conference on ‘Navigating a VUCA World’ on October 30, 2013 in Mumbai, India. The goal of this conference is to sharply dissect the tough times we are facing in the current economic situation, and to find out how organizational processes and practices need to be recast to deliver to this new VUCA world.
Paul Polman, Chief Executive Officer of Unilever, will be the keynote speaker at this conference. He will share his thoughts on how business leaders can navigate in these tough economic situations. His views on the subject are thought provoking and widely acclaimed in the corporate world. Rahul Bajaj, Chairman Bajaj Industries, the second lead speaker, will share his perspective of challenges faced by Indian brands and organisations. Rahul Bajaj and Paul Polman will also engage in a dialogue on VUCA.
Other speakers at the event will be R Gopalakrishnan, Director, Tata Sons; Manu Anand, President – India & South Asia, Cadbury India; Marten Pieters, CEO, Vodafone India; Pawan Munjal, MD & CEO, Hero MotoCorp; Ravi Kant, Vice Chairman and Former Managing Director, Tata Motors.
For more details, email emily.boral@exchange4media.com
and visit www.exchange4media.com/ISAVUCA2013
How advertisers are keeping up the optimism
A few marketers reveal how’ve they’ve been planning positively despite the low market enthusiasm this festive season
RAJEEB DASH
Marketing head, Tata housing
“The rupee depreciation is helping us get a lot of traction from NRI investors as the currency advantage is slowly diluting. On the other hand, a lot of domestic buyers who had kept their decision on hold from quite some time, are expected to close transactions this festive season. In order to attract bookings, Tata Housing will be offering one assured gift from nine gift items that include a jewellery voucher from Tanishq, Sony LED TV and home theatre system and a trip to Singapore.”
S RAJENDRAN
Chief Marketing Officer, Acer India
“The IT hardware industry has one characteristic which is uniform across brands, which is to do with the margins made in this category. It is wafer thin and this is in public domain. So it’s hardly 2 to 3% over net that any vendor makes worldwide. Any wild swing that happens in the dollar, will have to get reflected in the price probably with a latency of four to six weeks depending on the supply chain. That is something that all of us have followed; so from July onwards when the dollar started swinging, I think across all brands there have been an increase of 6 to 8% in price.”
KAMAL NANDI
executive Vice-President, Marketing & sales, Godrej Appliances
“Digital gives us a huge opportunity to engage with our consumers in real time. However we continue to invest in traditional media like TV and Print which we use for mass communication during product launches or scheme announcements. We are also active in on-street and shop level activation and engagement programmes which are an essential part of brand building strategy.”
VIRAL OZA
Director – Marketing India, nokia
“Over the last three to four years, Nokia has always focused on one thing: relevant innovation. We have always felt that it is not what the device has, but what you can do with it. That is going to be the key differentiator, which is how we have focused on our services and experiences. We continue to differentiate and innovate so that we grow faster than the market.”
SANJAY GOPALAKRISHNAN
AVP-Marketing, Fiat Chrysler India
“Normal festive campaigns usually offer schemes on new models, but while initially brands used to reduce schemes to encourage consumers to buy products, that’s not the case anymore. In fact, automobile brands are generally increasing offers because of low market sentiment. As a brand, we’ve not been affected by the economy. Overall, in volumes we are growing and as per that we are looking at various festive activities, with Linea Classic at the centre of it all.”
“At ISA, we always believe in quality. Since this is a global CEO conference, it will be world-class. We have an exciting line-up of speakers, who will address what’s on everyone’s minds today — how one can deal with the economic slowdown and uncertain times. The speaker will address how we can navigate this VUCA world and come out as leaders with smarter ideas, better marketing abilities and better ways to address the consumer.” Paulomi Dhawan, Events and Committee Chairperson and Treasurer, ISA, Director – Landmarc Leisure and Advisor, Raymond
“To navigate a VUCA world, business leaders must deliver in the near term, while investing in the new and uncertain future. During times like these, it is more important than ever before to unlearn, relearn, grow and innovate.” Anisha Motwani, Director & Chief Marketing Officer, Max Life InsuranceDirector, Ogilvy South Asia
“At a fundamental level, talent retention is a function of the inherent strength of the agency and also its actual growth potential in the near future. If you consciously take steps or take none, then take care of talent retention if the agency is not strong and not growing. Anything else is just an intermediate short-term step.” Sam Balsara, Chairman & Managing Director, MadisonWorld
“The first six months went off well for us as IPL was in the first quarter. However, we have seen a slowdown since September. We haven’t seen the response for Diwali like the previous year — ours will be a weaker Diwali after quite some time.” Rohit Gupta, President, Multi Screen Media
“We are hoping for the best but are also planning for the worst. We have been focusing a lot on narrowcasting with the help of Digital, CRM and Outdoor. More focus should be on segments, prices and markets for us as well as for our clients.” Shashi Sinha, CEO, IPG Mediabrands
“Maybe we are in a typical position, but this year has been the best in our history. A lot of brands have diverted significant funds from ATL, as in Television and Print, to Digital and we have seen some very large campaigns taking place.” Sabyasachi Mitter, Managing Director, ibs
Feedback: shobhana.nair@exchange4media.com
