Advertisement slump worries agencies

Media-buying and advertising agencies are a worried lot. The last quarter was bad for them with overall advertising, across all media, dipping by 10-20 per cent.

Some of them fear that if the global situation doesn't improve, there could be a renegotiation of prices and 10-15 per cent reduction in TV advertisement tariff.

Mona Jain, India head, strategic investments, India Media Exchange (media-buying unit of Starcom MediaVest Group and Zenith Optimedia), says there is a demand and supply gap. "Upfront, there is no reduction in advertising rates, but client-to-client renegotiations are happening. Advertisers are bargaining very hard. TV is the most-affected medium," she said.

Brand building advertising is being badly-affected and if the market doesn't stabilise, the prospects will worsen. Scheme-based advertising, on the other hand, is doing well because of the festive season. If advertisers are not able to dispose their inventories by Diwali, they might extend the schemes till December, says Jain.

Gowthaman Ragothaman, MD, Minshare (a global media planning company), said, "Most of the advertising deals happen on an annual basis. So, there's no renegotiation there. On that front, advertisers are not actively pushing for bargains. Print media is under more pressure and client-to-client renegotiation is taking place here," he said.

"We are adopting a wait and watch policy," says Praveen Vadhera, country head, Bates, adding: "Whatever advertising we see right now is due to the festive season. Nobody is sure what will happen post-festive season. Our clients are not talking about their plans."

Ramanuj Shastry, chief creative director, Rediffusion Y&R, said, "Sentiments are low, and people are not splashing money." With volatile markets and the downturn in the economy, nervous marketing departments in individual companies will look at taking a more direct advertising and branding approach, where promotional offers and strident or loud marketing will be given a preference to creative marketing, he said.

However, he says some of the best advertisements were made on stringent budgets. For instance, the Feviquik advertisement with two anglers is a classic example of a low budget ad that does not have a shelf life, he notes.

Amitava Mitra, senior vice-president of advertising agency Percept, says the downturn in the markets and economy will definitely hamper the advertising industry growth this year and the next year.

"The growth rate will come down to single-digit as companies take a relook at their overhead spends which include advertising and marketing. Activities that are considered wasteful or not yielding desired results will see a cut," he notes.

Chandradeep Mitra, president and head, Mudra MAX (Media, Analytics & Convergence), says: "Advertisers are seeking esteem value in less, given that their budgets have gone down. TV and print are the worst-affected. Only strong papers are able to hold back their new rates. FMCG, DTH and Telecom, etc., haven't seen any decrease in budgets. But realty and the BFSI sectors have cut their budgets by 30-40 per cent. Durables have also cut by 10-15 per cent."