Talk to the men and women at some of the largest media companies in India. There is a marked absence of slowdown blues.
“We have had a fantastic H1 (first half of the year). We have grown in double digits. Nothing is on hold,” says Monica Tata, general manager, entertainment networks, South Asia, Turner International.
“Our first quarter growth was over 50 per cent, Star and Zee both grew in the first quarter. The three largest networks have shown growth. As far as TV is concerned, there is no slowdown,” says Rohit Gupta, president, Multi Screen Media (Sony). (Click here for charts)
“The experience of the festive season is critical. If it is good then we can end the year with 8-10 per cent (ad growth), “ says D.D Purukayastha, managing director and CEO of ABP. The publisher of Anandabazar Patrika among other brands is going ahead with the launch of its Bangla tabloid later this month.
Jayant Mathew, director Malayala Manorama, “senses a slowdown.” But Kerala’s largest newspaper publisher continues to pour hundreds of crores into upgrading its printing facilities across the state to colour.
Girish Agarwal, director, DB Corporation, emphasises that it is going ahead with its expansion plans for more editions in the states it operates in. The only thing the publisher of Dainik Bhaskar has postponed – a launch in Bihar.
Now talk to advertisers. Nikhil Sharma is director marketing, Perfetti Van Melle India, a large advertiser. “Our ad spend in 2012 will go up in double digits over 2011. Not a single plan has been held back,” says he. The confectionary firm has had 12 launches so far and has another six planned. Rahul Thappa, managing partner, Mindshare asserts that “the first two quarters were robust, clients haven’t cut budgets yet.” Says Satyajit Sen, CEO, ZenithOptimedia India, “There is no slowdown.”
The facts seem to support him. Going by TAM Media Research data, ad volumes on TV, print and radio continue to rise though growth is slower than it was. More importantly ad rates have, largely, held steady. According to ZenithOptimedia data, rates on Hindi general entertainment channels rose by 18-20 per cent in 2012. Most listed TV and print firms showed growth in the first quarter. And most Internet and radio firms — the minnows in India’s Rs 26,800 crore ad pie — are exactly where they were a year ago on growth.
The selective slowdown
You could argue that if ad spend growth numbers are being pegged at 7 per cent or so, down from 10 per cent last year, surely someone is getting hit. What really is happening?
One, the slowdown in the economy, late monsoon and inflation have led to an, “overall sentiment that is not making people buy,” says Agarwal. “Right now people are just anticipating a slowdown,” says Sharma of Perfetti. Pravin Kulkarni, general manager, marketing, Parle Products agrees. The 70 per cent increase in cost of raw materials used in its biscuits, “puts pressure on profitability. Usually our biscuits off take grows by 10-15 per cent; this year it has been flat,” says Kulkarni. So while Parle is not cutting back on ad spends, it isn’t increasing them either.
Two, the slowdown has had very selective impact. For example FMCG ad spend in the first quarter grew well. Ditto for telecom. Cars, financial services and real estate — products where interest rates affect consumption — report some slowing of spends. These products use male-centric media, such as English newspapers and news channels which are therefore seeing some fall in volumes, says Sen. In news television for instance, “offtake of ad inventory has been lower by about 10 per cent,” says Avinash Kaul, CEO, Times Now, ET Now and Zoom. And “effective ad rates are either stagnant or have fallen,” adds Neeraj Sanan, chief marketing officer, MCCS (ABP News). FMCG-dependent media such as general entertainment channels (GEC) continue to grow. So networks such as Star, Sony and Zee are happy.
Three, “There is a real sizing of the industry happening,” says Sen. He reckons that for too long we believed that we were growing by 20-25 per cent while the actual numbers were much smaller. RECMA, a Paris-based research firm, brings out billings data based on figures given by media agencies. Its numbers peg the Indian ad pie at Rs 22,000-odd crore in 2011 against Rs 30,000 crore dished out by local bodies. You could argue that a lot of media is bought and sold outside the media agency’s ambit and RECMA cannot account for that.
Four, “a lot of money is getting diverted to mediums we don’t measure,” points out Thappa. This includes events, outdoor, activations and a host of below-the-line activities.” Roughly one-fourth of all marketing spends go to non-mass media options. These however don’t shape sentiment the way TV and print do.
The third and critical Diwali quarter, which everyone in the media business looks forward to starts in October. If it is good, much of the current gloom should go away.