Ad agencies smile again

The advertising industry finally has a reason to believe that it is in for some good times again. It is getting an increasing number of pitches from sectors like telecom, fast moving consumer goods (FMCG) and pharmaceuticals, all of which have increased their advertising spends.

Other catalysts — like the Indian Premier League (IPL) matches, the general elections and even the T20 world championship cricket matches which will start next month — are leading it to believe that business will stabilise in the coming quarters. The icing on the cake is the overall positive sentiment over a stable government coming back into the saddle.

“A stable government is always good for business. And when business does well, corporates spend more on communication,” opines Sanjay Thapar, group president, north and east, Ogilvy & Mather.

Mona Jain, India head, strategic investments, India Media Exchange (IMX — a division of Publicis Groupe Media in India), concurs that the market will boom and benefits will trickle down to the ad industry.

Arvind Sharma, chairman & CEO of Leo Burnett India, also echoes the sentiments.

“It ends the uncertainty on economic policies. Hopefully, the government will announce sound economic policies, which will bring more investment in the country. I believe this will take the economy to a growth level of 7.5 per cent. And the cheer will spread to the ad industry,” says Sharma.

Sectors like FMCG, telecom and pharma have already increased their spends, Thapar points out. For instance, Dabur and Procter & Gamble increased their ad spends by 30 and 47 per cent, respectively, during the January to March quarter. Parle Agro also announced that its ad spends would go up by 50 per cent this year.

Telcos like Aircel and Shyam, too, have started advertising. Aircel’s ad budget alone is understood to be around Rs 100 crore. Even Loop is advertising as it’s expanding into other markets. Reliance and Tata have also entered the GSM segment. By the end of the year, more licensees will start operations and advertise.

Consumer durables major Samsung says its ad spends will go up as they have a number of new launches coming up. It spends 4-4.5 per cent of total sales on advertising. This year, it’s targeting a 25 per cent growth and, with it, the ad spends are expected to go up.

Pratap Bose, COO, Mudra Group, agrees there is “certainly some improvement”. Clients have stopped holding back spends, even if they haven’t increased these, he adds. Since the last four months, Mudra has seen many pitch requests coming in.

Tarun Nigam, executive director, Starcom MediaVest Group (North), adds that the industry is optimistic now.

“Last quarter, we saw some 10 per cent growth as compared to the corresponding quarter last year,” he points out.

The IPL matches and the election campaigns benefited media-buying agencies, as media vehicles (channels) have increased. This accounts for the fact that Allied Media (Percept’s media buying agency) is planning to hire 20 people this year.

“Our business has grown significantly, and we are hiring more people,” says Shripad Kulkarni, COO, Allied Media.

There are some, though, who believe the next quarter will give a clearer picture. “The real picture will be clear once the IPL is over, as some advertisers are taking out from one bucket (general entertainment channels) and pouring into the other one (sports channels). But, at least, there is intent to open up now,” says Madan Mohan, COO – West, TBWA\India.

Sam Balsara, chairman & MD, Madison Communications, also believes the real picture will be out after the IPL and the T20 world championship events are over.

Via : BS