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'Advertising easiest to cut': Coronavirus wrecks ad industry

FMCG, is the only sector which is advertising, but the FMCG companies are also careful and are pushing broadcasters to cut down rates

twitter-logoAjita Shashidhar | March 31, 2020 | Updated 00:52 IST
'Advertising easiest to cut': Coronavirus wrecks ad industry
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A recent Nielsen report shows an eight per cent increase in television viewership ever since the outbreak of the COVID-19 pandemic has forced people to be locked down in their respective homes. While the spurt in viewership is likely to get broadcasters incremental subscription revenue, it is unlikely to add to their ad moolah. COVID-19 has set dark clouds over the advertising industry, as advertisers are either deferring ad spends or re-negotiating deals. "Prior to COVID-19, the prediction was that the ad industry would grow by 11-12 per cent. However, under the current circumstances, I will be surprised even if the industry manages a low single digit growth," says Ashish Bhasin, CEO, APAC and Chairman India, Dentsu Aegis Network.  

Bhasin says that everyone's focus now is to conserve cash. "Advertising is the easiest to cut during an adversity. However, when the economy does well advertising benefits disproportionately," he adds. He hopes that companies would open their purse strings around Diwali. "The next two quarters are definitely not looking good for the ad industry," he says.

Sectors such as auto, hospitality and tourism have completely stopped spends says a senior industry expert. FMCG, is the only sector which is advertising, but the FMCG companies are also careful and are pushing broadcasters to cut down rates. "There is indeed a boost in TV viewership, but the real test will come after the fresh content dies out (TV production houses are shut due to COVID) and the TV channels have to rely on library content. One isn't sure whether the library content will generate as much viewership and that will play a role in broadcasters generating ad revenue," says the industry expert.

Prathap Suthan, Managing Partner and Chief Creative Officer, Bang In the Middle, says that COVID-19 is a brief hiatus for the advertising industry. "Work has come down, but companies will need to advertise after the lockdown," Suthan says. He also adds that while companies are not promoting their brands on traditional media platforms such as TV, print and radio, they are using the digital media to stay relevant. "A lot of brands are coming up with digital content around COVID in order to make their target audience feel that they care for them. Since they can't do expensive productions, they are using easily available footage and putting out videos on digital platforms," he further explains. He cites the example of the campaign his agency has created for handset manufacturer, Vivo, for 'Earth Hour' recently.

It's not business as usual for the public relations professionals either. Jaideep Shergill, Founding Partner, Pitchfork Partners, says that clients are either putting on hold their PR and communication spends, or have completely stopped. "Our business may not be as badly impacted as paid media buying, but we are also badly affected." Shergill says that sectors such as auto and financial services are badly impacted, and FMCG is the only saving grace.

Though the overall mood is sombre, Anup Sharma, Independent Communications & PR Consultant, says that sectors such as health, IT enterprise are getting more active in PR along with telecom and OTT platforms. "The pandemic is already affecting industries such as tourism, hospitality and airlines with immediate effect and there are others in the pipeline. That holds true for the PR and communications industry as well, as the fate of our business is closely linked to the health of our clients."

Also Read: Coronavirus scare: Foreign tourist arrivals growth hit record low in February

Also Read: Coronavirus: Govt denies lockdown extension, says 'no such plan'

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