Luxury apartments with world class facilities, half price sale at a clothes store, mobile phone with three-inch LCD, camera phones…just some of the advertisements on hoardings, serenading the consumer. But today as you drive through the city, more than advertisements for consumer products, you are likely to see advertisers calling for advertisements, their names and numbers given big and bold. Thanks to the economic downturn, say companies, they are taking it slow and cutting down on advertising expenses. But some in the advertising field say it has more to do with the mind than market conditions.
Syed Sameer Ahmed, Manager, Business Development, Adlinks Advertising, says the number of ads on hoardings this January has been 30 per cent lower than last January. “Because of the global economy, the first cut that companies make is on advertising and marketing expenditure. But generally there is a slowdown in January, February and March as it is not festival season,” he explains. Ahmed is hopeful that things will get better after April, when the next financial year begins. “As this is the end of the financial year, advertising will depend on the returns of the company,” he adds. But Shivakumar, Senior Marketing Officer of Infant Advertising, says it is only going to get worse. “As a result of recession, the first area to be affected is advertising. It has been this way for the past six months,” states Shivakumar.
When the economy was first hit, it was the banking sector that felt most of the heat and Bank of Maharashtra was one bank that cut down on advertising. “Last year our overall advertising budget was Rs. 15 lakhs. Twenty five per cent of that was for outdoor ads. This year our budget will be cut by about 20-25 per cent,” says Ramachandra, of Bank of Maharashtra. The bank has no plans to increase its ad spend as advertising did not give them much mileage last year. On the other hand, the State Bank of India has not cut costs on advertising as it is growing. Says an official, on condition of anonymity, “Our business is increasing. Customers and products are also increasing. Our head office in Mumbai decides.”
DNA Publicities has also been badly hit y the slowdown. Khadeer A Shareef, proprieter of the company, says there has been a 50 per cent cut in the prices of advertisements as companies are saying they do not have the budget for advertising. Ambal Advertisers also feels that the numbers have come down because of the market condition. “There is a 15-20 per cent decrease this January as compared to last year. It is likely to improve in the first quarter of the next financial year,” says Harish Ambal, owner of Ambal Advertisers. Ambal also says that the price of boards has come down. If a board used to cost around Rs. 1 lakh, it now costs about Rs. 80,000-Rs. 90,000.
Even as companies cut costs and ad agencies bear the brunt, Narayanan G Vincent, Vice President and Branch Head, Beehive Communications Private Limited, an ad agency, says some of it is also due to panic. “The slowdown has affected outdoor advertising in a certain way,” he agrees. “But the propensity to spend has come down because of panic. For example, a telephone provider will not cut down on spending on hoardings. They are catering to people who might decide to buy a phone today, tomorrow, next week or next month. It is need-based.” Vincent says the decrease in outdoor ads is 70 per cent because of panic and 30 per cent due to recession. “But those who have to spend will spend, whether it is recession or not.”
But Gopal Krishna, Director, Client Services, Ogilvy & Mather (Karnataka), an international advertising, marketing, and public relations agency cites a different reason for the empty billboards in the city. There is an excess supply of billboards is his point. “It is the surplus billboards that are vacant. In the central business district like Residency Road and MG Road, it is full. It differs with location. At Outer Ring Road, near Hebbal and Marathahalli, occupancy will be less. Near Trinity Circle, Jayanagar and Bannerghatta Road, hoardings are full,” says Krishna. He says if 75 per cent or more of hoardings are filled, it is good. As a buyer, he finds it difficult to buy boards in the central business district, he adds. Krishna also points out that the global economic situation is just an excuse for people to bargain. “My buying of hoardings is the same as it was in 2008,” he states.
Ramesh Makhija of Favourite Shop, an apparel store which follows a similar formula, says they have not cut down on advertising as they will lose out on business. They have got good business because of outdoor ads and find it to be the cheapest means of advertising when compared to radio, TV or print. We will not cut costs for the next financial year, says Makhija.
Even Titan, a manufacturing company, has not cut down on advertising. Parthiban B, Senior Marketing Officer of Titan says, “We have scattered our ads on hoardings across the city so that there is more reach. We use outdoor advertising because it has direct impact.” He says Titan decides on the budget depending on its new launches and promotions. “In December 2008 and January 2009, about 50-70 per cent of our advertising budget was given to this,” says Parthiban. “The coming financial year we are planning to reduce the cost on outdoor advertising as we want to concentrate on in-store promotions because it is more convenient for people within a three to five kilometre radius.”
B E Govindaraju, Joint Commissioner (Advertising) of BBMP, which collected Rs. 12 crores as advertising tax last year, says it all depends on individual companies and whether they want to spend. “Some companies may continue to keep a longer contract while others may not want to renew the contract,” he says.
A majority of companies are hesitant to spend, says Hemalatha N Valecha, Assistant Manager, TDI Media Services. “Prices of boards have come down by about Rs. 15,000. If companies were spending Rs. 10 lakhs before, now it has come down by 50 per cent. Post April-May, after the budget, it is likely to get better,” she says. Sumesh, Marketing Manager, Option Advertising, says they have been forced to give in to prices quoted by companies. “The cost of the hoardings has come down by 25 per cent,” he remarks.
Vincent says he would rather make use of this opportunity to advertise and get into the consumer’s mind. “Since no one is advertising now, I would definitely advise clients to advertise their products or services. Because when the market picks up, their product will be top-of-mind-recall. I’m trying to convince clients about this. They are just being cautious and calculative,” he concludes.
Even as companies mull over the economic crisis, market experts say companies should refrain from following the herd mentality and instead have an advertising strategy in place, downturn or no downturn. ⊕