Campaign India Team
Feb 24, 2016

IAA Retrospect and Prospects: ‘The biggest of online players are still spending more outside of online’

Anupriya Acharya, Shashi Sinha and Vikram Sakhuja discussed the year gone by and 2016 advertising spend projections

IAA Retrospect and Prospects: ‘The biggest of online players are still spending more outside of online’
The third edition of IAA’s annual ‘Retrospect and Prospects’ was hosted in Mumbai on 23 February 2016.
 
Speakers included Anupriya Acharya, group CEO, ZenithOptimedia; Shashi Sinha, CEO, IPG Mediabrands; and Vikram Sakhuja, group CEO, Madison Media.
 
After each speaker took the audience through their agencies’ projections on advertising spends for 2016 in India, a panel discussion followed, moderated by Ashok Venkatramani, chief executive officer, ABP News.
 
Achche din?
 
The first question of the evening was posed to Acharya. Referring to ZO’s predictions as ‘less optimistic’, the moderator asked whether the agency’s growth projection of 13 per cent (lower than the other two) was a reflection of the end of the honeymoon period, or ‘Achhe din’.
 
Acharya responded, “We don’t pay too much attention to other forecasts. Overall, we’re an optimistic report. ZO always believes in cautious predictions. We update our reports every quarter and rarely need to revise our reports downwards.  We are fairly confident with our forecast.”
 
The next point of discussion was about online video, and why the ZO projection did not seem bullish about the category. Acharya reasoned, “Some part of video gets classified as social media because of them being viewed on Facebook and Twitter. Also, data pricing isn’t getting cheaper and lots of people are still on 2G.”
 
Venkatramani brought up numbers from GroupM’s report and compared some of them to Madison’s projections. He posed the question to Sakhuja about how Madison’s growth projections (percentage) for print, radio and OOH were almost double those of GroupM.
 
Sakhuja said, “I stand by these numbers. With new editions coming in, it’ll happen. I’m bullish about print.” He noted that categories like FMCG were using print.
 
Acharya added, “I agree with Vikram about being bullish about print. English titles which were plateauing are on steroids currently.”
 
The next question posed to Sakhuja was on digital and how within it, there are no sub-categories for mobile, videos etc.
 
He said, “I would love to classify digital differently. We can dissect search but the rest doesn’t break (down). We need an Adex mechanism for it. Somebody needs to do it. Maybe the IAMAI can.”
 
The moderator got Sinha into the discussion. IPG Mediabrands’ report predicts digital to grow at 67 per cent this year.
 
Sinha explained, “Globally Adex is normally twice of the GDP of a country. In India, the GDP is seven per cent, but we’re projecting it to grow higher than that.” He explained that in the case of digital, how one defines what constitutes as advertising within digital could be different, leading to different projections.
 
Venkatramani brought up the government’s decision to ban ‘Free Basics’ and asked Sinha if it was a boon or bane. Sinha said that while he thought banning it was a boon personally, as the head of IPG he was still unsure and that the ‘jury was out’.
 
Will yield increase?
 
The moderator posed a question to the panel on inflation. From all the numbers published, Venkatramani asked panelists to reflect on media inflation and value increase.
 
Sakhuja went first. He said, “We don’t have our inflation numbers ready yet. The very simple way of looking at inflation is that you take a medium. Let’s take TV. There’s a supply, there’s a demand. There’s a supply of ratings and then there’s a demand in terms of ad spends – the difference of which is inflation. The interesting part lies in how exactly the inventory is going to break up. Let’s take cricket for example. If that goes up, pricing goes up on the back of one expensive property. People who are not on cricket, they don’t have to have the same inflation. What’s going to be interesting in 2016 in particular because of the BARC transition is that we won’t have a very good base year in terms of CPRPs or CPTs. So you’ll be using effective rate. So inflation might even come down depending on the inventory that goes up and yield coming down.”
 
Sinha voiced a different opinion on the subject. He reasoned that inflation would account for two-thirds of the spend increase, and said, “So, that 15 per cent growth on television, probably 10 per cent will be because of inflation because whether you like it or not there is measurement which is showing the numbers being high. Rural will be measured too. Above all there are new clients coming in. So supply and demand is there. There are more consumers coming in. There are more numbers coming into television.”
 
“In print, I think the inflation will be less. There will be a lot of small regional advertisers coming in, so inflation will be less. The growth of around eight per cent – only 25 to 30 per cent will be because of inflation, the rest will be because of volumes. The country is going to grow, and it won’t grow because of the top 100 advertisers but because of the SMEs. So these SMEs will come to print and if they’re smart they’ll come to digital straight,” he added.
 
Acharya said, “I agree there will be inflation. It’s essentially across all media. It’s a function of demand and supply. Macroeconomic factors like India being an investment destination, high urban consumption... In rural, if the monsoon is good, we should be fine. We saw high inflation last year too when a lot of money was pumped in suddenly. Especially in the peak season. Yes, inventory is increasing as well, and that will check inflation. But it’s not growing at the same rates as the demand in the market, so some inflation is bound to happen. We are seeing an increase in inventory on television with new channel launches. But the fact is that eventually it’s limited. The demand side is supposedly higher if we look at individual sectors.”
 
The digital wave
 
The moderator then asked the panel whether traditional media houses should start building and understanding audience profiles, something digital platforms allow.
 
Sinha said, “A lot of print guys have invested in digital. They’re not leveraging the medium to the full potential yet, but they’re investing. This year, will be a landmark year. We are getting into digital measurement for print with ABC. BARC will get into cross TV measurement with TV and digital homes. Whether that happens in the last quarter of 2016 or the first of 2017 is a matter of detail.”
 
Venkatramani questioned Sakhuja about the spurt of ad spends by e-commerce players. Was this a flash in the pan like the elections that happens once in five years, he asked.
 
Sakhuja said, “I think, we should be cautious about this. With all the e-commerce startups, spending will continue. The clients we have in that space are very cautious about how the money will be spent. There’s no burn rate when it comes to advertising. The caution is only to the effect that how you can make it effective. The more and more you invest, and start asking what did that do for the brand – I think those kind of conversations need to start coming up and then you can defend your investments. Add to that, I don’t think any one medium needs to feel insecure that suddenly the gates are opening to digital. It’ll always be a balanced ecosystem. The biggest of online players are still spending more outside of online (on print and TV).”  
Source:
Campaign India

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