Demonetisation and The Ad Dollar

Marketers are optimistic, but cautious.

A lot has been said and written about the impact of demonetisation on the advertising-media-marketing world. afaqs! spoke to a few experts in the industry and here's what they had to say about the matter.

"Slashing (of marketing spends) is the wrong term; the correct one is deferring," says Mayank Shah, category head, Parle Products, who believes this is applicable across the FMCG sector. The consumer discretionary product segment has seen a 20-30 per cent dip in sales whereas, the dip in consumer essentials is around 15 per cent, as per Shah's assessment.

"This is happening due to the lack of cash flow in the economy. Retailers sell in cash and pay the distributors in the same form. Lack of cash flow has disrupted both," he says.

Parle, we learn, has halted all advertising spends for now and will decide the plan ahead after evaluating the scenario this month. "If the government pumps in more cash and circulation becomes normal, things on the advertising front will also become normal again. But if the government decides to take the cashless transaction route, then the scenario will be different, as making people transact electronically as a habit, will take time," Parle's Shah says, adding that this is not a good time to launch new products, unless it's an electronic payment product.

"We did not have any new launches scheduled during this time. Even if we did, we would have definitely postponed our launches. It is not an opportune time for the FMCG sector to introduce new products into the market. Before November 8, 2016, only one per cent of retailers in India had the infrastructure to support online transactions..." he says.

Shah predicts that the total impact of demonetisation on ad spends will fall within the Rs 700-1,000 crore bracket.

Ashish Sehgal, chief operating officer, Zee Unimedia, however, feels, "It is too early to estimate and put an amount. On television, the FMCG category had put a halt in its advertising for a brief period but December 15 onwards we had a series of campaigns."

Titan went ahead and launched its new safety watch Sonata ACT soon after the demonetisation drama unfolded. To Suparna Mitra, chief marketing officer, Titan Watches & Accessories, demonetisation wasn't a big deterrent.

"Of course a temporary impact of demonetisation, but for us it was not something that could force us to postpone our launch and communication of this product. We decided this was the right time to do it and so we went ahead and did it," she says.

Sumeet Narang, vice-president, marketing (Motorcycles) Bajaj Auto, says, "We did not change our marketing plans at all. In fact, we announced the launch of a new variant under the V portfolio, launched an upgraded version of Pulsar and on December 15, we rolled out our biggest launch 'Dominar', a 400 cc bike. So demonetisation has not impacted our launches or media planning at all."

Narang explains why not, with, "We are not a category where a consumer reacts immediately after seeing an ad. For us, it's always about long term investments. We found no reason to stop or slash our marketing efforts."

Broadcasters too, did not stop launching new shows despite the broadcast business being heavily dependent on advertising revenue. "Liquidity is an issue but it's a temporary one and we all know everything will fall into place with time. Shows are on-the-floor always, new shows are discussed (such as Indian Idol, a big budget show). We are going as per our plans and demonetisation has not forced us to make any changes," says NP Singh, chief executive officer, Sony Pictures Networks.

Some media reports alluded to brands increasing marketing spends due to demonetisation. Our buying experts find this counter-intuitive. "I don't think there is any category which has decided to spend more in this period then their actual media plans," says Nandini Dias, chief executive officer, Lodestar UM India.

Dias has noticed a sense of cautiousness in the market. "People," she says, "are thinking there could be new guidelines or 'diktats' announced this month. As per BARC India data (December 13, 2016) there is a 15 per cent decline in television advertising. There are few sectors starting to coming back. FMCG and auto are among them," she says.