Festive season set to bring in 20-30% of the years’ ad spends

The first unrestricted festive season post-Covid19 may witness a cloud of gloom due to the concerns of inflation.

After losing two festive seasons to Covid19 and its related restrictions, India will once again be freely celebrating its festivals this year. And celebrations in India are incomplete without the splurging involved, whether it be for food, clothes, decor or outings. It is this period that the advertising industry is optimistically waiting for. Especially this year, when it almost feels like it is back to the pre-pandemic normal. The season is expected to bring in at least 20-30% of the year’s ad spends.

Starting from Raksha Bandhan in August to Diwali in October, Indians have a long list of festivals to celebrate. After a short, but dull monsoon, this season brings much-needed cheer to the ad industry.

Krishnarao Buddha, senior category head, Parle Products, says the industry is extremely optimistic this season and there is an overall positive sentiment.

“The last two years the festive season was shadowed with a lot of challenges. Unlike that this festive season will be far more exuberant and exciting. There is likely to be a lot of splurging. Consumers have also got accustomed to online ordering, so now there’s a mix of both- offline and online. Advertisers are quite enthusiastic to spend because they are expecting a lot more returns during this time,” he says.

Prachi Bali, national head, client partnerships, FoxyMoron, says with everything being open to its full potential this season, brands have recognised the need to be spending more. “However, this increased spending is being executed with a pinch of conservatism where the focus is on the ‘must haves’ and not the ‘good to have’,” she says.

FMCG, e-commerce, lifestyle and home improvement categories are expected to be the key spenders during this time. Kavita Sagar, head - revenue (broadcast), IN10 Media Network, which has five linear channels - EPIC, ShowBox, Filamchi Bhojpuri, Gubbare, and Ishara- under its umbrella, expects the ed-tech category also to be a potential area of growth.

“These categories are not only increasing their spends during this time, but are also aiming for deeper penetration. They are going beyond the metros, to reach tier 2 and tier 3 cities, with higher levels of engagement,” she says. “Gaming also could have been a rising category. But now with so much ambiguity around its advertising, it is a grey area.”

Bali expects the DTC sector and online selling to see an upswing. “May it be FMCG, beauty, technology, apparels or e-commerce, all these segments will serve as big spenders,” she adds.

The ICC Men’s T20 World Cup, which is scheduled in October, is set to give a greater impetus to the festive season.

Moreover, the ad spends have got a boost with schools and colleges reopening this academic year after a two-year hiatus.

“There is automatically a lot of out of home spending. On the way to school or back home school children tend to use their pocket money to buy goodies. This propels consumption, especially on impulsive categories,” adds Rao.

Mihir Palan, VP- media, Kinnect, expects more than 60% of the annual ad spend from this festive season.

"The global economic crisis may pressurise brands in India to operate cautiously and the chip shortage may directly impact the auto and consumer electronic industry. However, the opening up of domestic and international travel and increased savings of NCCS A households over the last two years will boost the spends," he says.

However, amidst the festive cheer there is also the darkening gloom of inflation. Retail inflation in April touched an eight-year high of 7.79 per cent. It came down to 7.04 per cent in May and further inched down to 7.01 per cent in June. Reports suggest that this has led urban consumers to reduce their spending on apparel, fuel and eating out.

Nevertheless, Rao says Parle has cut down on its ad spends. “The prices of ingredient inputs like edible oil are going down. The inflation is cooling down now. Most advertisers are choosing to spend and focus on brand building,” he says.

Sagar is also optimistic that the inflation will not dampen the advertisers’ spirits. She says that the network will focus on providing value optimisation and maximisation to them.

“With consumers having a wide offering to choose from, it is important for brands to have a top of the mind recall. So the reality is that advertising is needed. The question is the value the brands receive. So we have to add the incremental value to offset the inflation. During the festive season they will need advertising. How we offer value proposition will have a big role to play in building revenue,” she adds.

Palan says some brands or categories may curtail their overall advertising, but even in that case, their absolute investment levels in digital may remain the same.

"Several research studies have observed that if brands continue to invest in advertising during declining economic conditions, they tend to gain market share in the long run. Instead of curtailing ad spending, brands should continue further optimising their media mix and bring in more robust measurement solutions to justify every dollar that they spend, and if you think of the solution, digital becomes the apparent answer over traditional forms of non-targeted advertising," he adds.

However, Bali believes that inflation will see everyone modulating spends. “But it will most impact the big spenders in terms of curtailment,” she says.