What to expect in the advertising business in the next three months

The COVID-19 outbreak and the ensuing lockdown has paused almost all business activity. Its important to understand the present and plan for the immediate future.

The outbreak of COVID-19 has led to a temporary countrywide lockdown which has paused business in various sectors, including the advertising industry. There will be a significant impact to advertising due to this situation and there would be at best selective messaging in selective media.

The immediate casualty is IPL (cricket tournament) as there seems to a remote chance it will happen on schedule. It is a fact that in the first quarter, 28 per cent of annual budgets (approx.) are spent for all summer season brands. Also, the first quarter is when clients are fresh with their annual budgets and strategy for the year and are keen to begin on a strong note. However, this time it is different as most will be cautious. It will be some time before the factories, dealers reopen and business demand slowly returns. One can safely assume that this will not happen before the July-Sept quarter. Hence, the first quarter will see a dip in advertising expenditure of over Rs 10,000 crores across all media.

News channels, regional entertainment channels, movie channels on TV, Print dailies and some Digital is what will attract the advertising that will happen in the next three months. Outdoor, events, research, specialist offerings will be hit badly. Most messaging will be in context of COVID 19 or informative. Brand building, corporate advertising will happen selectively in some categories.

Cashflows and demand are hit hence advertising budgets are likely to be cut across the board. Some categories like travel, airlines, hotels, automobile & related sectors, real estate & allied sectors, consumer durables, furniture, retail (non-food consumables) are going to be hit the most. BFSI will be defensive and cautious.

Organizations are going to focus on cashflows and cost cutting, with talent cost and advertising comprising a significant portion of their costs. So, the sentiment normalisation will be the biggest challenge once things settle down on the virus front.

On the positive side, we could see advertising from the government, ministries and certain PSU’s as there will be a need for information dissemination and it could also be a good opportunity for PR and digital.

I would expect advertising to start picking up September onward. If things return to normal in the next three months, we could see a high level of advertising investment in the Oct-Mar period with Diwali, WC T20 and Budget being the big events.

This too shall pass and we will emerge a stronger, cleaner nation. It is my inherent belief.

(The author is president of R K Swamy Media group.)