Desire Downs Shutters

In the US, ad losses in the week that followed the attacks were reported to be to the tune of $320 million. Even aol Time Warner, the world's biggest media company that prides itself on relative independence (24 per cent of revenues) from advertising, announced last week that it would badly miss its financial goals for the year.

Some ad agencies, however, strike a positive note and say that a number of big advertisers who've been quiet through this year will now come out of the closet since the stakes still are quite high for this season. Says Naveen Khemka, media manager, Mudra: "There may be a pruning down of about 10-15 per cent, but no one can afford to miss out on the opportunities that this season offers. There is a huge number of people who only buy during this time of the year." Sai Nagesh, VP, Contract Advertising, sees no reason for panic and claims no drop in spends among his clients. But a senior manager says that even if the top 10 agencies are not reeling, they are definitely preparing for a scorching time. The smaller ones working on low margins of 1-2 per cent are already hurting badly.

On the contrary, big corporates continue to project that everything is hunky-dory. A Procter & Gamble spokesperson says that they are already planning on aggressive marketing this year, including product upgrades and value equation corrections in most product categories which led to an increase in ad budgets. p&g perceives no significant changes in the buying patterns of its target group. Coca-Cola's Irfan Khan echoes these sentiments. He assures you that "there is no change in consumption." The company is going ahead with its plan to launch a new energy drink in October. But some analysts say that though fmcg companies will hurt less than consumer durable companies, they cannot escape the downslide. Says H.K. Press, president, Godrej Consumer Products: "The consumers now are largely influenced by deals and offers and not the brands. They are also upstocking if the offer is good." He hopes for a good monsoon to tide over the crisis.

The only sector which seems to have escaped the carnage is the insurance sector. Trying to leverage the general sentiment of personal vulnerability, it upped its advertising budgets immediately after the attacks. Also, newsmagazines have reported dramatically higher circulations, and news channels are touting bigger viewerships. Before September 11, the latter commanded just 2 per cent of total TV viewership; but since then, for six days running, this stood at 10 per cent. The ad-secondage growth also went up by 30 to 100 per cent on these channels (this in spite of the fact that cnn and bbc refused ads during the first couple of days and increased news content).

However, there's no denying that newspapers are sporting far less number of ads in their pages today. Says an advertising executive: "You can now get a slot on the front page of a national daily at two days notice. This was unthinkable, say, two years ago." TV may, in fact, be slightly better off. Explains a media manager: "On TV, the time slots for the season are almost committed for, because you have to book 13 to 26 weeks in advance for sponsorships and campaigns." Advertising agencies feel that TV channels may not see a drop in the volumes, but will, at the same time, have to lower their ad rates thanks to the recent tam and intam scandal. Paradoxically, newspapers are hoping that their advertisement revenues can in turn be upped by the TV channels which have been using print campaigns to drive ratings. This market alone is valued at Rs 100 crore.

Vij feels that whenever there is a slowdown, the print media is affected more because its variable costs are much higher compared to television. "Time may be precious but paper costs money," he points out. Advertising spending in India is still in its infancy, with ad spends being just 0.4 per cent of the gdp up from 0.24 per cent in 1991. In the US, it stands at 1.28 per cent of the gdp. Even the ratio of advertising spends to sales is low.In personal care, for example, it is just 4.6 per cent.

The industry sees strong medium-term growth prospects in the emergence of new sectors like healthcare, retail and insurance. But right now, as they enter the last lap of this annum, it is a do or die effort to up bottom lines. What can bring about positive change is the hope that there will be no full-scale war and matters will settle down in about three to four months. Even then, predicts Nagesh, stability will not return before 2002-end. As for now, there are no prospects of a quick and Enduring Freedom for the advertising industry.

Charubala Annuncio and Gauri Bhatia