Lynn, Ravi, Sam, Shashi, Vikram on the economic downturn: Part 2

In the first part of the story, we questioned five media agency stalwarts – Lynn de Souza, Ravi Kiran, Sam Balsara, Shashi Sinha and Vikram Sakhuja – on what categories will be worst hit by the economic slowdown, and how various media vehicles and their ad rates will be affected. Here, we deal with aspects such as media inflation, changes in media spends by advertisers and a shift in media habits by them, if at all. Read on …

Q. What will media inflation look like in each of the media mentioned?

Sam Balsara: There will be inflation despite lower demand because of higher input costs. I think the inflationary trend will continue, but it will be under check… like earlier, if it was going up by 20 per cent, now it will go up only by 5 per cent, hypothetically speaking.

Shashi Sinha: I don’t think there will be inflation because there is no recession right now. Two consecutive quarters of decline in real GDP is commonly taken to be a recession, and we haven’t faced that yet, thankfully. But if things continue the way they are, then it will be bad news for everyone in a few months from now.

Q. Could you compare the media spend growth in 2007-08, 2008-09 and predict the scenario in 2009-10?

Ravi Kiran: Our sister company ZenithOptimedia projects 2009 spends growth to be around 12 per cent against 16 per cent in 2007 and about 10 per cent in 2008. These projections are regularly monitored and revised. We must understand that in these uncertain times, predictions need to be laced with caution.

Sam Balsara: In 2007, it was 22 per cent, in 2008, it was 20 per cent.

Shashi Sinha: It’s very difficult to make a prediction. The growth in 2008-09 over 2007-08 will not be more than 10 per cent, as the last quarter will be affected by all this. It was about 14-15 per cent in 2007 compared to 2006. I cannot predict for the future. I can only say that if what happened in the US happens here, it will be hell.

Vikram Sakhuja: We go by the calendar year. In 2007, it grew 21 per cent. We had predicted 2008 growth at 20 per cent but have now scaled that down to 15 per cent.

Q. How does April-September 2008-09 compare with April-September of 2007-08?

Lynn de Souza: It has not gone up so far.

Sam Balsara: By and large, there has been robust growth in April-Sepember 2008. But the post-festival season is going to be critical.

Q. Will there be any shift in ad spends towards BTL and promotions?

Lynn de Souza: Actually BTL and promotions are expensive media on a cost-per-contact basis. I think money will flow back to TV, print, radio and internet - all in-home media - next year.

Ravi Kiran: BTL, experiential marketing and promotions will grow, as customer retention becomes a priority for many marketers.

Sam Balsara: Yes, one can expect a slightly greater emphasis on BTL and promotions. BTL is closer to the last point of sale, so more advertisers anxious to complete the sale would give higher weightage to push media (BTL) rather than pull advertising.

Shashi Sinha: I don’t think any such drastic shift will happen. Companies which need to advertise will maintain their ratio with various media. They will still advertise on TV - maybe a theme spot will be replaced by a promotional spot. India is such a huge country - we simply cannot do without mass media. And that won’t change anytime soon.

Vikram Sakhuja: People will look for plans that grow revenues. They will also look to manage outlays. I see some caution being exercised in high-outlay buys and some ‘top-up’ buys that may be seen as superfluous. Hard-working spots that get reach efficiently will be looked for.