Aishwarya Ramesh
Points of View

Will the third COVID wave affect ad spends as compared to last year?

We take a look at the difference in ad spends between the second and third COVID waves through the eyes of three media experts.

The third COVID wave is in full force in India. For many, this comes with a heavy sense of déjà vu. People everywhere find themselves with a cold, fever and other symptoms of common cold as well as that of COVID’s new Omicron variant.

One thing we know for sure, is that no matter how bad things get, it won’t get as bad as the first wave. During that time – thanks to a complete lockdown, agencies were not able to shoot ads and clients lowered their ad spends in a bid to be sensitive to what people were going through. This resulted in a shortage of new ads as well as content on TV to run these ads along with.

<div class="paragraphs"><p>HealthifyMe's outdoor ads</p></div>

HealthifyMe's outdoor ads

Advertising, as far as the third wave goes, is continuing in full force. We’ve spotted multiple outdoor and TV ads, and the Internet is rife with digital ads too. This begs the question – does the arrival of the third wave affect ad spend rates as compared to the first wave?

<div class="paragraphs"><p>Outdoor ads for Swiggy Instamart in Bandra, Mumbai</p></div>

Outdoor ads for Swiggy Instamart in Bandra, Mumbai

We spoke to three media experts to analyse the difference in ad spends between the second and third waves.

Dr Kushal Sanghvi, head, India and South East Asia, CitrusAd (a retail adtech platform)

We’ve had a lot of conversations with global professionals over the last few weeks on this topic, and I keep hearing this question from other people as well. The US and UK had been worse off in the last 15-20 days, in terms of the number of cases, infection rates, and so on.

"It’s not going to affect marketing spends."
Kushal Sanghvi

I don’t think India is any different from other parts of the world, but COVID is here to stay. Ten months from now, we’ll probably be in a different situation with another COVID variant. We’re going to keep grappling with it and find ways to stay safe. It’s going to almost become a way of life and we’ve now come to terms with it.

Therefore, it’s not going to affect marketing spends. Typically, H1 of the year is when the ad spends go up as well. I think that this trend is going to continue this year as well, despite the third wave.

If there’s a segment that may get affected, it’s the out of home (OOH) advertising segment. This space was doing okay since August 2020, but malls and other such spaces may see a dip in spending due to the third wave.

"Most other forms of advertising, such as on television and digital, will continue as it did last year."
Kushal Sanghvi

Most other forms of advertising, such as on television and digital, will continue as it did last year. Every industry’s advertising has been growing at a steady rate of 8-12 per cent year on year, and digital advertising continues to grow at a rapid pace too.

<div class="paragraphs"><p>Kushal Sanghvi</p></div>

Kushal Sanghvi

Festivals will continue to be celebrated with the same fervour. The ad spends of brands that are associated with these festivals – for example, paint brands, home solutions, FMCG companies, will continue at a similar rate.

"This is also a good time for publishers because they’re able to get a much higher premium for their ad slots."
Kushal Sanghvi

There’s also a spate of B2C brands that have taken to advertising and, because of that, some of our clients have had to pay a hefty sum to get those ad slots. This is also a good time for publishers because they’re able to get a much higher premium for their ad slots and, therefore, the average CPC and CPM rates have actually gone up over the last one year.

The pandemic has increased ad rates, which used to be around Rs 50-60 per slot; now, it’s risen to Rs 75-100.

Sri Harsha, senior partner – client lead, OMD Mudramax

Before COVID, the last time Indian ad spends saw any negative growth, was way back in 2009, during the Lehman crisis, where it had `degrown’ by 10 per cent. If we closely analyse the current trends in Indian media spends, almost all the advertisers lost a quarter of advertising in FY 20-21 and FY 21-22 due to the two COVID waves. FY 20-21 ad spends took us back to FY 17-18 levels.

"Before COVID, the last time Indian ad spends saw any negative growth, was way back in 2009, during the Lehman crisis."
Sri Harsha

However, FY 21-22 saw lesser negative impact as compared to FY 20-21; surpassing FY 19-20 levels. Since this is the last quarter of this financial year (FY 21-22), the advertising as such is relatively low, as compared to festive or pre-festive period, as many seasonal advertisers would have exhausted their marketing budgets by now (or the end of January).

<div class="paragraphs"><p>Sri Harsha</p></div>

Sri Harsha

Given the third wave coinciding with the last quarter of FY 21-22, the impact is likely to be minuscule. The online businesses and non-seasonal advertisers will continue to advertise, businesses will see lesser negative impact, as most people across regions are fully vaccinated now. This wave is likely to witness minuscule impact on ad spends.

Sujata Dwibedy, group trading director, Amplifi, Dentsu International

It is most likely that the AdEx (advertising expenditure) won’t get impacted. Emotions, of course, will get dampened, but that shouldn’t affect advertising. The third wave should hit its peak around February and what we’ve seen in the last two years, is that the festive season is when the surge in ad spends usually happens.

While in 2020, ad spends were badly hit, 2021 turned out to be relatively better, with the numbers clocking in close to those in 2019. There were many new advertisers who advertised, some existing categories came back aggressively and grew organically. Many D2C advertisers surfaced. Sentiments were up and there was a positive momentum.

Sujata Dwibedy
Sujata Dwibedy
"Despite the pandemic, I don’t think the ad spends will plummet in 2022."
Sujata Dwibedy

This was also because more people received the vaccine, and were more aware about COVID-appropriate behaviours. Now, in 2022, teenagers are also getting vaccinated, and booster doses are on. So, it seems like the impact of the pandemic is going to be much lesser this year. Hence, despite the pandemic, I don’t think the ad spends will plummet in 2022.

"New advertisers came up from categories like cryptocurrency, fintech, edtech, e-commerce, gaming, pushing AdEx to grow."
Sujata Dwibedy

Finding ad slots won’t be difficult – it may just be business as usual. In fact, it could be the opposite because what we’ve seen in the past is that traditional advertisers were more careful and lowered their ad spends. But many new advertisers came up from newer emerging categories like cryptocurrency, fintech, edtech, e-commerce, gaming, etc. The demand from these clients has pushed the AdEx to grow.

In fact, during the 2021 festive season, it was difficult to get ad slots on mainline TV channels. It was also difficult to find inventory on desired platforms/slots on digital. So overall, it doesn’t look like the AdEx will get that impacted in 2022.

(Hero image by 'Negative Space' from Pexels)

Need a social media marketing agency for your project? Choose among 82 such agencies on afaqs! Marketplace now. Click here