2020 AdEx may reach levels recorded 2 years back: Pitch Madison Report

Whilst it has been known that AdEx has collapsed in Q2, the drop is as high as 65% because of the impact of COVID, says the Pitch Madison Advertising Outlook H1 2020.

The report also reveals that AdEx contracted in Q1 by as much as 8%, and that the drop for traditional media was much higher. The H1 Outlook also indicates that AdEx may well recede to 2017 or 2018 levels.

For the first time, the Pitch Madison Advertising Report brought out a mid-year review, revealing that AdEx saw a dramatic decline in 2020 H1 by 39%. The report also has dismal news for traditional media, which has seen a de-growth of 47%. However the drop is significantly higher for Q2 when AdEx de-grew by 65%.

Also traditional media has shown a degrowth by as much as 71% in Q2. Television and Digital seem to be bouncing back in June and July but other mediums like Print, Cinema and Outdoor have not been so fortunate.

The report also draws parallels from last year’s cash spinning properties and events that contributed to the growth of AdEx. Last year on TV, IPL, ICC World Cup and Elections in Q2’19 contributed around Rs 3000 crore (34% to the TV AdEx in Q2’19). However, the pandemic removed both these money spinners from the April-May-June quarter this year, which has added to the decline.

In absolute terms, AdEx has de-grown from Rs 35,110 crore in H1’19 to Rs 21,298 crore in H1 2020, a drop of almost Rs 14,000 crore. Traditional media de-grew by more than 40% in H1. Digital media, the reigning driver of growth of AdEx in recent years too suffered, but got by with a mere 7% de-growth.

In AMJ 2020, TV and Digital together account for a 80% market share whilst Print registered a mere 18% share. Radio came down to 1%, and OOH and Cinema were virtually ‘nil’.

For Indian AdEx, the months of April and May were the worst ever when even TV suffered despite breaking records in viewership and time spent by audience despite a dearth of original content. Even lucrative discounts offered by many broadcasters failed to bring advertisers back and we saw more than half the usual number of advertisers disappear from Print and Radio and a quarter from TV compared to normal times, in these three months.

In terms of category growth, whilst each of them shows a drop, Telecom, Travel, Clothing, Fashion and Durables were the worst hit. FMCG predictably showed up to be most resilient and its share moved up to 38% compared to 33% it had in full year 2019.
Outlook for H2 2020: AdEx to be back with a vengeance

It is now amply clear that 2020 has been a record-setting year of sorts, with AdEx hitting new lows and unprecedented situations confronting the media and advertising fraternity. That said, the PMAR outlook for H2 2020 does show a glimmer of hope as TV and Digital seem to return to normalcy. They are expected to perform well again aided by the launch of IPL and big ticket properties such as KBC and Bigg Boss. The report however refrains from putting out a specific forecast this year on account of the fact that Radio, OOH and Cinema are still to see some semblance of normalcy.

However, it is now reasonably certain that the full year 2020 will show de-growth. If offices open in September, the report estimates that H2’20 in AdEx should grow by 60% to 72% compared to H1’20, leading to an overall de-growth in Adex, ranging from -14 to -18 %.

The report concludes by indicating that the pandemic may set the industry back three years on a more conservative note. Optimistically, if the festive season and consumer sentiment helps the industry bounce back, then the pandemic might set the M&E sector back two years.

To read the full report, click here.