Will H2 see return of the AdEx?

After a dull first half of the year that was riddled with challenges on various fronts, the advertising and marketing industry is now looking at the second half with renewed hope and determination. One of the primary reasons for this optimism is the upcoming festive season, which traditionally has seen a surge in consumer spending and marketing activities. The festive season has always been a crucial period for businesses as it is a time for heightened consumer enthusiasm and a willingness to loosen purse strings.

Adding to the industry's anticipation and excitement are two major cricketing events coinciding with the festive season – the Asia Cup and the ICC Men's Cricket World Cup. However, looking at the soft market conditions and the Indian Premier League’s lower-than-expected performance, the broadcaster has opted for a reasonable 20-30 per cent hike from the last tournament. The industry is nevertheless hopeful that the broadcasting sector will see estimated ad spends of Rs 2000-3000 crore in this period. 

The festive season's celebratory atmosphere along with the excitement of the big-ticket cricketing events have given the industry reason to hope that this synergy will significantly lift the struggling AdEx. Brands will hopefully allocate larger budgets towards advertising during this period to capitalize on the potential uptick in consumer demand and engagement. Sources claim the industry should be able to see an upswing of 30-40% during this period.

Right after the festivals will be the excitement and buzz of the election season, with polls set to take place in five states, followed by the Lok Sabha elections in early 2024. According to experts, this is expected to inject a positive impetus into the market and help sustain its momentum. The five states of Rajasthan, Madhya Pradesh, Chhattisgarh, Telangana and Mizoram are due for elections by the end of this year. The state elections should give a major boost to regional and local media with an estimated Rs 50 crore to Rs 100 crore expected to be spent on advertising and publicity.

In the recent Karnataka elections, BJP alone is believed to have spent Rs 50 crore. As per the state’s Department of Information and Public Relations, BJP spent Rs 27.46 crore on print media and Rs 16.96 crore on electronic media advertisements to promote the party’s initiatives and to counter campaigns by opposition parties, namely the Bharat Jodo Yatra and Mekedatu March. Congress won the polls, and is believed to have spent Rs 25-30 crore by way of ad spends.

Talking of Lok Sabha polls, in 2019, the estimated advertising spends touched Rs 2,500-3,000 crore. According to some estimates, this figure could have gone up to Rs 4,000 crore. With 20-30% inflation, the number is expected to touch Rs 5000-6000 crore in 2024. Experts believe that the spends this time will certainly be higher because media costs have gone up. Also, this time, it is expected that the media used will be different with digital and mobile playing a bigger role. And, of course, Outdoor, Print and Radio have always been key mediums for elections because these are localized mediums.

This period will serve as a much-needed redemption for businesses that have faced difficulties earlier in the year. As economic conditions improve and uncertainties subside, marketers will become more confident in their decision-making. Moreover, the electoral activities combined with the festive season, cricketing events and an improving economic outlook, will help the industry regain its footing and set the stage for a more prosperous and rewarding second half.

There is an expectation that AdEx will experience a notable uplift and the industry will see close to 16 per cent growth, as predicted by the Pitch Madison Advertising Report (PMAR).

2023 has, so far, been a challenging period for the advertising and marketing industry with few moments of respite. Despite the brief upswing experienced in April and May due to IPL boosting the market, the subsequent months have been marked by sluggishness, witnessing a significant decline of an average 15 to 20 per cent in advertising expenditure.

IPL managed to temporarily invigorate the industry, drawing in audiences and generating increased marketing but failed to match the previous year’s revenue numbers (estimated to be around Rs 3500 crore). It is believed to have closed on a significant drop (Rs 2500 crore). This, however, has been comparatively the most active period for the ad industry in 2023 so far. The market experienced the same sluggishness in June and July too.

A combination of factors has contributed to the downturn, leaving experts to speculate on the root causes behind this downturn. One of the primary reasons, cited by numerous experts, has been the drying up of venture capital (VC) funds. The BYJUs, Creds and Swiggys of the world dropped their advertising spends drastically affecting the overall AdEx.

The industry has also been impacted by the broader global economic slowdown. International uncertainties, trade tensions, and geopolitical concerns have collectively exerted pressure on businesses worldwide, leading to cautious spending and budget constraints in advertising and marketing endeavours.

The early arrival of an unpredictable monsoon in the northern part of the country also had a profound and adverse impact on the summer category this season. The monsoon's untimely onset has disrupted the usual patterns of consumer behaviour and consumption, leading to significant challenges for sectors like summer beverages, air conditioners and ice cream.

Now as we transition into the second half of the year, our optimism has grown stronger and we are hoping that these challenges will be a thing of the past. The goal is to conclude the year on a positive and joyous note, looking forward to better times ahead.