Social Samosa gets in conversation with Anand Bhadkamkar, CEO, Dentsu Aegis Network India understanding his stance on the AdSpends 2020 in light of the economic slowdown and upcoming marquee events.
Bhadkamkar shares that while 2019 commenced on a high note, it was impacted by the economic slowdown resulting in lesser growth than expected. While digital managed to hold the momentum, print grew the least and is expected to stay stagnant in 2020. Anand Bhadkamkar shares trends and statistics he foresees in terms of AdSpends 2020.
2019 was an interesting year with a number of major events (leagues, elections, et al) creating opportunities for the A & M industry. How was the year in terms of spends, creativity, and innovation?
It was a mixed bag, 2019 started off with a lot of promises. We had elections, Cricket World Cup, IPL and a very strong government came back in power. Anticipation at that point was for the economy to bloom. We were expecting a growth of 12% -13% in terms of ad spends, but the economy dipped, and that trend continued till the year-end. It affected the overall AdEx because several industries were impacted – automobile, real estate and BFSI (banking & financial issues that came up during the year) to name a few.
The consumer sentiments also went down after the second quarter. The festive season was expected to pick-up growth but unfortunately, it did not. It is not like we went backward, but we did not witness the growth we anticipated. At the same time, the reduced budgets for advertising spends due to the market conditions helped the clients and agencies focus on becoming more innovative in their approach, with more personalized, purpose-driven advertising and innovative creative ideas. As a result, we did witness several award-winning creative works, produced across the network during the year, which further won accolades internationally.
In AdSpends 2020 too, the first quarter seems to be in the same mood. The recovery is expected to start in the second quarter.
That actually brings me to my second question – what are the trends you foresee for AdSpends 2020? Do we see BFSI brands picking up pace in JFM?
E-commerce in the last year did quite well on advertising spends, which is also because of the shift in consumer spending patterns. FMCG brands are continuing to advertise.
First-quarter being the most critical for BFSI, it is expected to have higher spends, which is the case every year in this quarter, considering it is the financial year-end. Like we saw last year, ads spends are shifting towards more targeted programmatic ads, hyperlocal advertising, digital OOH, location-based marketing, and more performance-driven marketing as opposed to large formats such as Television, Print, and OOH. Digital is getting more traction and a larger share of the pie out of the spends for these mediums.
Clients are continuing overall marketing spends, but the mix will continue to change aggressively in the coming year.
In terms of AdSpends 2020, will this year be more promising than 2019? Please share a few trends you foresee
Television will be the largest medium with 38% – 39% of spends with a growth of 9% – 10 %, Print is likely to be at 27% but it may be near stagnant in terms of growth. Digital comes next at an expected growth of 26% – 27% and is getting closer to print rapidly on ad spend share. Then follows OOH, Radio, and Cinema in that order.
Print has been growing at a lower rate, around 3% – 4%. But that is still positive than the global markets where Print is actually de-growing. Digital is expected to lead the growth momentum in 2020 as well.
In a previous interview, Gautam Dutta of PVR told us that print is becoming irrelevant for the brand. Do you think this sentiment is echoed across the industry or sector?
Growth for Print has definitely reduced. While other mediums are expected to grow close to double-digit, Print is growing at the lower end of single digits, and this is happening globally. The same news is instantaneously available to readers on their mobile. CMOs who feel Print is getting irrelevant in their overall strategy are in a way right because consumers are going digital.
But India is a diversified market; we have a large regional reader base. IRS numbers last month also echoed this. Print still has a stronghold in certain areas.
Readership and spends are growing, but gradually, and Digital does have a large role to play in that reduction. In the next two years, there will be growth in Print, again, at a very small rate but it is not that the Print medium is witnessing negative growth. The mix of mediums depends on the needs of the brand – Print still works for mass advertising. We still see e-commerce brands occupying front pages of the newspaper before the festive period, big launches, etc.
Digital will surpass Print shortly, but the latter won’t fade away, so to say.
Speaking about digital’s growth streak, 2019 was a crucial year for digital marketing, with brands increasing spends on the platform and digital-first campaigns winning at Cannes. Do we see digital surpassing television in terms of ad spends in 2020?
Digital has already surpassed Television in several markets globally. In the end, the consumer is consuming Video content, which is becoming platform agnostic. Brands and agencies are focusing on video to reach out to consumers. So, it’s Television or Digital, but the focus of agencies is now on video planning, and this works on both, Television and Digital.
Digital spends in the long term will definitely surpass Television in India too, but it’s not in immediate feature. In Indian television, a lot of innovations are yet to take place. In Tier II, III towns Television still continues to remain strong.
Shifting the focus to Dentsu India – what’s in store for DAN in 2020? In what direction will the media group be moving forward?
From a creative & awards perspective, 2019 was definitely a good year for us with Dentsu Webchutney leading the pack. From creative excellence and product, it was a good year for the group; and there were also a few good business wins on the media side. We have had good progress over 2018. While the slowdown of the market did impact our clients too, we did achieve our growth ambitions set for the year.
Almost 50 percent of our revenue came from Digital. Our one P&L model helped us in 2019, where overall market conditions were challenging.
In 2020, the focus remains the same – we aim to grow faster than the market, focus on talent development, and also, we will keep on adding more capabilities in the business, offering solutions to client’s problems.
The previous decade saw consolidation on a large level with bigger networks acquiring niche/specialist agencies. Dentsu India was also at the forefront of this trend. Is consolidation a more profitable route going forward? What future do you foresee for Independent Agencies?
India is a uniquely positioned market. Other markets have seen lower single-digit growth or even de-growth whereas, in India, we are expecting growth of about 10% -12%. There is ample opportunity in the country for growth if you get your product and strategy right in terms of client focus and service offering. Consolidation has definitely happened across segments, which includes other industries too and it will continue, but the scope for niche and independent players will remain.
Consolidation is a way of industry. We have seen consolidation in the last year in India as well as globally across advertising networks. In DAN India as well, we have been consolidating our operations and in 2020 we will still be looking at acquisition opportunities; which is a major part of business growth strategy.
A message for brands & agencies to help them ace 2020?
-Digital Transformation: it is all-encompassing. Getting ready for digital transformation and embracing it is critical.
-MarTech: Creating consumer experience & engaging with them for which technology is an integral part.
-3Vs: Voice, Video, and Vernacular will continue to play an important role in 2020 as well.