A street corner view: advertising market in India

An industry quagmire?

India is experiencing a significant slowdown in ad spend. In some ways it mirrors the global slowdown. In others it is uniquely Indian and in large parts self-inflicted and an outcome of the way the industry grew up. All forms of media are deeply impacted - TV, print, out-of-home, radio, web, mobile - you name it. The information below is culled from conversations with multiple senior execs over the past few days. [Caveat emptor: I leave it to the reader to corroborate my findings, if basing any deep business decision around the numbers used below]. Accustomed to calling out gloom and doom on other sectors, it would take a lot of guts and integrity for the media to own up to the gravity of the slow down in their own backyard. If you find good sources, do leave a link.

Displaying house ads or having 40-80% idle inventory is now commonplace. Advertisers are having a field day - that is if they have any budget available to spend. Those that do, are able to drive ad-buys down to unprecedented low levels. Airtel seems to be the largest advertiser by far, followed by CPG firms. Here's a quick rundown.


TV
Given India's insatiable appetite for music, videos and movies, TV saw an explosion of channels vying for the billion+ eyeballs these past few years. Tens of news, music, sports, talk, food, religious, ethnic, regional, etc. channels emerged as the cost of licensing became inexpensive. Aggregated 10 second slots on the most regarded and watched national channels are down to Rs. 2,000 ($40)! How can any of these channels maintain their top line is beyond my comprehension. Add to this low price, unfilled inventory, and you have a disaster in the making ... or perhaps a much needed consolidation.


Print
You don't need an analyst to issue a white paper. Walk with me to a street corner and pick up any broadsheet newspaper - Times of India, Hindustan Times, DNA, Mint, Dainik Bhaskar (which, BTW now, has the largest circulation), Navbharat Times, even Economic Times - and flip through the pages. Count the number of ads, and if, you happen to have a copy of the same newspaper lying around from the early part of 2008, you can compare yourself. The first thing you notice is how thin "today's paper" is and the clutter much reduced. Then you notice that very few national brands have ad inserts. Finally, most ads are call-to-action ads with little to no branding ads. Here's what I heard through the grapevine - a full back page ad for India wide circulation reaching over 20 cities and 20 million readers, with a 4:1 reader-to-sub ratio, can be had for Rs. 50 lakhs ($100k). Chump change for the buyer used to paying over a quarter million dollars during the go-go days and having to wait for weeks before getting a slot.


Radio
Most ad-creation is/was happening for TV, and being retargeted with a few hacks for Radio, leaving a lot to be desired on quality. Listening time is relegated to cars largely, and one can just feel the low number of ads one is listening to. This is a double whammy for the broadcaster. They have fewer ads and therefore more licensed content they need to play. They can, of course, repeat programs provided they own the original content. Sadly however, there is very little original content. One saving grace seems to be the proliferation of FM radios on mobile phones. This does increase the reach, and gets more "eyeballs."


Out-of-Home
I mentioned this in my previous post. India is a country littered - yes littered - with billboards. Now as you drive by, you will notice that even in large metros such as Delhi, Mumbai (pic) and Bangalore, 2 out 5 billboards are vacant. The stark reality hits you particularly hard on the Bangalore Airport Highway. On this 40km stretch of prime ad real estate, only 1 out of 8 billboards had the good fortune of hosting an advertiser. This industry is considered the armpit of advertising in India because of the fragementation of property owners and free-for-all fraudulent tactics that are pervasive. In the current economic climate, only the very high trafficed areas are getting any activity.


New Media
Web, mobile and the nascent digital out-of-home market are hurting in their own way. India has roughly 15 million users on the web (only 5 million on the 256kbps+ lines that pass as broadband). The sad irony here is that new media lends itself to auditable performance measurements. There is no place for the publisher to hide compared to blind (CPM or circulation based) nature of radio, TV or print ads. Advertisers can, and do ask the hard questions and are rarely getting desired results. SMS ads do reach many tens of millions of users and seem to be holding up advertiser interest.


Musings & observations
The depth of the slowdown is making the wheels move viz. consolidation. Print publishers are eyeing TV properties and radio stations; media agencies are merging; campaigns integrated across multiple media are surfacing. All this is a positive for the long run (for the survivors, at least). Creative deals are begin crafted. Not fast enough, but the name of the game is changing to regional and demographic targeting. Creative deals are surfacing. Here is an example that captures the unique character of India's dhandha (deal making) mindset to close out this post.

A regional broadsheet publisher is working on a strict percentage of increased revenue in a targeted market. Advertiser says - "I sell Rs. 1 cr of soap in this town every month. You do whatever print advertising you want to; give me whatever real-estate you are inclined to; whatever frequency Mr. Publisher. You keep x% of any incremental revenue I get out of this market." No minimums; no guarantees; no agencies - just the basics with a brutal set of metrics.