Covid-19 takes a toll on the Indian ad industry

The Covid-19 pandemic has had severe outcomes across several industries and the ad industry is no exception. Pitch Madison's latest advertising report for 2020 forecasts that although Adex has collapsed in the first half of 2020, it is likely to rebound 60-72% in the second half.

The highlights of the report were presented on 18 August 2020 by Sam Balsara, chairman at Madison World in a webinar that had over 800 participants.

The mid-year review of the advertising report revealed that Adex contracted by 8% in Q1 and collapsed 65% in Q2. It also mentioned that Adex 2020 is expected to recede to 2017 or 2018 levels. In absolute terms, it means an unprecedented drop of almost Rs 14,000 crore from Rs 35,110 crore in the first half of 2019 to Rs 21,298 crore in 2020. Traditional media de-grew by 71% in Q2 and 15% in Q1, thus ending up with a 47% de-growth. Also, television and digital seem to be bouncing back in June and July, but other mediums such as print, cinema and OOH have not been so fortunate.

"Print de-grew by almost 80%, radio by 90% and cinema and OOH recorded virtually no billings. Digital, both in H1 '20 and Q2 '20 now accounts for as much as 30% share of Adex, versus 23% share in 2019, making it easily the second largest medium after TV. Television continued to lead the pack with a share of 38% in H1," the report stated. "TV and digital together account for 80% market share while print registered a mere 18% share. Radio came down to 1%, and OOH and cinema were virtually ‘nil’."

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

Television still continues to be the largest contributor to Adex in H1 with 38%, followed by digital at 30% and print at 25%.

Sharing his views on the report, Balsara said: “We are bullish in our forecast for H2 2020. We believe advertisers will return to Adex in full form by Q4 to take advantage of the festive season. Enlightened advertisers know that they cannot risk being off advertising for risk of losing market share, since share lost is expensive to regain.

"Media owners are well advised to be nimble and flexible with existing advertisers and spare no effort in helping local and regional brands become national brands and help hitherto unadvertised brands taste the power of advertising."

Print versus digital Adex

According to the report, digital  suffered a minor contraction of just 7% in H1, whilst all the others suffered a drop of 40% to 55%. Digital is also the only medium to grow by 16% in Q1 2020, when all others registered a double digit drop.

In Q2 2020, digital de-grew by 35%, yet it emerged as a strong medium with 30% market share second only to TV. While there was an explosive spike in video consumption, it did not translate to ad spends and video only maintained its share of 30% of digital Adex, continuing to be the largest contributor.

Social media came in next with a share of 26%. Q2 2020, saw a spike in social spends as more brands used social platforms to maintain saliency in absence of other traditional media. Display advertising took a sharp hit, whereas search maintained itself in third position. However, eCommerce advertising platforms have made their presence felt by registering  a 10% share.

Meanwhile, print Adex suffered not only because of lack of advertising money in the market, but also because of the lockdown, where newspapers could not be delivered to households in many cities in the months of April and May.

Whilst most readers could lay their hands on the e-version of their favourite titles, widely in circulation on WhatsApp, quick monetisation was difficult, the report found.

Print de-grew by as much as 79% in Q2 and 17% in Q1. Overall print de-grew by 51% in H1. "In absolute terms, in H1 '20 we estimated print Adex to be at Rs 5,237 crores of which Rs 4,020 crores came from Q1’20 itself. Q2’20 saw only a marginal Adex of approximately Rs 1,200 crores," the report mentioned.  

The report also identified categories such as FMCG, auto and education to continue to be the main cash cows, which contributed almost 45% to print Adex in H1’20 (38% in 2019). Also, publications across languages show a drop in space consumed, of more than 50% in H1’20. English and Hindi publications continue to contribute close to 60% of the total volume like in recent years.

However, the report hoped for a robust growth in the second half of 2020 owing to the positive indications signalled by TV and digital, with early signs of getting back to normalcy, aided by a slew of programmes to be launched in the coming months.

The report also found that H2 Adex will primarily depend on demand coming back in markets, which will depend on sentiment and consumers’ outlook of the immediate future, which in turn will depend on when government and private offices are allowed to open and work on a regular basis.

"Given the nature of Covid-19, it is difficult to estimate this. However, we would venture to suggest it is now reasonably certain that the full year 2020 will show de-growth. If offices open in September, in our estimate, H2 ’20 in Adex should grow by 60-72% compared to H1 ’20 and grow by 6-13% of H2 ’19, leading to an overall de-growth in Adex, ranging from -14 to -18%," it stated.