The past one month has seen the rupee sinking to new lows against the dollar, industrial growth spluttering and interest rates climbing up menacingly. While the dollar dominance sent India?s marketers into a tizzy, consumers tread a world of almost anticipatory darkness. The HSBC purchasing managers? index (PMI) states that India?s manufacturing activity slipped for the first time in August 2013 since the high-decibel 2008 economic crisis as both output and business orders witnessed a significant fall. Add to this the Prime Minister?s Economic Advisory Council?s estimates that the Indian economy is expected to grow by 5.3%, and the scenario becomes bleaker. Meanwhile, consumers are increasingly cutting back on their household shopping (soaps, shampoos, skincare, packaged groceries and food items) to counter rising prices and hence, slowing economic growth.
So, does this mean that the marketer is staring at empty stores?
Not really. As Kiran Khalap, co-founder, Chlorophyll, a Mumbai-based brand and communications consultancy, puts it, ?The slowdown has not affected all categories equally. Fast moving consumer goods (FMCG) brands have not been hit as badly as, say, cars. Entertainment has not been hit as badly as, say, tourism. Tractor sales may actually see a rise due to a good monsoon. Hence, we must be careful when trying to understand the slowdown effect.?
Agrees Shashi Sinha, CEO, Lodestar Universal India, ?While ad expenditure seems static for now, it is too soon to predict whether the market will continue to remain stagnant in the future. Things will become more clear once the festive season gets into gear.?
The fact is that the consumer?s needs continue to be the same as before. But as market sentiments turn grim, consumers are not ready to spend their entire disposable income. Rather, the idea now is to save a significant portion of that money in anticipation of the ?rainy day? that seems to be getting closer and closer. ?Prioritisation is of utmost importance for people when times are difficult. So, in good times, if the consumer would spend R100 on two brands, during tough times she would in all probability spend only R50 on one of the two and save the rest in apprehension of the worst,? says KV Sridhar, chief creative officer, Leo Burnett, India subcontinent.
And when prioritisation is high, the fight is no more just between brands within categories but rather against all. While on the surface there may seem to be no competition at all between an air conditioner and a washing machine or even a holiday, the equation begins to change when the prospective buyer decides to spend his disposable income on one of the three instead of all.
Therefore, Sridhar argues, it is during times like these when a marketer should go that extra mile to get hold of the consumer and communicate to him how important his brand is for him. As Sam Balsara, chairman and managing director, Madison World, puts it, ?If you cut spends in a slowdown, you risk losing market share and it will be difficult or very expensive to gain it back.?
So, what are brands doing to make sure that consumers pull out that extra money from their wallets?
The price-communication strategy
Well, going to town about low prices surely stands to be the easiest route to lure the buyer. When the ultimate intention is to get the consumer to spend on your product, why not play around with the brand?s pricing a bit and talk loudly to the buyer about the same!
Quite a few brands are doing just that. Tanishq launched a television commercial in August this year to promote its flat 15% off scheme on all diamond jewellery. The same month, Thums Up too decided to launch a 200 ml bottle for just R10 and rolled out a promotional campaign with brand ambassador Salman Khan to advocate the thought that now R10 was just enough to pick up this ?toofani? drink.
Says Rohit Ohri, executive chairman, Dentsu India Group, ?Price innovations always help in talking to a new set of consumers and adding a new SEC (socio-economic category) to the overall brand demographic. It helps reach out to newer markets and expand the brand?s total footprint.?
Well, Ohri is right. Consider the latest commercial that telecom brand Airtel has launched to highlight its economic data-package offerings and promote its ?R1, friendship free? proposition in accessing smartphone features (e-mail, Facebook, songs and videos). Of the four television commercials created by Taproot India, one showcases an elevator attendant asking a smartly dressed young man to add him as his Facebook friend. While initially the youth does have his doubts as to how on earth a lift attendant could have access to Facebook, it becomes clear to him when the man shows his FB profile on his phone to the rich young man.
Now, it is not just economic pricing, discounts and slashed rates that marketers are using to promote their products and grab consumer attention. The ?lowest EMI (equated monthly installment) and/or at a 0% interest? theory is also heating up the brand promotional game. A few months back consumer electronics major Samsung launched a television commercial? created by Leo Burnett?to promote its smartphone Samsung Galaxy Note 2. The commercial showed a young professional talking to his colleagues in a conference room about his latest purchase for which he paid a ?zero? amount?zero down-payment, zero interest on EMIs and zero processing fee. And this is not enough. The purchase also offers him a 15% cash back on the total amount if he uses his credit card to pay the EMI. And before the executive had even finished giving the full information, he finds the room vacant as his colleagues rush to buy their own Samsung Galaxy Note 2.
Get cautious, get innovative
Experts point out that brands that choose to remain visible and accessible during a period of subdued economic sentiment benefit the most in the upswing that follows. But it is also true that as slowdown takes effect, cautious spending becomes the key mantra for one and all. Effective and measurable advertising options take centre-stage as focussed and targetted marketing becomes key to driving up sales.
Take, for instance, the latest Zee TV-Amagi tie-up. Amagi Media Labs has partnered with general entertainment channel (GEC) Zee TV to sell the channel?s air-time inventory to advertisers who want to target specific geographies.
Interestingly, this is for the first time that a national Hindi GEC has joined hands with this geo-targeted ad sales agency.
Explains Ajay Kakar, chief marketing officer, Aditya Birla Group – Financial Services, ?If I spend R10 during a boom period, I may get over-shadowed and out-shouted. But if I spend the same amount when everyone is getting cautious, then that R10 can give the brand an impact of R12 or R13. But this will only happen when one takes on a sniper?s mindset and tries to make every bullet (rupee) count.?
Let?s take the financial category as an example. It is pretty obvious that as the rupee weakness persists and the Sensex remains volatile, consumers are hesitant to invest anywhere anymore for now. But does this mean that the category should stop advertising?
?No!?, says a top marketing executive from a mutual fund group, who did not want to be named. ?You need the doctor the most when you are under the weather. In today?s market, the customer psychology is that if I am visible and accessible, my financial services patient will feel more comfortable whether he needs me or not. But whenever he needs me, I should be just a phone call away. On the other hand, if brands have chased you only during the good times and in bad times go under the table, the investor will wonder whether he made the right decision at all. The customer will appreciate if the brand is there not only to sell but also there in the after-sell mode,? he says.
SBI Mutual Fund?s brand campaign to promote its Systematic Investment Plan (SIP) stands tall to the statement made above. SBI Mutual Fund launched a mass media campaign in August to educate the customer on why SIP is ?just a good habit? and that when markets are down one should keep investing even more because ?with purchase price averaging in the long run, you are still up?. Again, Birla Sun Life is consistently sending mailers to its existing customers to educate them on how to react during such bleak market conditions.
Now, even as mass media needs to be used consistently to keep the brand image positive, there has to be an acceptance of the fact that, for now, just mass media cannot do it all. Mass media is not personalised and when budgets are tight, it is not necessarily cost-effective either. So, even as the mass media-advertiser relationship continues for many, marketers are also willing to add and use the non-mass media route to create direct consumer connect. And, it is not just the large advertisers who are taking a more targeted route.
Crocs, a premium brand in the footwear category, intends to target only the right audience in the right market for now. ?Therefore, the tools that we use for each part of the country may vary depending on the market sensitivities,? informs Nissan Joseph, general manager?India operations ?Crocs.
?We are an experiential brand and we have decided to promote our products through four contact channels that include public relations, retail (promotions and incentives at stores), events – consumer activation (to create an experiential platform) and online and social media communication for brand visibility and convenience of online purchases,? said Joseph of Crocs.
For Liberty, another brand from the same category, the approach again is more focused than elaborate. ?Our mix includes the intelligent selection of print, particularly magazines, that results in targetting niche customers through a logical interference. They are most cost-effective and surely have higher retention value than electronic media. Social media is another platform where we actively engage with our target audience. Liberty?s Senorita range, Suede collection, Footfun and many latest footwear ranges are promoted digitally to connect with the target audience,? says Anupam Bansal, executive director, Liberty Group.
Another advertiser that is betting on targetted marketing is Vodafone. Very recently, Vodafone launched the Mobile Internet Bus campaign to encourage adoption of mobile internet among customers. ?As part of the campaign, five Vodafone mobile internet buses, each equipped with five smartphones, are touring key tier 2 and tier 3 cities in Maharashtra, Gujarat, Delhi, Uttar Pradesh and West Bengal, interacting with citizens, building awareness on the relevance of mobile internet and the umpteen possibilities that it opens up in life,? said a Vodafone spokesperson. For the record, the Vodafone Mobile Internet Bus offers live demos and free surfing to people so that they can check out a range of internet options on the mobile phone such as entertainment, games, social networking and search.
Adds Khalap, ?The other strategy that will pay dividends in such a market is creating strategic signature events that reflect the brand?s core values and also connect to the current passions of consumers. Coke Studio, which is now shown on Doordarshan too, is a great example of a signature event that probably has a higher return on investment than, say, advertising on Indian Premier League by the same brand.? For the record, this year Coke Studio is trying to spread out from being a six-to-eight-week property through mega concerts also known as megacerts.
The media game
Even as marketers are trying to get their money?s worth, many agree that there have not been any major knee-jerk reactions when it comes to cutting back on advertising spends. According to data analysed by TAM Media Research?s AdEx, television ad volume witnessed 16% growth during the first half of the year (January-June 2013) when compared to the same period last year while print witnessed 13% growth during the same period. Interestingly, the television ad volume for the auto sector, which has been one of the sectors most affected by the slowdown, saw 22% growth during the given period; on print, the volume grew by as much as 25% during the same time.
Says Ferzad Palia, senior vice president and general manager, English entertainment, Viacom18 Media, ?TV ad volumes have witnessed double-digit growth in the first half of the calendar year. The advertiser has options and has experimented with them. But then, he seems to be deploying more into TV as it is still the most effective medium.?
Interestingly, with the intent to be on TV (which is only getting costlier by the day), Parle Products has come up with nine five-seconder ads to promote its biscuit brand Monaco. It launched these five-second ads instead of 10-second ads so that these can be aired more number of times with the same limited inventory, which it expects will have a bigger impact on the consumer and thus generate better return on investment (ROI).
Clearly, with the festive season approaching, marketers are playing the ?wait and watch? game. According to Atul Hegde, CEO, Ignitee Digital Services, it is the festive season that will finally determine a lot many marketing plans, especially for next year. ?The first quarter of 2014 may witness the real knee-jerk reaction to all the negative market sentiments as brands decide to become more prudent and far less aggressive while crafting their annual marketing plan,? he said. And once that happens, it is digital media that will stand to benefit.
?Our past experience shows that online platform gains when there is a slowdown. Advertisers are looking for effective ways of meeting their objectives and digital has gained more acceptance with the brands,? said Praveen Sharma, head of media sales, Google India. He points out that digital as a platform is more measurable and targetted. As technology has evolved, advertisers are now making use of rich ad formats and targeting techniques to connect with their audience.
For instance, automotive is one category where 60-68% research is done on the net before the customer actually buys the car. Therefore, industry pundits expect to see more spends coming onto digital from auto as they rationalise their spends on other mediums. ?Currently, auto brands spend about 8-10% of their overall budget on digital. I see that going up to 10-12%,? says Hegde.
While many brands may cut down on plain-vanilla advertising on digital, targetted performance marketing will only continue to grow on this platform because digital will continue to be one of the most cost-effective ways of acquiring business leads for many categories.
?There are about 10,000-odd advertisers in India. Out of this, only 200-300 advertisers are on digital. So, newer categories are expected to come onto digital while existing categories such as auto, telecom, IT and even FMCG should increase their spends,? says a top media executive who did not want to be named.
Apart from digital, it is regional print, regional television and out-of-home (OOH) which are expected to attract a significant portion of the ?more focussed? advertising budgets. ?Regional television and regional print attract a more focussed audience set; they are also low-cost platforms and, therefore, the return on investment is better,? says Pawan Jailkhani, chief revenue officer at 9X Media.
Meanwhile, Sanjeev Gupta, managing director of outdoor media agency Global Advertisers, notes that OOH has already started witnessing significant growth as advertisers have increased their budgets for outdoor campaigns by 10-15% this year. ?Real estate clients have increased their spends by about 12% while media and FMCG brands have increased their outdoor budgets by 10% and 15% respectively,? he says.
Players such as Meru Cabs have also started gathering advertising strength in the current scenario. Meru has the required government permission to advertise on its taxis across all the cities it operates in and this is one of the most economical and efficient methods of marketing communication. ?An average trip time of a taxi is 35 minutes and our customers are constantly exposed to this advertising, thus increasing the recall value and reach of the product,? says Siddahrtha Pahwa, CEO of Meru Cabs. Meru, itself, is seeing an additional advantage in these times of uncertainty. With the decline in sales of automobiles, Meru is expecting people to look forward to a quality taxi service. Consequently, it plans to double its marketing spend this year to reach out to a larger consumer base.
Now, if the above stand to gain, it?s the broadcast industry that should lose even if regional television attracts some extra revenues for being a cheaper medium. Reason? Despite an economic downturn, larger networks are not ready to slash their ad rates.
Notes Divya Radhakrishnan, managing director, Helios Media, ?What will change in the current economic slowdown is the level of risk that a brand will be willing to take given the limited resources that will be available at its disposal. Hence, high value properties, especially those which have not been tried and tested such as reality shows, new formats of sporting events, etc., are at greater risks.? Industry insiders anticipate that overall ad spends on television could go down by as much as 20-25% by the first quarter of 2014.
?Currently, there have been no cutbacks in our marketing and ad spends. But our marketing mix is now oriented towards below-the-line (BTL) activities that further complement initiatives on the above-the-line (ATL) front. The focus will now be on increasing effective reach with an increasing emphasis on cost efficient media vehicles such as social media and mobile marketing,? says Anu Anamika, national head?marketing, Suzuki Motorcycle India.
