Hit by severe slowdown, India Inc to halve ad spend

With its margins hit by a severe slowdown and the sharp depreciation in the rupee, Corporate India has been forced to halve its ad spend this Diwali, according to a survey by industry body Assocham.

"Due to the steep fall in the rupee, the total ad budget for print, television and radio during the festive months of October to December may see a cut of more than 50 per cent this year," Assocham Secretary General D S Rawat said.

Moreover, automobile and consumer durables players are slashing their ad expenditure by over 65 per cent this Diwali, the survey said.

Companies worst affected by the slowdown belong to sectors like consumer durables, gems & jewellery, FMCG, electronics, automobile and real estate. They will spend far less on brand promotion and keep a tight leash on their budgets, it said.

"All these sectors have become victim of current slowdown as their margins and bottom as well as upper line profits have shrunk to a great extent," Rawat said.

Besides, sectors including banking, telecom, financial services and insurance, which account for major share of the advertisement expenditure in India, have also slashed their ad budget.

As an alternate promotion strategy to win over cash-strapped consumers, big companies are focusing on "quick win" sales promotions such as coupons and point of sale discount promotions during the festive season.

On the other hand, the print and electronic media are slashing ad rates and offering packages at heavy discounts to attract advertisements from corporate and garner revenues.

"Both television and radio networks are staring at tougher times as advertisers cut back on budgets for brand marketing and promotions in the face of deepening economic gloom," Rawat said.

The survey included responses from around 1,200 companies in large and medium segments located in cities like Delhi, Mumbai, Chennai, Hyderabad, Bangalore, Pune, Kolkata, Ahmedabad and Chandigarh.