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ADVERTISING SPEND IN INDIA: TOPLINE ANALYSIS 2001
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The ad industry grew at a healthy 22% in 2001 over the previous year.
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Cable TV provided the impetus for the TV media, whereas press sustained
decent growth rates of about 14%.

Magazines grew at a faster pace (18%) than dailies (13%). However, they
contribute only one fifth to the press ad revenue.

FMCGs completely dominate the spends in media especially on TV. The only
durable which was among the top 10 was ‘Car/Jeeps’, primarily because of many
new launches in the passenger car segment in the middle to premium price
segments.

Latent categories like ‘Writing Instruments’ and ‘Mosquito Repellants’ have
become big media spenders this year because of increased competition among
the players in these categories.

As expected, advertising for dotcoms, one of the largest spenders in 2000
dropped substantially in 2001.
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In year 1999, only 2 Indian FMCG companies were in the Top 15 ad spenders.
In year 2000, there were 3 and in the year 2001, there was as many as 5 Indian
FMCGs in the top 15. It seems the Indian FMCG companies have decided to take
the fight into the MNC’s court through aggressive advertising and distribution
strategies especially in the toilet soaps and skin care categories. The FMCG
market is currently dominated by the MNCs viz. Hindustan Lever, P&G and
Colgate.
Outlook for the first 6 months of 2002
With many new launches in the various FMCG categories, especially skin care and
toiletries, there will be aggressive advertising by both MNCs and Indian Companies.
Moreover, the first 6 months of the year are also going to be a very active cricket
season for India, with India playing England and later West Indies. Hence, it is
expected that ad secondage will increase by at least 20-25% over the same period
last year. However, with recessionary pressures continuing, channels will offer more
and more discounts and most industry sources expect value growth of only 9-10%.
Contributing unique local factors to 2001 Adspend
Again thanks to the recessionary wave, the advertising has changed from product
based advertising to scheme/offer based advertising for the FMCG as well as the
Durable sector. Hence, companies in an attempt to drive sales offer various kinds of
consumer promotions from price offs, extra volume, freebies, scratch cards etc. This
is backed by aggressive advertising in media.
Secondly, small Indian companies have come of age and have started ‘believing’ that
they can compete with the MNC Goliaths. Hence, this has resulted in these
companies shifting from a ‘proprietary’ type of an attitude to a professional one.
There is marked difference in the way they look at the advertising task along with
aggressive distribution of the products. This has resulted in aggressive marketing,
advertising and promotion of the products eg. One company gives 2 units of talcum
powder free if you buy 1 i.e. 3 for the price of 1 backed by heavy advertising!
Unique local factors or events that may affect the Indian markets’ adspend in
2002
India being a large country with different languages and markets, most channels
realise the importance of catering to local tastes. Hence, the various TV networks are
expanding their operations by either taking over TV channels or by starting new ones
which cater to the local markets. Hence, the no. of channels may increase
fragmenting the market further than what it is today. This in turn will put pressure on
the ad spends to spread over more channels and implement price increases.
Another important factor may be that the leading channels will force the media
buyers to buy on its network as a whole rather than on specific channels, just as they
are forcing the cable operator to distribute the entire bouquet of channels rather than
only the popular ones. Hence, the consumer pays for channels that he doesn’t watch!
The media buyers may be forced to follow suit, at least by the leading channels.
Note: All mentions of expenditure in this analysis are based on published rate cards.