By Pyotr Mundolsky and Phyllis D’Souza in Mumbai
Southern News &
Feature Service Exclusive
SNFS provides an insight
into the sufferings of advertising industry, due to the demonetisation by the
National Democratic Alliance regime
The demonetisation has
dealt a body-blow to India’s audio-visual entertainment to the tune of Rs.1400
crores [US$ 20 million], top industry sources told SNFS.
The monthly ad-spend is
roughly Rs.4500 crores, as per industry indices.
In early 2016, media
agency GroupM had predicted an annual growth of 15.5% to Rs. Rs.57,486 crores from
last year’s corresponding spread of Rs.49,758 crores.
Part of WPP PLC, the
media agency had predicted that digital advertising would annual swell by a
face pace – by 47.5%.
The earlier fiscal had
seen an ad-spend annual growth of 14.2% overtaking the group’s prophecy of
12.4%.
“Audiences have thinned in cinemas affecting
box office collections of movies that were expected to be hits. Advertising
agencies that are already known to delay payments up to 120 days have asked
production houses to hold the cheques citing demonetisation blues. And this has
adversely affected top programmes with high television rating points [TRPs] as
advertising contracts are being heavily withdrawn and/or deferred”, top satellite
channel sources told SNFS.
India’s top advertiser
Hindustan Unilever (HUL) has cut its TV ad-spends December onwards, sources said.
Release Orders are being
handed over on week-on-week basis instead of the usual monthly practice. As a
result, HUL alone has cut its budget till January 1 by Rs.150 crores, a highly
placed source in a general entertainment channel [GEC] outlet told SNFS.
HUL, however, denied the
averment.
“Our investments in
popular brands are planned dynamically to ensure optimum exploitation of
consumer interest driven by market forces and ground realities,” a source aware
of the development commented.
Nevertheless, an
internal HUL communication, it is said, had predicted adverse short term impacts
on sales dampened by the ongoing demonetisation scheme.
“Cash strapped retail
buyers are bound to spend less,” says one of the operative lines in the
presentation, an insider said.
The strain has been
outlined in a circular of the Indian Broadcasting Foundation (IBF).
“It has been observed
that several advertisers/agencies have started sending cancellations to members
on existing deals, which include both short term and long term contracts citing
the demonetisation initiative of the Government of India,” it says.
Production companies are
facing the crunch as units supplying equipment and food during shooting and
post production schedules are not able to withdraw cash. Stars too are paid a
sizeable portion of their remuneration in cash. Endorsements of products
involve a huge cash component – and these have acquired new question marks.
Finally, those who succeed in withdrawing money are landed with two numbers of Rs.2000
currency notes. Nothing at all can be achieved with this sum. Further, even for
this paltry sum, change is extremely difficult to obtain, insiders told SFNS.
Media sales firms chose
to downplay the development.
“Cancellations are
underway. However, we see this as a temporary hiccup. While old-school sections
are feeling the heat, newer companies specialising in e-wallets like PayTM,
M-Pesa and a few others are experiencing a windfall. The losses, when finally
computed could be around Rs. 500 crore, at present estimates, in the known
sectors. The hit is also bound to hurt those surviving on TV advertising.
Nevertheless, the newer businesses’ inflow could stem the ebb to a decent
extent,” a channel’s marketing head said, insisting on anonymity.
The worst effects were
experienced in the FMCG, textile Banking-Financial Services-Insurance [BFSI],
Non-Banking-Finance-Corporations [NBFCs], real estate and jewellery sectors whose
sizeable component depend on initial cash inputs. Rumours about income tax
raids only worsened the fears driving business further southward.
Demonetisation has also
forced a rethink on the advertising plans to be finalised before March 2017.
“Everything depends on
how the market shapes up in the coming weeks. The biggest dampeners are coming
from tidings about a 50% tax outgo adversely affecting sentiment. Firms that
have a little stashed cache of cash meant for the oncoming year will have to
consult auditors to do some serious tax-planning, to reduce the burden of
fines. It would, however, imply a windfall for income tax department. While
none grudges the taxes, fears of what taxmen would do later, is a source of
serious worry,” a top source said on phone from Kolkata.
Well-known media
personality S Gurumurthy told an elite gathering in Chennai that a decade-long
decadent and unrealistic growth fuelled by false currency, black wealth and
black money had triggered the urgent need to force the demonetisation move by
Prime Minister Narendra Modi.
“The course correction
was long overdue. The discredited former United Progressive Alliance [UPA]
regime allowed the inorganic, sudden and unrealistic growth that drove prices
northward that suited the designs of some 5% of the super rich in this nation.
What seemed like a runaway growth potential was also financed by counterfeit
currency and even terrorist funding,” he said in the Nani Palkhivala Memorial
Lecture.
“Surprisingly, most
newspaper and television channels opted not to expose the obvious malaise,” he
added.
-additional reporting by
Radhika Padmanabhan in Chennai
PM/HA/TSV
SFNS is a news service with a difference. News is
narrated succinctly and in detail - for the reader to understand - every event
it its complete perspective.
For further info, contact: tsvhari@tsvhari.com
