Davids fragment Goliaths in ad industry shakeout
The last five to seven years have seen a ground shift in the advertising world. With advertisers seeking more creative work and willing to shell out that extra amount, brands are also looking for fresh ways to engage consumers.business Updated: Oct 05, 2013 01:17 IST
Small can definitely pack a big punch - at least when it comes to creativity.
The last five to seven years have seen a ground shift in the advertising world. With advertisers seeking more creative work and willing to shell out that extra amount, brands are also looking for fresh ways to engage consumers. The result: It's no longer only about big names such as Saatchi, Leo Burnett and BBD0. A number of small, specialised agencies such as Creativeland Asia and Taproot India, Law & Kenneth, Saints & Warriors, and Scarecrow Comm have managed to pick up businesses as well. The growth of digital and social media is a major force in driving this change.
Digital communication recorded a steep 41% growth in 2012 over 2011 in an expanding media environment. Ad volumes are increasing while agency rates are decreasing.
"The traditional advertising agency business is dead," said Sajan Raj Kurup, partner and executive creative director of the five-year-old Creativeland Asia, which has gained clients including Godrej, Audi and Parle Agro. Kurup left his established large ad agencies to start his own venture.
Agnello Dias, chairman and co-founder of ad agency Taproot India - less than five-years old and acquired by Dentsu just over a year ago - said it was "only a matter of time before someone decided that creative too could be a specialist offering."
"There was also a 30% jump in sales of high-end refrigerators. With fresh government impetus we expect this momentum to continue further," Aggarwal added.
Sony India, too, said it expects sales momentum for its premium-end products such as Bravia televisions and Xperia smartphones to continue. Samsung and Panasonic also expressed confidence that growth momentum would get further boost.
But not everyone is hopeful, especially auto makers reeling under the effect of high input costs.
"We do not expect prevailing negative sentiments to undergo any change and the market will not witness any rebound in the short-term," said P Balendran, senior vice-president, General Motors India. "There can be only a marginal improvement in the festive season. The level of discounts will also not go up significantly as the industry is already squeezed on margins. Discretionary sprending by consumers has almost come to a standstill."
"The festive season started with Onam in the South and Ganesh Chaturthi in the West last month and frankly it has not been up to expectations," said a senior Maruti official. "We are pinning hopes on the Navratra but the situation does not look very optimistic."
The government meanwhile, it seems, is pulling all stops to boost buying sentiments.
While the finance ministry on Thursday announced cheaper interest rates on loans to buy consumer durables such as televisions, refrigerators and motorbikes, RBI governor Raghuram Rajan on Friday said the government and banks are in talks to work out the contours of cheaper loan schemes that could be announced soon.
Their moves may light up the Diwali a tad more than previously.