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Press Releases

Corporate Inc. slash their ad budget by 50%: ASSOCHAM; Ad budgets are being slashed mercilessly this Diwali!
Friday, September 27, 2013

This Diwali, the advertisement budget of corporate inc. for brand promotion have been curtailed by almost 50% due to severe slowdown, spiralling inflation further confounded by a sharp depreciation of rupee, reveals the associated chamber of commerce and industry of India (ASSOCHAM) recent findings.

Releasing the ASSOCHAM paper on “To Slash or up Ad expenditure this Diwali?” Mr. D. S. Rawat, Secretary General ASSOCHAM said due to steep fall in 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% this year. Automobile and consumer durables players slashing their ad expenditure by over 65% this Diwali, adds the ASSOCHAM paper.

Nearly 1,200 companies in large and medium segment that participated in the internal assessment exercise of ASSOCHAM at Delhi, Mumbai, Chennai, Hyderabad, Bangalore, Pune, Kolkata, Ahemdabad and Chandigarh, the majority of the participants revealed that their advertising expenses declined by 45-50 per cent in rupee terms on a year-on-year basis.

The paper highlighted that a vast majority of corporates in private sector have reduced their budgets by over 50%. The Banking, telecom, financial Services and Insurance sector, which accounts for major share of ad expenditure in India, have reduced its spending on advertisements. Even the government has also minimized its spending on advertisements.

Mr. Rawat further said that the advertising world is reeling under the impact of the severe slowdown in the market. Many medium and small companies have chopped budgets down to about 50% of their previous year’s figure.

He further mentioned that Large, fast-moving consumer goods companies have also cut budgets and holding back releases substantially. Even cash-rich industries, like pharmaceuticals, automobiles are cutting back on spending.

The corporates worst affected by the slowdown are in consumer durables, gems & jewellery, FMCG, electronics, automobile and real estate. They will be spending far less and will keep a tight leash on their budgets, highlighted the survey. All these sectors have become victim of current slowdown as their margins and bottom as well as upper line profits have shrunk to great extent, said Mr. Rawat.  

The venerable print media is slashing rates, has offered packages at a fourth the price. The rate actually includes even the processing costs of the ads and this has brought down the total costs to just about a fifth, adds the ASSOCHAM paper. 

The most impacted sectors are newspaper, magazines and visual sectors especially the less popular dailies, magazines and channels. The newspaper and TV Channels are reducing the ad rates also heavy discounts are being offered to the advertisers, adds the ASSOCHAM assessment.

The survey further reveals that big companies are cutting back on big brand advertising campaigns and focusing on “quick win” sales promotions such as coupons and point of sale discount promotions to win over cash-strapped consumers during festive seasons.

Mr. Rawat also said that 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.
 

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