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| Edited By: Collin Furtado |Source: DNA |Updated: Mar 22, 2018, 04:11 AM IST
The impact of demonetization is expected to continue well in 2017. Ad spends from various brand segments are expected to see a decline. This includes FMCG, real estate, automobile and even the banking sector. Srinivasan K Swamy, chairman, Advertising Standards Council of India (ASCI), speaking with Collin Furtado, said that he expects the advertising spends to stablise only by the third quarter of 2017. Here are the excerpts of the interview.
The last few months have seen a serious breakdown of the advertising business. There are various numbers that are floating, but we all know that there is a decline in growth from what one would otherwise like to see. Till October the growth was in a steady fashion. Agencies who have a contract-based or retainer-based income have not been affected, but those who have a commission based income they certainly would have been affected. But also I think there is an overhang of GST coming in 2017 coupled with demonetization, it has brought about an uncertainty which probably will pass on into 2017. Moving forward, it will stablise by the third quarter of 2017. The economy will be growing at a much faster rate than what it is now. An enormously good Budget could be a game changer for consumption. The Finance Minister has already indicated that he is looking at a lower tax regime this year.
FMCG is certainly affected. Real estate, jewellery have all been affected due to demonetization. Another important segment that has slowed down in the past two months is the banking segment. The banks probably have been very busy in re-organizing their internal issues regarding the new regime for demonetization. As a result, they have no time to worry about communication. The mobile wallets is a very small part of their spends. There are many banking clients with us, but many of them have gone to sleep (in terms of ad spends) in the last few months. I think this is because nobody is available to take decisions. Many of the head officers were even shifted to various branches to help out. Very few banks have spends on advertising during these two months.
The most affected agencies in the last couple of months are the media agencies. While most media agencies contracts are based on commission, many creative agency contracts are based on fees. So, when spends of brands are getting postponed, it is the media agencies that are taking a hit. For some creative agencies they may be linked to the media spends, but more often than not, the bulk of the revenues are based on fees for the month.
There are some brands for which business comes ahead of what is right and wrong. Even though pan masala ads are not allowed in this country, they chose to advertise. Unfortunately, sometimes when they get caught they are taken to courts. Even consumers know that they can complain to ASCI and we can take the necessary action. We can take the ad to appropriate government authorities and take action against that. Many a times, these pan masala brands and some other brands too are upset with the decision that ASCI takes. But how they want to handle it is up to them. If the courts dismiss their claims, then the brands will have to go with the recommendation of people. Fortunately enough, a bulk of the decisions get fully complied with.
The consumer protection act is being amended and the government is looking for a much bigger role for ASCI under it. So only when it takes final form we will know exactly the role for ASCI. But from whatever indication we have, there is some expanded role that they are trying to provide to ASCI. Having said that, in the case of Patanjali, FSSAI and Aayush Ministry both have sent to Patanjali a notice to make amends in their ways. We don’t know if the government authorities have received any reply or not. But I am sure, correct action will be taken.
