Layoffs, tight-fisted consumers: Media cos see an unhappy new year

There's no need to attempt to soften the blow. 2017 will be a tough year for media companies. That's because 2017 will be a tough year for the marketer.

And if the marketer sees a tough year, so will all media - TV, print, outdoor and digital. Yes, digital as well.

Let's cut to the chase and take a look at what I believe will happen in 2017. I must add that these thoughts hold only for the period from now to March 31, as we still wait for the (hopefully) pleasant surprises in the Budget.

While the words are mine, they are based on conversations with scores of professionals from the communications business.

Television: The worst hit will be the general entertainment channels (Hindi or otherwise). Overall, Hindi GECs seem to have taken a 25-30% hit on revenue until the end of December, but expect the pain to last at least until the end of March. Things will improve if the supply of currency improves, but there will be a lag. My punt is that there will be a minimum 20% drop if you take the period November 2016-March 2017. As long as cash is in short supply, discretionary spends are on hold, and advertising in the 'discretionary' categories (biscuits, salted snacks, carbonated beverages, and so on) will see a sharp downturn. Real estate and jewellery will also be hit hard. Mobile handset makers, a large contributor to GECs, are making unhappy noises. Uncertainty over the IPL will also hit and one can expect spends by the BCCI on the IPL to come down sharply. Ads by banks will also dive as the current spends are unsustainable even as they grapple with excess cash, the absence of borrowers and lower margins thanks to various post-November 8 diktats.

Expect job cuts, job freezes and zero increments. And salesmen can kiss their variables goodbye.

Press: Primarily, newspapers, as magazines are already on the slow road to hell.

English newspapers will see a sharp fall as we will see the number of launches reducing – in almost all categories. Expect marketers to try and retain the share of voice – while relooking the advertising unit. More half pages instead of full pages and significantly fewer wraps. Look for the return of smaller units like the 60 cc ad and so on. Classifieds will be hit by the currency shortage as well. The upside for newspapers is the government sector and the digital payments businesses. The fall for English newspapers will hurt, but the hurt will not be as bad as for TV. But a 10-15% drop is a large drop, so increments will be hit here as well. Media houses will also take a hard look at their supplements and axe those that are bleeding.

Vernacular newspapers will struggle more as their dependence on the retail sector and on classifieds is much greater than English newspapers. Both these sectors will be badly hit by cash unavailability and so will their ad spends. Like the English newspapers, they will gain temporarily from government and digital payments brand spends. The vernacular press is more directly affected by the impact of consumer sentiment on brand sales as these are the growth markets in most categories. Consumer-positive elements in personal taxes could see sentiment improve and provide a fillip, but the impact will not be felt in Q1 2017. Tough times ahead, sadly and a 15% drop seems optimistic.

Digital: Which includes social.

As overall spends shrink, so will digital, though it will shrink less than the others. Having said that, Google will continue to grow as it seems more 'effective' and 'measurable' than others. News portals will see more 'branded' content that increasingly will seem more like paid-for-plugs. Facebook will be under pressure to prove performance and will be called upon to widen the net and educate more first-time advertisers. Twitter will see a surge in paid tweets and hashtags – and twitter 'influencers' will see an upside in income thanks to brands looking at them as relatively cheaper options.

Outdoor and Radio: Very tough, especially in the absence of measurement. Outdoor will see spends fall by 30-40% and radio by at least 20%. The unknown: government spends. If these remain as high as they are now, these two mediums can heave a sigh of relief. Outdoor will get affected positively or negatively by sports spends, and for the moment, it seems negative.

Overall: Marketers are under pressure and they will transfer the pressure to their media agencies and to media. Expect them to focus more on measurement, effectiveness and delivery rather than on pretty ads, awards and their egos. The next quarter will see them asking hard questions on what ads will do to help raise toplines, and media planners and media sales executives will be forced to brush up their knowledge on measurement. Meetings on media planning will be both more frequent and longer, and marketers will not hesitate to nix proposals that do not satisfy their measurement needs.

Job freezes and salary cuts will be widely seen. If the Budget is positive for the individual taxpayer, a bloodbath will be avoided. Increments will be surprisingly easy for the super performer, but only for the super performer. Expect the variable component of salaries to be increased and the basic to be frozen.

Overall, it's not going to be a happy new year.

The writer is editor, Storyboard on CNBC TV18