It's been a tough year for anyone in business anywhere in the world, but perhaps tougher still for those in India, considering that many just didn't see the slowdown being as harsh and unpredictable as it has been.
For the advertising and media industries, it's been torrid, dependent as they are on the fortunes of the marketing companies. 2013 has been a tough year for marketers, and 2014 is viewed with caution and, perhaps, with some apprehension.
To the uncertainty in the economy, add some of the changes that we are witnessing in the media business, such as the Telecom Regulatory Authority of India's 10 + 2 ad cap (which restricts paid advertising on TV channels to 10 minutes per hour), the roll-out of digitisation, and so on, and we have a potent mix that suggests that the only certainty we have in 2014 is uncertainty. Having said that, here's a list of what we believe will be the major factors in the year to come.
#1: The 10 + 2 regime and a tussle between advertiser and broadcaster
Fundamentally, this means that no TV channel can have more than 10 minutes of advertising per hour (there are exceptions for live sports). There are a number of implications arising out of this, the most important being that saleable inventory for the channels shrink. For the channels which are performing poorly, this is a disaster, as, despite shrinking inventory, they will not be able to raise their yields, which means that both their top-line and bottom-line will be hit.
For the channels which are in the top few in their genres, it's a mixed bag. In theory, when in-demand inventory shrinks, rates should go up. They will, but not to the extent that the shrinkage of inventory demands. As a result, top advertisers and leading broadcasters, buffered by media buying agencies, will be locked in a tussle to arrive at a magical, mutually acceptable new rate.
The 10+2 regime will also force small advertisers out of the best performing channels, as, simply put, it will be beyond their means.
#2 Impact of 10 + 2 on newspapers
This is the opposite of collateral damage - collateral benefit. As high quality inventory in TV shrinks, advertisers seeking more audiences effectively will maintain and, in some cases, increase spends on (leading) newspapers and (leading) portals and websites. The major upside is that newspapers get a much-wanted boost. For the advertiser, though, it's bad news: the better, more expensive newspapers will be tough to negotiate with.
#3 Pressure on margins at creative and media agencies
As they face an uncertain year, compounded by the hung assembly in Delhi being extrapolated into the likelihood of a hung parliament, marketers will be cautious and will, whether we like it or not, slash budgets. It doesn't help that agencies, both creative and media, have allowed themselves to be seen as commodities with no differentiators, which results in too many agencies chasing too few brands. The result? A year of tough negotiations. In most cases, clients will win.
#4 Effective advertising will rule over creative advertising
Marketers will be averse to investing in edgy, exciting ideas, and will stick to the safe and predictable. We will not see many risks being taken as the question that will be asked when considering an idea will stay at the mundane, "will this sell my product or service?" A pointer is available in the number of entries for this year's Effie Awards, the Advertising Club's showcase event for effectiveness in marketing and advertising in Indiawhich has seen a 20 percent increase in the number of entries this year.
#5 Reduction in 'scam' advertising
'Scam' advertising, or advertising created solely in an attempt to win laurels at awards shows, claimed a number of high-profile victims in 2013. Tata Chemicals withdraw their award winning radio spots when they discovered that the entries were not quite kosher. "The entire award submission process is one initiated and entirely managed by the agency; our role as a client was limited to approval of the creative. As a client, we were not aware of all the other technical requirements and subsequent process of submission criteria etc. As soon as the inconsistencies were brought to our attention, and upon further enquiry, we conclude that it would be appropriate for the agency to return the award to the organisers," Tata Chemicals said. The agency, Leo Burnett, lost the Tata Salt account as a fall-out. A month earlier, a scam campaign for Ford Figo by agency JWT India forced the exits of senior professionals at both Ford India and JWT India after global mainstream and social media criticism.
After this, how many clients will want to risk running scam ads? Very few.
#6 Long duration ads
After the successes of the Gondappa film for Lifebuoy by Lowe and the Google Search film by Ogilvy, to name just two, both clients and agencies will explore the long, primarily aired on YouTube, films. Why wouldn't they? As this piece is being written, Gondappa has clocked over 16 million views on YouTube and Google Search just over 10 million in less than a month. This will be tricky for creatives as many clients will expect each piece of communication to go viral, and briefs will increasingly include the instruction, "make a viral." They should learn from clients like Cadbury who repeatedly use films in digital media as they learn what works and what doesn't without the pressure of unreal and imagined expectations.
#7 Social media explosion
If the last few years have seen a few brands and a few professionals dabbling in social media, this is the year that we will see an explosion. Buzzwords of the year will be hashtag trending, viral, twitter and Facebook contests and social media engagement. Look out for more CEOs emulating Anand Mahindra and Vijay Mallya (the only two CEOs from non-digital companies on the 100 top influencers in India on social media) and getting on to twitter. But more importantly, look out for brands that use twitter and Facebook for a variety of objectives, ranging from complaint handling to communication testing to consumer engagement to actually marketing their products and services. Telcos airlines and media, already active on twitter and Facebook, will take the plunge and stop outsourcing these activities and invest in internal teams to manage the opportunity.
#8 Digital and mobile growth
In addition to social media, digital and mobile digital in general will be a big gainer. The FMCG majors have all tasted blood with their digital investments as they apply their learnings and make course corrections. E-commerce has become attractive enough even for manufacturers of high unit value products such as cars to pay increased attention to what was, till two years ago, a blind spot. And as smart phones (no longer sub $100, but sub Rs.5000 make rapid growth in non-metro India, the ability to communicate to this high-growth consumer base will be most efficiently done through mobile digital. Expect content to be tweaked to ensure that it can be delivered across devices and across platforms with similar experiences. Look out for brand communication (commercials) that will be created for the hand held, not adapted from television commercials.
#9 TV audience measurement and print readership measurement
India is frighteningly become a vastly under-measured country as far as two of the most used media, TV and print, are concerned. It has been almost a year since the Indian Readership Survey has been published by the Media Research Users Council (the last data available is for 2012 Q4), forcing media agencies and marketers to buy space virtually blind. Hopefully, the new, improved IRS, which, on paper promises to be significantly more robust than the old, discontinued one, will be available in 2014 Q2.
It is less than three months since the relationship broadcasters and TAM India, the company that measures television audiences in India, collapsed to an extent that the major broadcasters decided to withdraw subscription, leading to a situation where no measurement would have been available for TV viewership. Peace was brokered, but it was a fragile peace, leading to the decision by the Broadcast Audience Research Council (BARC) to find an alternative, universally acceptable measurement system. As this is being written, there is no clarity on when the new system will be rolled out, let alone when usable and actionable data will be available.
The result of these two fiascos is that we might be in for a spell of zero measurement, and that is, quite simply, advantage advertiser. The fallout? Lower yields in TV and print for all but the top performers.
The measurable part of TV, direct-to-home, will be a blessing for broadcasters as, hopefully, they will be able to extrapolate DTH numbers and convince advertisers that similar trends will be seen in non DTH households.
#10 Magazines under more pressure than ever before
Magazines are already at the bottom of the totem pole. It's bad enough that an entire category, news and current affairs, is threatened by television and the web, both of which deliver the news instantly. Adding to the problem is the legacy problem of low cover prices and consequent low print runs. No magazine is measured for circulation by the Audit Bureau of Circulation and the IRS data, as we stated, is not available at all. To make matters worse, magazines are so low in the priority list for advertisers and media agencies (considering the outlay for magazines is so low) that there is little attention paid to the category. Which are the genres that will be able to stretch their lives? Fundamentally, all those who bring expert views and opinions to the reader - expert views and opinions that are not easy to find on the web. How many magazines meet these criteria? Not too many, I'm afraid. Fundamentally, it's downhill for most magazines and there's no percentage in living in denial.
#11 Collaboration will flourish
One just has to take a look at some of the recent (international) work for Coca-Cola and Heineken, to name just two, to see how complicated communication is becoming. The average piece of communication sees an advertising agency, an events company, a PR agency, a media agency, a social media agency, a digital company, a production house and a media house working in tandem to create work. Closer home, we've seen Aviva do some work collaboratively, Tata Motors has found success with their association with 24, and Unilever India and Proctor & Gamble are upping their game. Cadbury is executing complex multi-partner campaigns. They're all learning - and it's patent that all the early movers are learning how to measure RoI on such experiments. The good news - those who get it right are laughing all the way to the bank; because they both interactive and measurable, we'll see more and more of these multi-partner, engaging communication exercises.