Teji Mandi Explains: With ad spends making comeback, media operators heaves sigh of relief
Teji Mandi Explains: With ad spends making comeback, media operators heaves sigh of relief
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The year started with renewed optimism among advertisers as the recovery process began to unfold. Historically, FMCG companies have been the biggest ad spenders for the media industry. The ad spending started to revive post the first lockdown. And, it has been on an upward trend ever since.

Strong Volumes Despite the Second Wave

FMCG companies responded with new product launches to keep their product portfolio relevant as they tried to adapt to the changing consumer preferences. It led to increased ad spending from FMCG brands. The resurgence of the second COVID-19 wave did put a dent in the sentiments. However, ad volumes bounced back immediately as the wave started to recede.

According to BARC data, ad volumes from January to February 2021 clocked an all-time high since 2017. While it took a dip during a second COVID-19 wave, they bounced back immediately, with ad volumes increased 2x in April 2021 compared to April 2020. FMCG players were the major spenders in April 2021, registering 166% and 42% growth compared to 2020 and 2019, respectively.

Television Remains the Most Preferred Medium

As FMCGs started to loosen their purse string, broadcasters have also seen a considerable improvement in ad revenue in H2FY21, as compared to the first half. Zee Entertainment's ad revenues increased consistently in H2FY21 after seeing a 50% dip in the first half. The trend was similar for Sun TV as well, with a drastic dip in the first half of FY21. But there was a significant recovery in Q3FY21.

Emergence of Digital Space

As per an EY-FICCI report, digital platforms have emerged as a major competitor to television. Digital platforms have gained a 39% share of ad spends while the remaining 61% is still occupied by the traditional media outlets.

Out of the traditional platforms, television remains the most dominant medium, attracting 35% of the ad spending share. It is followed by print media with a 17% share of the ad spend.

Closing Comments

Ad spending is expected to pick up further as most of the consumption companies have efficiently tackled the second COVID-19 wave. So far, staple-based FMCGs have managed to drive the ad volumes, but sentiments in discretionary space have remained muted. And the volumes are expected to gain further momentum once the discretionary segment also starts chipping in.

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