The Impact of COVID-19 on the Advertising Industry

Industry leaders share their vision of the Advertising World post COVID-19 in the survey done by the Advertising Club Bangalore.

The Advertising Club Bangalore conducted a survey of 70 agency heads covering creative, media, research and brand consulting and 22 CMOs from FMCG, Retail, Durables and Services to evaluate the impact of COVID-19 and the ensuing lockdown on their future business projections. The Advertising Club also talked to a number of business heads of leading Advertising Agencies to get their perspectives on the various findings of the survey and any advice they may have for Indian agencies.

Laeeq Ali, President of The Advertising Club Bangalore and Co-founder of Bloombox Brands & Origami Creative says, a lot is changing around us by the day and a new world order has already set in. While there is a lot of talk on how consumer preferences and behavior are going to change, we conducted this survey to understand the overall impact and see what can be done from our end. It is very clear that the advertising agencies have a critical role to bring back consumer confidence as well as move the market at large into a positive frame of mind.

It is also important that all agencies swiftly figure out how they will stay relevant in the new normal. The survey has thrown open a lot of inputs and we have already initiated a series of online programs which will be beneficial for the agency and professionals at large. Less face-to-face meetings, Work from Home and Video calls are going to be the new normal and this is the going to be the time for big hard working ideas and smaller budgets. The sooner we adapt to the new world order, the better for us. So, let us take steps in the right direction and be prepared.

Drop in revenue predicted

The last few weeks have seen radical changes in the way businesses function, with many of them resorting to salary cuts, furloughs and even layoffs in an effort to keep themselves afloat.

The survey showed a drop in revenue and advertising spend levels of between 10 to 20% across agencies and industries. Respondents spoke about the measures they have taken to ensure work continues seamlessly, and the changes and steps needed for the industry to bounce back including the role Government needs to play.

As Sam Balsara, Founder, Chairman and Managing Director of Madison World and Madison Communications, said, “Advertising is one part of the overall Indian Industry that is critical. The major challenge before the industry is how to revive demand and to my mind, Advertising can play a big role here to enable advertisers, to advertise with confidence. The Government should allow amortization of advertising expenditure and if possible, media should allow extended periods of credit. These two enablers would in my view, considerably help, get the Indian economy back on track, sooner than later.”

By what % are you expecting your billings to change in the next quarter?

Time for recovery

Most of the respondents believe that it will take at least 6 to 12 months for the situation to normalise and spends to go up again, though perhaps not to the same levels, pre-Covid.

Some of them commented that the advertising industry needs to utilize newer and more strategic techniques to target their audiences in the post-COVID world. The focus should be on targeting a highly relevant audience, rather than spreading yourself too thin over the entire consumer spectrum.

Srinivasan Swamy, Chairman and Managing Director of R K Swamy BBDO, believes that there will have to be significant cost cutting and expenditure control. “Three changes I foresee are clients will accept less travel and more video/audio call meetings. Staff costs could have a higher variable component and Marketers will look for a sharper nail, not a large hammer. That is, ideas will be more important than a budget that backs it.”

Mr. Ramesh Narayan, Founder of Canco Advertising and Area Director of APAC, IAA, agrees that whatever shape the recovery takes, V-shaped, U Shaped or W-shaped the advertising industry will take a solid hit this year and will have to cut as many costs like travel and real estate as possible in order to preserve jobs and their people.

WFH: the new normal

Many agency heads are apprehensive of the way this pandemic and the global work-from-home mandate affects the daily lives and schedules of their employees. The Advertising Industry which has largely been a face-forward industry has to now figure out a way to work remotely. In fact, this pandemic is helping people realise that a lot of business travel can potentially be avoided entirely and even real estate costs can be cut back to a large degree.

Will more agencies start working from Work from Home (WFH) in the long run?

With work from home being the general mandate, what % of your people are working from home?

Ashish Bhasin, CEO of APAC and Chairman India at Dentsu Aegis Network, is all praise for the Indian advertising industry and believes that some good has actually come out this pandemic.

“This massive work-from-home experiment, imposed on us to fight this severe pandemic, has certainly unleashed the immense gift of agility that was sitting there within our modern workforce.

It has definitely introduced great flexibility, virtual mobility, and dynamic collaboration into the market. Remote work software like mobile work tools and virtual reality conferencing are becoming the preferred mode of communication now, even over face-to-face meetings, other than those deemed critical.

Did your team face specific challenges getting clients up to speed in the use of any of the newer apps/ softwares/ video conferencing facilities which were hitherto not necessary earlier? Do you believe you will need to allocate more budgets on tech upgradation once this tough time is over?

Fresh strategies are being explored and executed to sustain and nurture the industry’s creative output and digital is now being looked upon as the new form for survival. Frankly, the situation has brought us together like never before and that is going to stay.”

Has daily-work monitoring and reporting become less intrusive or more challenging for your team?

Remote working has a lot of virtues and benefits especially when it comes to increased convenience for employees and an opportunity to implement a more enjoyable work-life balance. Provided we can manage the technology efficiently.

According to Subhash Kamath, Head of BBH India, “The big opportunity for the industry, thanks to the current lockdown situation, is learning how to make technology work more efficiently for us. While WFH seems to be the current situation, I believe it is far from temporary. Working out of different locations and collaborating on ideas online will be the future way to go, post COVID as well. This will benefit the industry greatly in saving real estate costs, cutting down travel time, reducing stress levels, and utilising resources better, leading to better productivity.”

How long do you think the situation is going to be worrisome?

Some light at the end of the tunnel

Increased media consumption with people spending more time at home will profit Industries like Television and Video Game Production which will in turn impact advertising agency spends.

Many industries are treating this not so much as a crisis, but as a challenge and a set of circumstances that companies need to adapt to. The fundamental principles behind Advertising still remain the same, which is to identify customer needs and attempt to fulfill them.

PC Musthafa, Co-founder & CEO of ID Foods, says “Covid is a challenge – not a crisis for the businesses. Role of a businessman is to identify customer pain points and solve it using common sense during these challenging times.”

In these trying times, customers will surely appreciate goodwill initiatives which will definitely go a long way towards building customer loyalty, something which has been sadly eroded today, like Ashish Dabreo, Co-founder of Maverick & Farmer Coffee Roasters is doing “At a time like this, the only way a brand like ours can connect with its customers is through genuine compassion. And for us, our way of demonstrating this was to enable our customers to continue their elevated coffee drinking experience – the kind they are used to at our cafes, by showing them (with no trade secrets held back) how to make these very same coffee drinks at home.”

A long-needed overhaul of the industry

A crisis such as this can also precipitate a much-needed business strategy overhaul in companies which have fallen into a rut. It forces organizations to take a long and hard look at their policies and to implement the changes they may have been delaying for a while. This can definitely serve as an impetus to revitalize an organization.

K Vaitheeswaran, Co-founder of AGAIN Drinks and Founder of Fabmart, loved business downturns. “While no one wants a pandemic, I love business downturns. I have survived the dot com bust in 2000 and the financial downturn in 2008 and I can tell you that every downturn is a great opportunity to reset a business. In good times, well funded startups can get into bad habits – excessive ad spends, bloated head count, trophy hiring, ill-conceived expansions, impractical extensions etc. A downturn sends a much needed shock through the system and pressurises the management to review all aspects of the operations and put them back on efficient and sustainable modes.”

Strong words but true.

Creative Excellence in the time of Covid

Josy Paul, Chairman & Chief Creative Officer of BBDO, brilliantly summed this up in his quote:

“We’ll see refreshing changes in the creative workspace. It’ll most likely be a hybrid model – of people working from home and people working from the office. This dual way of work-from-home-work-from-office model will disrupt conventional chemistry and influence new ways of connecting, thinking, ideating and creating. We are already seeing this play out during the lockdown. But once the restrictions are lifted, we’ll witness the collision of new and old ways. The changing rules of conduct will lead to new and creative ways to execute ideas, scripts, audio and digital content and on-ground activation. The new challenge is the opportunity. The constraint is freedom. In the process, we will find another surprising side to ourselves. Like when we go on an adventure trek and we discover new muscles and strength that we never knew we had. Human ingenuity will come into play. There’s going to be a lot of positive rearrangement! We can’t fully write this. It will write to us. So let us wait and watch.”

Is there a silver lining to this situation? Do you see benefits of large-scale remote working that can be implemented in non-emergency situations as well?

In the end, it’s only the methods and policies which will change. Advertising has survived crises like these in the past and it will overcome this one as well. The best brands know that they are ultimately selling a feeling and the emotional connect that a brand has with its customers is the biggest value of all. According to Bobby Pawar, Chairman & Chief Creative Officer of Havas India, “Yeah, there will be some changes in how we work, but the principles that guide the work still hold true. Eg., If your idea is not interesting nobody will be interested in it. People buy with their hearts and rationalize it with their heads. A brand’s values are just as important as its value for money.”

So, even in the midst of all these unfortunate developments, experts believe there is a silver lining to this crisis. It can present an opportunity for any organization to completely overhaul its business model and restructure marketing strategies to meet the expectations of consumers.

Founded in 1980, The Advertising Club Bangalore has been taking the lead in conducting workshops, seminars and talks about Advertising in an evolving marketplace. Their members and speakers hold prominent positions across the industry and are instrumental in shaping the future of the trade. The Advertising Club Bangalore also hosts the Big Bang Awards – an annual feature which celebrates excellence in Communication and Media.