The Indian advertising and television industry has started to feel the heat of the global economic slowdown. With advertisers trimming their ad budgets and postponing launches of products and services, the entire sector is beginning to feel the pinch.

In an interview with Indiantelevision.com’s Anushree Bhattacharyya, Havas Media CEO Anita Nayyar speaks about how the Indian television and advertising industry is trying to cope with this financial crisis.

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Excerpts:

How much has the global financial crisis affected the Indian advertising industry?
The Indian advertising industry, pegged at Rs 160 billion, has been clearly affected by the global economic meltdown. The television segment, which accounts for Rs 72 billion, was growing at 18-20 per cent. Given the current situation, growth will slow down.

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Lots of big launches of products or services have been postponed. Advertisers are waiting till the first quarter of next year to see how the market is going to evolve. It is too early at this stage, thus, to quantify the pace at which the ad industry will grow.

Looking at the current economic crisis, how deeply hurt will be the TV sector? Are the Hindi general entertainment channels (GECs) headed for further trouble due to the on-going dispute between the TV producers and workers?
Out of the Rs 72 billion television ad industry, almost 50 per cent (Rs 36 billion) comes from the Hindi GECs. Looking at the current strike and the global financial crisis, the Hindi GEC market can only grow between 10–12 per cent. The strike between producers and Federation of Western India Cine Employees (FWICE) is, however, a temporary phase and would not continue for long. So the GEC market would pick up pace once again, after the strike in Mumbai gets over.

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FMCG is the category that advertises mostly on GECs. And presently it is one of the least impacted category. Hence advertising will gain momentum once the strike gets over.

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Will the TV news channels feel the pinch?
It is true that the five to six categories that include banking, insurance, automobile, aviation and real estate are the worst hit by the global financial crisis. And so news channels would be affected. The news television market could see a 5-7 per cent growth. Interestingly, I think now is the time for the banking sector to advertise to regain the confidence of its clients. But it seems like banks are restraining from further advertising spends in a major way.

What about the growth of sports and movie channels?
Sports and movie channels are based on events and film titles. Channels like these will not get affected to a large extent and will grow between 5-10 per cent, each time they show events or big titles. Thus for sports channels, the more the sports events they have, the more they will get a chance to grow. In sports, cricket will keep bringing the advertisers in. However since the TV rights acquisition cost for live cricket is very high, it will be difficult for broadcasters to break even.

Do you feel you have been able to bring Havas out of Euro RSG’s basket?
I don’t think that we have ever tried to project that Havas Media works under the limelight of Euro RSCG; in fact we are trying to bring Havas Media out of the shadow of Euro RSCG. Today we have Havas Media as the umbrella brand which has various other brands like Euro RSCG, Havas Sports, Havas Entertainment, MPG, Media Contacts etc. Thus wherever there is an opportunity, we try to bring the Havas brand in front.

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Havas Media has clients like Reckitt Benckiser, which is our biggest client. It also has Voltas, Bank of Baroda, Air France, ibibo.com and Hindustan Motors as its clients.

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Interestingly, when you moved out of Starcom you were blamed for taking away both people and accounts?
I don’t know how to answer these allegations. There were people who had shifted from Starcom even before I had joined Havas Media. Nevertheless for people who joined Havas after me, all I can say is that they were all intelligent people and no one has brainwashed them. So they were aware of their decision.

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As for the businesses that I got from Starcom, those moved based on pitches. But this also proves another point – that I share a very good relationship with the clients.

Havas Group introduced Havas Sports in India. How has sports marketing picked up in India, especially after IPL?
Sports marketing always existed in India. However thanks to the Indian Premiere League (IPL), it gained recognition. Sports marketing companies like Total Sports Asia and Globosports have been investing in sports like Golf tournament, Tennis matches, marathon etc. After the success of IPL, companies have openly accepted sports as an event to endorse their products or services. Cricket, however, continues to hog the limelight.

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We at Havas Sports have clients like Good Earth products, A1GP, etc. Havas Sports is also involved in celebrity endorsement.

How are your clients reacting to this financial crunch?
Fortunately for Havas Media, clients have not yet decreased their advertising budget or postponed launch of their products. So far, we have not seen our clients reducing their budgets.

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How is Havas Media tackling the situation, because sooner or later your clients will also reduce their ad budgets?
We are looking at various cost efficient alternatives like internet, multiplex, radio and below the line activities.