Adlanders open up on the pandemic’s impact on the Indian ad landscape from a revenue perspective, the challenges they grappled with and the road to recovery The end of 2020 is finally upon us. It has been a year when the Covid-19 pandemic presented serious challenges in stabilising the overall economy amid the lockdown, one of which was changing industry dynamics. According to a recent report, the pandemic has wiped $63bn (£47bn) of revenue from the global advertising market this year, a decline that is double the rate of the Great Recession after accounting for inflation. While there is no handbook that one can follow in such a crisis, the need for advertisers to re-calibrate their entire approach seems imperative. Looking back at it all, adlanders open up on the pandemic’s impact on the Indian ad landscape from a revenue perspective, the challenges they grappled with this year and how the industry can look at a rebound as we step into the next year. Rohit Ohri, Group Chairman & CEO, FCB India The advertising industry has witnessed a 10-20 % decline in topline revenue owing to the pandemic. “India's GDP contraction has been highest in the world. Though demand is coming back, it's still early days. We are all hoping for the vaccine in the first quarter of 2021.The economic impact of Covid 19 has been severe. Some companies have thrived while others have faced severe challenges. The whole digital economy and e-commerce category has seen huge tailwinds. The pandemic has underscored the need for personal mobility and that has triggered demand in the automotive industry.

At FCB, we intend to put customer journeys at the very center of our brand strategy. FCB has recently launched People and Patterns - a customer journey tool for the 'new normal'. This tool can be used across categories and delivers a comprehensive communication solution for each category.   Tarun Rai, Chairman and Group CEO, Wunderman Thompson, South Asia Two trends emerged during the pandemic. First, the obvious one, a reduction in spends. And therefore, reduction in agency revenues. Here, if we dig a little deeper, we find that depending on the client category, the spends contracted in different measure. For the categories affected the most, like fashion/lifestyle retail, hospitality, airlines, the spends just disappeared. On the other extreme were the ‘essentials’, where the spends reduced but at a smaller scale and picked up significantly after the first quarter (April-June). So, depending on the client-mix of an agency, the pain of the loss of revenue varied. Some of our client remuneration models are linked to media commissions. And here, we were impacted simply by reduced media rates that were available. Lower rates, therefore, led to smaller commission even with the same percentage. The second trend, however, was positive. Clients aggressively shifted their spends to digital, tech, data, e-com. Plans were fast-forwarded and there was an urgency to push the digital agenda. Due to this, WT group benefitted as we have a lot of capabilities in these areas. In fact, our digital revenues grew in double digits during this period. And herein lies the opportunity for the advertising industry. We have to find and develop new sources of revenue. And these are in the newer areas of digital, tech, data and e-commerce. We have known this for a while but there was never any urgency to develop capability in these areas. Well, the pandemic has accelerated this transition, and as an industry, we have no option but develop new capabilities. Coupled with the need of our clients to accelerate their digital transformation journey is their need to be more ‘efficient’. To stretch the marketing rupee further. And for this, consolidation is the obvious answer. Working with multiple partners is expensive; consolidating with just a few makes eminent sense. Once again, networks like ours who have all the requisite capabilities – from long term brand building to e-commerce- are in a sweet spot. We don’t need a bigger share of our clients’ advertising budgets, we need a bigger share of their marketing spends. Finally, what the pandemic has reminded us is that we need to re-look our cost structures. We need to build flexibility in our cost structures. It is not easy since almost 70% of our costs are people costs. So, we have to figure out new ways of working and different organisation structures. WFH has shown us the power of technology which leads to making geography redundant, increasing productivity and being more efficient. All of this should have an impact on our organisation structures which are built around geographies. We shouldn’t be in a situation where our costs are committed for the long term while our revenues remain unpredictable. Amit Wadhwa, President, Dentsu Impact The challenges for agencies have been on multiple fronts. Stating a few below: Business: Businesses across industries and regions have been impacted, so has their spending power on promoting their brands. While things have been picking up lately, they will take a little while to get back to pre-Covid days let alone growth. People: They are the biggest asset we have, and with conditions and working hours not being normal, the whole challenge is to find the balance between work delivery and people management. Agencies have been striving for creative ways to do the same. Working: Advertising is all about bouncing off ideas and brainstorming together to create new ideas. With people virtually connecting, it certainly has its challenges. While teams have been finding newer ways to do the same, it can never replace a jamming session in the conference room or even better on an offsite. It had a massive impact during lockdown but things are getting back to normal and I feel we will see 2021 coming back to 2019 levels, if not growth. I feel that this has also been a time where agencies have gone beyond their comfort zones and moved more into the business solutions mode than just being limited to marketing. I think we as agencies should build on capabilities and people that would help us grow in this domain. Basically not just focus on the top funnel but invest towards the middle and lower funnel. Anil Nair, CEO, VMLY&R India                           The Covid pandemic can be viewed as a bane or a boon. A glass half empty or half full. I would like to see it as the latter. This pandemic has given the entire marketing and brand building fraternity a chance to pause and ponder. A pivot to accelerate change and innovation. A segway to improvise and question the current operating systems and modify to face the challenges post pandemic and beyond. These changes will also be triggered by the reality that the post pandemic relationship between brands and their consumers will have changed and may not go back to the earlier status quo, especially in the areas of speed to market, personalisation, data driven operating models, omni-channel commerce, direct to consumer initiatives amongst others. This will involve, in many cases, a heavy overhaul of platforms, techstacks, supply chains, customer out-reach initiatives, data infrastructure investments which will have a medium to long term impact on organisations and will also involve a wider CXO involvement beyond the marketing function. The loss of traditional ad revenue will more than adequately be made up by these strategic investments that clients are eager to execute. Like in any downturn there are categories that have suffered and an equal set of categories that are thriving. More and more categories are beginning to see upsides, and hopefully, with a talk of vaccines around the corner, the markets should bounce back and stronger than ever. Ranjit Raina, CEO, The Geometry Encompass The “rule of paw” says a dog year is equal to seven human years. 2020 has been a dog year (no pun intended). The single biggest challenge has been keeping pace with and understanding the transformation in the human behaviour. In the early days, the ambiguity exacerbated the volatility of the situation and almost caused paralysis in certain sectors. Advertising spends are directly linked to GDP movement and the pandemic saw a fairly severe contraction in ad spends and revenues. Some geographies and businesses are beginning to see a slow but steady recovery but there is no deny the fact that advertising revenues have been greatly impacted by the pandemic. More than make up for the loss in revenue, the industry has to ensure that it is prepared for the realities of what we have dubbed the “new normal”. For a lot of disciplines within the industry, this is a moment to reboot the business while for others it is about reimagining the services and solutions we provide to brands. Innovation and agility will be key in keeping pace with the changes. Nisha Singhania, Co- Founder, Infectious Advertising Learning the entirely unfamiliar skill of working as a team remotely, coping with the sizeably reduced revenue stream, dealing with low employee morale, maintaining the agency culture and atmosphere, managing with severely reduced production budgets are some of the key challenges faced by the industry. One has been hearing horror stories of some large agencies bracing for up to 40% impact.  I feel the small to mid-sized agencies have fared better because of them being nimble and able to adapt faster. The industry must focus on being ‘relevant’ by continuing to do what we do best - building our client's brands and businesses. Once that is in place, when businesses bounce back so will our industry.