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The going gets tough for ad industry

Nithya Subramanian

NEW DELHI, Dec. 25

IT's been a terrible fourth quarter in an extremely tough year for the advertising industry. The Rs 8,500-crore industry is expected to register negative growth rates, especially in the last three months of 2001.

Preliminary indications are that the overall industry could have registered growth rates of anything between (-) 5.0 per cent to 5 per cent, a drastic fall from its all-time high of 49.5 per cent in 1994-95. Industry analysts are pegging the growth in th e fourth quarter at (-) 4 per cent.

``But the real hit has come in the fourth quarter which is usually the best part of the year when companies increase their ad spends and step up the noise level,'' said Mr C. Rao, President, Universal McCann.

Media planners claim that while there was a positive growth in the first quarter of this year compared to the first quarter of 2000, over the months there has been a tremendous slash in ad spends.

And the September 11 World Trade Centre (WTC) bombing wrecked the industry.

``There has been an across-the-board decline in advertising spends. The drop in dotcom advertising was expected to be compensated by increased spending by the new private insurance companies. But that does not seem to have happened,'' said a top media-pl anner.

Several specialised units which were set up by the ad agencies seem to have little business, and recruitment in the advertising industry has also been down.

The slowdown has impacted not only the print sector which still accounts for over 50 per cent of total advertising in the country, but also the broadcasting industry.

Television, which had seen good growth rates in advertising in the last couple of years, has not been a big gainer this year.

Broadcasting companies such as Sony and Zee have already indicated that revenues through advertising will not be higher than last year's.

Only Star India claims to have registered growth rates higher than last year.

``We can only say that we have not been severely impacted by the recession in the advertising industry,'' said Mr L.S. Nayak, Executive Vice- President, Sales and Marketing, Star India Ltd. He was, however, not willing to divulge any numbers.

The industry is projecting a bleak picture for the coming year. They claim that there are no reasons, no fundamentals to look forward to.

``The going will continue to be tough,'' said industry insiders.