Wednesday, October 29, 2008

Slowdown: An opportunity for corporate communications?

Many sectors in India will be affected by the slowdown in the global economy, some more than the other.

After Diwali festivities, India Inc is set to show pink slips to 25-30 per cent employees in businesses like IT, aviation, steel, financial services, real estate, cement and construction as part of their cost-cutting measures, industry body Assocham has said.

Ramanujam Sridhar, Chief Executive Officer, Brand-Comm, Bangalore, knows of technology companies that have frozen recruitments over the last few weeks.

“Everyone wants to wait and watch,” says Sridhar in an interview with Divya Trivedi & Sravanthi Challapalli of The Hindu Business Line. “In the real estate sector, it is no longer a seller’s market, and it would have to advertise more. Infrastructure companies are also suffering from the lack of liquidity. My clients are asking if there are other ways to achieve the same advertising and marketing objectives with less money. So now there is greater importance being given to PR. On our part, we are trying to deliver better for the clients - the onus is on PR which becomes more critical now.”

Chandan Nath, President, Mudra Advertising, Ahmedabad, says both above- and below-the-line advertising will have to be used as different categories will be affected differently. “Any category where the consumer can postpone his buying decision will be affected, such as upgrade of consumer durables, automobiles and real estate. While the food industry, over-the-counter products, apparel, telecom and FMCG cannot remain untouched by the meltdown, they will be less affected.”

However, Ambi M. G. Parmeswaran, Executive Director and CEO, Draftfcb+Ulka, says “Some amount of diversion of advertising budgets to tactical and promotional spends may happen, but in a vast, spread-out country such as India, and for mass-marketed brands, there is nothing to beat press and TV. So those media will continue to hog the limelight. In fact, marketers may even shy away from niche media.”

According to him, Indian ad spends are correlated with economic growth and market sentiment, more than anything else. The Sensex has no real effect except for the dampening on the sentiment. “If we expect the economy to grow at over 6.5 per cent next year, there is no reason that why ad spends should not grow by about 9 per cent,” he says.

Sukhpreet Singh, General Manager (Brand Marketing) of consumer durables company Whirlpool of India, says the choice of media (conventional/digital or above-the-line vs below-the-line) could be altered, which would depend on campaign objectives and effectiveness of each media to deliver results.

Fast moving consumer goods companies cannot afford to cut back on marketing right away, says Ramesh Viswanathan, Executive Director of Chennai-based Cavin Kare. “There’s no slowdown in the overall FMCG market. The rate of growth of most categories is continuing and our growth is in line with our past performance. But, there is pressure of escalating costs so there’s lowering of profit. We need to see how sales go in the third and fourth quarters, see how costs progress and take a call by December.”

Viswanathan says advertising and marketing is the last thing an FMCG company would touch; the focus will be on cost engineering and pricing.

As far as the question of retrenching goes, there are mixed responses. Srinivasa says he does not see signs of retrenching in retail and that his company would certainly not do it. Ditto, says Nath of Mudra, adding that the company was looking for copywriters as it plans to expand.

Meanwhile, public relations firm Hanmer MS & L’s Partner and Member (Corporate Leadership Team), Amit Desai says all agencies would have to maintain status quo. His company was looking to redeploy staff and get in more efficient people. “Recruitment at the middle and senior levels will definitely be hit but junior levels need not worry too much,” he said.

Nath of Mudra says corporate communication has been hit hard as, with the withdrawal of IPOs due to dampened market sentiments, all pre-IPO events have been cancelled.

Some agencies, however, see the slowdown as an opportunity. Such as the upcoming 50-employee-strong Saints & Warriors. Arjun Dutta, copywriter with the agency, says this crisis might actually be an opportunity to grow on the back of innovative ideas.


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