The second half of the year generally augurs well for the advertising industry because of the festive season. Now add to that a good monsoon, revival of rural consumption, favourable economic conditions, and slightly increased spending power of the consumers. Naturally, this is to lose the purse strings of the advertisers.
The Union Budget, announced on June 23, promised investments in job creation, skill upgradation, and MSME development which is to support more inclusive economic growth. The special focus on agricultural schemes and rural development is said to indirectly boost consumption spending, particularly in rural and non-metro markets.
Experts tell Storyboard18 that these positives together might lead to an overall increase in AdEx (advertising expenditure) between 10 percent to 18 percent in the H2 of FY25. With positive budgetary measures announced for rural India, brands to also now increasingly bet on the rural demand and could increase ad spends by 15 percent, at least.
The government’s decision to allocate Rs. 2.66 lakh crore for rural development, including rural infrastructure are big steps in the right direction. These measures would further boost consumer sentiments in the hinterland, which is already showing green shoots of revival, especially for the retail sector.
Ashish Bhasin, Founder, The Bhasin Consulting Group, highlights that as a rule of thumb, advertising tends to improve by 1.5 times the GDP growth and there are a lot of things in this Budget that are pro-growth.
For FMCG in particular, rural is very important to determine growth because in urban there is near 100 percent penetration of most categories and kind of a plateau that is reached. But rural growth has been pretty slow over the last couple of years. “Now we are witnessing a good monsoon, at least so far. The indications like a good monsoon, efforts to put more money into the consumer’s pocket, and rural benefits, all augur well for advertisers,” he says.
Around 40 to 45 percent of advertising spend happens between Ganpati and the end of the new year. The Budget will further push the growth of the AdEx in the second half of this fiscal, he adds.
Overall, he expects ad spends in FY25 to be better than last year by about 12-14 percent.
Rural consumption is a big driver for brands, it surely means better AdEx spends – a 8-10 percent jump would be a fair expectation, says Sandeep Goyal, Chairman, Rediffusion.
Nisha Singhania, CEO and Director, Infectious Advertising, also anticipates a notable uptick in ad spends as companies seek to expand their reach and reinforce their presence in these newly energised rural communities, driving both brand growth and overall market dynamics.
Read more: Union Budget 2024- A big positive for consumer and retail sector
According to Yasin Hamidani, Director, Media Care Brand Solutions, the forecasts for overall AdEx of FY25 will reach approximately between Rs 1.1 – 1.55 lakh crore. While in H1 FY25, AdEx experienced a slight decline due to global macroeconomic headwinds and reduced spending by new-age companies, due to three major media properties: the Indian Premier League (IPL), the ICC Men’s Cricket World Cup, and the General Elections H1 FY25, AdEx saw a substantial surge by 10-12 percent.
In H2 FY25, AdEx is expected to increase by around 12-18 percent compared to the previous year, he remarks.
Betting on rural revival
As per Hamidani estimates, in response to rural growth and improved economic conditions, brands may increase their advertising spends by approximately 15-20 percent as they seek to leverage the heightened consumer confidence and spending power in rural areas.
“This surge in ad spend will be directed towards regional and localised campaigns, aimed at capturing the growing market share in rural segments. Additionally, there will be a stronger emphasis on digital and social media platforms to effectively reach rural consumers and drive engagement. Overall, the positive rural consumption story is set to create a more competitive advertising landscape, with brands intensifying their efforts to attract and retain customers in this lucrative segment,” he notes.
Also, while the increased ad spend is notable across various sectors, it is not limited to FMCG brands. The boost in advertising budgets is likely to impact multiple industries, including automotive, real estate, and consumer electronics, which also stand to benefit from improved rural consumption and economic conditions.
“FMCG brands are expected to be at the forefront (to tap rural demand) due to their direct correlation with consumer spending, but the trend of increased ad spend will be seen across a range of sectors seeking to capitalise on the positive market environment,” he says.