Sluggish market forces CTV cos to trim ad spends

NEW dELHI, SEPT 10: If there was ever any doubt about advertising and its impact on sales, the current downtrend in colour television sale...

NEW dELHI, SEPT 10: If there was ever any doubt about advertising and its impact on sales, the current downtrend in colour television sales due to reduced advertising spends – top eight companies slash ad spends by about 10 per cent in the January-June period this year at Rs 184 crore against Rs 200 crore last year – ought to make the correlation clear.

This significant reduction in advertising budgets has spelt doom for the industry, which registered an almost 27 per cent reduction in sales at 1.73 million units till May this year against 2.2 million unit sales in the first five months of 1999, as per industry estimates.

Of the top eight CTV manufacturers, five have reduced ad budgets for televisions while simultaneously hiking spends for other home appliances, as per the ORG report.

While market leader Videocon slashed its ad spend on CTVs by about 20 per cent at Rs 8.9 crore, it hiked advertising spends for both air conditioners as well as refrigerators this year by over 900 per cent and 30 per cent respectively.

This is in stark contrast to arch rival BPL’s strategy which hiked ad spend across all product categories including televisions (as much as 80 per cent at Rs 37.1 crore) as per the report.

Both Korean majors LG as well as Samsung slashed their CTV ad spends by 25 per cent and 15 per cent respectively to Rs 20.8 crore and 12 crore this year. But while LG hiked its ad spend on all other consumer durables except a marginal fall in washing machine budgets, Samsung was circumspect in advertising for all the other product categories as well, as per the report.

Notable exceptions were Onida and Akai brands of television, apart from BPL, which actually hiked advertising spends this year by 12 per cent and a whopping 125 per cent respectively to Rs 16.5 crore and Rs 11.1 crore respectively and the resultant sales boost is quite evident.

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While Onida has emerged as the fastest growing brand this year, wrenching third position in a fiercely competitive market, Akai has also shown remarkable sales growth in the first half of this year, as per ORG.

But while companies are being stingy in advertising for televisions, they have hiked ad spends for other consumer durables, with the maximum 200 per cent hike being registered for microwave oven advertising, as per the report.

This report tracked ad spends of the top 11 consumer durables companies for the six-month period this year as well as for 1999. While the ad spend for microwaves was up to Rs 10.2 crore in the first six months of this year against 1999, air conditioners came a close second with almost 90 per cent hike at Rs 61.3 crore against 31.9 crore in the January-June period of 1999.

A similar trend was seen for refrigerators where the top eight companies upped ad budgets by a significant 42 per cent at 103.0 crore this year against only 73.2 crore in the previous year, the report said.

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The only other consumer durable item where total advertising spend has been reduced this year apart from CTVs is washing machines at Rs 32.8 crore against Rs 38.1 crore in the Januray-June period, the ORG-MARG report said.