Advertising Industry Bodies Issue Contradictory Messages Over Ad Campaigns

The scrapping of highest-denomination currency notes by the government is seen hitting advertisement spending as consumers facing a cash crunch are unlikely to be swayed in a big way by product promotions.

According to industry sources, the Indian Society of Advertisers (ISA) had a meeting with its members and asked them to postpone all their advertising campaigns for two weeks.

ISA feels consumers are not able to buy goods and services because of a shortage of money after the government decided to take old Rs 500 and Rs 1,000 notes out of circulation.

Banks and ATMs across the country are witnessing daily scrambles for cash as people try to exchange the scrapped notes or withdraw cash within the tight limits imposed the government.

Another advertising industry body, the Indian Broadcasting Federation, has issued an advisory to advertisers and media agencies to continue with their existing deals.

It said, "All payment transactions between IBF members and advertisers/ agencies are done electronically, or by way of cheque/draft payments through proper banking channels and hence there is no question of cancelling confirmed deals on the pretext of demonetisation."

Media experts are not surprised by the contradictory messages being sent by the leading advertising industry bodies as there is no clarity when the cash shortage is going to be resolved.

The immediate impact of the cash crunch is on retail advertising and print is suffering more in comparison to the broadcasting industry, which usually relies on long-term big deals.

Shripad Kulkarni, managing director of media agency Vizeum, said: "As one would expect, we see a knee-jerk reaction with a sharp drop in print retail advertising and an opportunity sensed by mobile wallets. The impact on ad spends will depend directly on how fast the market sentiment rebounds."

Media planners are not sure how much loss the market may suffer if advertisers turn cautions in the current financial climate.

But they are hoping for the market sentiment to bounce back and things to become normal over the coming weeks.

P.M. Balakrishna, CEO of media agency Allied Media, said: "There are no facts available and everyone is speculating. The low-end goods have got influenced and some campaigns may get postponed."