Top consumer-facing companies such as Hindustan Unilever, Maruti Suzuki, Britannia, Aditya Birla Fashion & Retail, Shopper Stop, Emami, Godrej Consumer Products, and Bata are planning to increase their advertising and promotion spending in the current fiscal year above pre-Covid levels, despite document inflation impacting margins that some stated can be tempered by reducing prices in different heads.
Aim to increase spending by 10-25%
Companies aim to raise advertising spending by 10-25 percent in 2022-23 compared to the previous year, according to advertising executives.
Expect a recovery in rural markets
CEOs of those companies said the move was made to take advantage of the fact that demand has rebounded in some of the worst-affected categories, such as apparel and stylish retail, while other industries, such as FMCG, expect a recovery in volumes and rural markets within the next two quarters.
“People are realising that turning off the advertising tap may be simple, but there is always a cost. It takes three times more money to make up for a one-point share loss,” said Sam Balsara, chairman of Madison
World, who expects the ad industry to grow 20% in 2022.
“So, it is critical and necessary to support brands and companies despite inflation and companies that reduced ad-to-sales ratio have historically suffered from a slower growth rate compared to those that kept investing,” he stated.
Despite the lengthy waiting period, Shashank Srivastava, senior ED, gross sales and advertising and marketing at Maruti Suzuki, claimed that there is no slowing down on engaging with customers through
advertising and advertising and marketing.
Automotive advertising spending expected to raised by double digits
“Automotive advertising spending is expected to increase by double digits, surpassing $7,500 crore for the industry, with carmakers accounting for over half of that. Higher spends are being driven by high-decibal new launches, the maintenance of brands already selling in the market, and ground-level activation to increase conversion of attention into sales,” Srivastava added.
When very high inflation is squeezing margins, several corporations have said that they may defend margins by reducing various spending. Several corporations have also begun to provide clients cross-entry price hikes in the form of price hikes, reduced pack sizes, or both.
Due to the commencement of the Covid pandemic and lockdowns, most corporations cut back on advertising and marketing spending in 2020-21, however some industries, such as FMCG and consumer electronics, rebounded in 2021-22, supported by improved consumer attitude.
Hindustan Unilever company will grow market growth at a faster rate
Hindustan Unilever CEO Sanjiv Mehta, India’s largest consumer goods company with a substantial advertising budget, told last month that the company will grow market growth at a faster rate than the rest of the industry and will not be afraid to invest in it through advertising. Rising consumer franchise and safeguarding the business model, according to Mehta, are two major imperatives in this kind of unpredictable
hyperinflation scenario.” However, we are in it for the long haul. “And we will not do anything that will harm our business in the long run,” said the company.
Aditya Birla Fashion & Retail managing director Ashish Dixit told analysts that advertising investments will need to increase dramatically from where they were in FY21 and FY22, when the company had to make deep cuts, and that they will return to pre-pandemic levels.
