Aug 8, 2008

Mktg - Ad spends on wane as companies plan more promos

NEW DELHI: Ad spends are on the wane as companies are gearing up for promos to maintain that direct link with the consumer so critical in today’s fast-changing retail sphere.

And with the festive season round the corner, below-the-line (BTL) activities seem to be the buzzword in every marketer’s lexicon. Around 32-33% of the total promotional budget is slated to go towards BTL promotions this year, say analysts.

“In future, it will reach a ratio of 70:30, where 70% of the marketing spend will be geared to promos,” contends Consults Inc CEO Harish Bijoor. As for above the line or advertising tactics, they’re all so very expensive, particularly during a downturn.

For Samsung India deputy MD Ravinder Zutshi promos will be a “thrust area”, with 4.5% of his company’s turnover etched as marketing spend.
“The ratio of BTL:ATL would be 60:40 this year as against last year’s ratio of 55:45. The BTL drive is also derived from the thrust on regional marketing, but this calls for a lot of customisation. Samsung’s Dream Home Roadshows, local language POP/POS material, regional language brochures, local language advertising are some of the activities we will carry out in all the regions,” he elaborates.

A year ago, a company’s spend on advertising and promos was in the 70:30 ratio. Now, it is around 60:40, or 50:50. However, FMCG companies still go in for 90:10 or 80:20 ratio, as they are quintessentially mass products whereas since durables and electronic products are sold at multi-brand outlets and require product demonstration and frequent first-hand consumer interaction, promos are undoubtedly a better option.

“ATL is very expensive and companies are looking for expenditure cuts. That is the main reason that below-the-line spending has added impetus,” says an analyst.

Of the total ad spends of LG Electronics worth Rs 370 crore this fiscal, 60% will go to BTL activities while the rest will be on advertising. In the festive season, the company will spend around Rs 70 crore on better displays in retail outlets, special discount scheme, in-store demonstration, new catalogues and product launches.

LG chief marketing officer LK Gupta said, “BTL promotions help build brand equity and influence the point of purchase as consumers are not satisfied with advertising alone.” Videocon marketing head Sandeep Tiwari said, “Out of the Rs 80 crore marketing budget this festive season, it would be a 50:50 deal for ATL and BTL, nearly 35% will go into in-shop demonstration.”

MPG CEO Jeffery Crasto said, “Even as the media cost has been reasonable, except for certain television prime time slots, companies want to work closely through consumer touch points in retail outlets. Moreover, televison and radio media are increasingly used to promote activities in a mall or a retail outlet.”

“A TV commercial would cost a company anywhere between Rs 15 lakh and Rs 2 crore whereas spend on roadshows, discount offers, billboards is much reasonable,” says Euro RSCG chief creative officer Satbir Singh.


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