Indepth: One year of demonetisation-How things changed for print industry
India is nearing the first anniversary of introduction of demonetisation on November 8, 2016. The policy move saw almost 86 per cent of the country’s currency, especially 500 and 1,000 denomination notes, becoming invalid overnight.
Introduced by the Modi Government to check corruption and black money in the country, the demonetisation move came without any prior warning and greatly inconvenienced the common man and businesses alike as cash disappeared from banks and ATMs.
With cash in short supply and lot of uncertainty in the market, brands and marketers curtailed their spends, which had a cascading effect in the economy.
On the positive side, it has seen India transition to e-payments and has encouraged a digital economy.
On the completion of one year of demonetisation, Adgully looks back on the chaotic times following introduction of the policy move, how the advertising and media (Note: in this report, we are focussing on Print) industry coped with the fast-changing developments, the steps taken to overcome the negative effects and more...
The initial effects
While stating that more than short term, demonetisation has had a long-term effect on the print industry, Mitrajit Bhattacharya, President & Publisher, Chitralekha Group, noted, “The informal sector is a big advertiser base for print players and that segment was badly hurt by demonetisation. It continues to hurt the industry.”
He further added, “The impact of demonetisation had a direct bearing on both consumer economics – Ability to spend – as well as consumer sentiment – Propensity to spend. While the former was impacted in the immediate aftermath and dampened demand, the real concern was on the latter as the adverse bearing on advertiser sentiment and the print business continued for almost 3-5 months. Apart from retail, realty, etc., other sectors such as consumer durables, electronics, automotive were all impacted to some degree. The opportunity led campaigns of m-wallet and e-payment based BFSI sector clients that we got hardly provided offset to the print volume loss in the marketplace.”
During Demonetisation, digital didn’t get too much impacted. In fact, in some instances, digital advertising increased because there was big emphasis on digital during the crisis with digital payments. Paytm really accelerated the digital growth.
Bhasin admitted that several clients at that time immediately wanted to cancel their advertising spends because their retail sales were significantly impacted due to demonetisation. “It took around 2-3 days for it to sink in as to what was happening. After that, the clients demanded that either we should postpone or cancel the projects for the time being,” he added.
Impact on ad spends
It is a fact that ad spends took a bashing in the period following demonetisation. As Bhasin put it, “November and December are the months which are full of festivals, but due to demonetisation they were severely impacted. Roughly, around 20-25 per cent ad spends in that period were lost due to this.” Adding further he pointed out that overall, demonetisation shaved off the advertising growth by 2 per cent. It was anticipated somewhere around 12-13 per cent, but 2-3 per cent was shaved off.
Sakal’s Dwivedi, too, admitted that initially there was significant downswing due to lack of liquidity issues. However, things are now looking up, especially after festive season.
While stating that it would be difficult to separate the effects of demonetisation, Mitrajit Bhattacharya said that the year 2016 would be counted as one of the most challenging years for the industry. Tripathy, too, termed 2016 a “slow year” in terms of growth.
On the other hand, Malayala Manorama’s Chandy maintained that the effects of demonitisation had been contained to some extent, but at the same time the small retailers and traders were hit in a big way. “Today, the initial teething problems around GST is what is having a greater impact on advertising spends,” he noted.
How the industry took on demonetisation
Pradeep Dwivedi, too, said that at Sakal Media, there was a large focus on the cost side of the business, which led to improved efficiencies all around.
After the low period for advertising in November and December, the industry started reviving from January 2017 onwards, noted Bhasin. “The impact of demonetisation lasted till March-April, but after that the impact wore off and advertising was back to normal. However, soon after that it was hit by GST. The next slow down happened when the GST impact came in,” he added.
Even as the industry is learning to navigate its way around GST and its after-effects, all the stakeholders are bracing for any further policy decisions of the Government.