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Advertisers gear up for a big splash to cash in on signs of demand pickup

Strong out-of-home demand revival, two back-to-back IPLs, green shoots of recovery in rural demand, and early onset of summer is propelling a three-year high in advertising spending, companies, ad industry executives, and analysts said.

“The traditional economy is set to see a very strong comeback as the year unfolds across multiple consumer-facing sectors, though the start-up economy remains subdued. Commodity inflation easing out, signs of revival in rural demand, and resurgence of travel and tourism are leading to strong advertising spending,” Sam Balsara, chairman of Madison World, which represents Titan, Godrej Consumer, Asian Paints, Marico and Blue Star, said.

ET Online

Executives at Godrej Group, Coca-Cola, Dabur, Maruti, Bisleri, and Lotus Herbals said they plan to invest heavily on advertising and marketing spends as a share of revenue in the April-June quarter, led by a combination of factors including new launches, early summer and strong revival of out-of-home demand.

“The intent, going forward, will be to increase our advertising spends, rationalise trade spends and consumer promotions and go back to building demand for our power brands. We will be budgeting a significant amount of increase in advertising expenses, going forward,” Dabur chief executive Mohit Malhotra told ET.

FMCG companies, which depend on rural demand for over a third of sales, said they are hopeful that ad spending will lead to market share gain and recruiting consumers. But they are not alone.

Shashank Srivastava, senior executive director (marketing and sales) at India’s largest car company Maruti Suzuki, said: “FY24 is expected to close with highest-ever sales volumes. We expect marketing spends of close to ‘1,500 crore with multiple new launches and tactical campaigns, and an increase of 15-20% in ad spending next year.”

Godrej Consumer Products said in a management commentary that ad spends in the December 2022 quarter grew by almost 21%, and it is “committed to increasing overall marketing spends for the next two years.”

Meanwhile, Kamal Nandi, executive VP at Godrej Appliances, said: “We will be upping brand spends, especially on cooling categories, during summer, in response to the increased demand fuelled by the rising temperatures.”

Arnab Roy, vice-president, marketing, at Coca-Cola India and Southwest Asia, said: “The business is showing very strong momentum, so we will be spending incrementally higher on advertising compared to previous years.” The India unit of the soft drinks maker had the “strongest year ever” leading to a period of tremendous growth ahead, the company’s global president and CFO John Murphy said recently.

Likewise, for Bisleri. Angelo George, chief executive at Bisleri International, said: “With scale up of capacities and stronger volume growth, our marketing spends are also going to be the highest in the last three years.” The bottled water company has announced three-year partnership deals with Delhi Capitals, Mumbai Indians and Gujarat Titans, and is speculated to be also signing a fourth team.

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