Advertising during Recession: An Agency Perspective from India

Abstract

Research has addressed the issues of advertising during recession mostly from the industry perspective or at the conceptual level. The present study has explored the advertising agency’s viewpoint of recession and its subsequent fallouts in the industry. The study was based on twenty seven in-depth interviews conducted with top management representatives of 23 major advertising firms in India. The questions were related to the external and internal changes that take place in the advertising agency during recession. The findings suggested that there were changes in the advertising budget, advertising strategies, advertising appeals, media and internal changes in the agency during recession.

Introduction

The global economic meltdown of 2008 resulted due to a credit crunch and affected most countries of the world including India. Firms looked to redefine their strategies and did a rethink to obtain proportionate returns through smart moves (Trivedi, 2008). The slowdown resulted in widespread gloom across the country and affected various business sectors like Finance & Banking, Transportation, Telecom, etc. Most of these sectors dependuponadvertising for their business.

Pitch-Madison Media Advertising Outlook (highlights) showed that the advertisement industry was expected to grow by 2% in 2009 as compared to 15-20% during the previous year (Chandran, 2009). The effect of recession on advertising exists namely because of two reasons: (1) Advertising budgets are typically set as a percentage of sales. (2) Some marketers think that advertising will not change the demand of products in a weak market and so they cut their advertising budget (Baxter, 1999;Dyson, 2008).

During recession, companies expect more returns than normal market returns. They want to reduce costs in various aspects of advertising. In television commercials, this is carried out by re-running the same commercials and shorter duration ads (Chatterjee, 2008). In print media, full-page advertisements shrink in size (Mohanty, 2008). In outdoor media too, hoardings are decreasedby20% (Aikara, 2008). The clients also cut their budget, forcing advertisers to reset their targets resulting in slowgrowth(Trivedi, 2008).

In such a scenario, a relevant question would be to explore what the advertising agency thinks about recession and howit affects the overall performance of the advertising function. Thus, the present study explores the advertising agency’s viewpoint of recession and its subsequent fallouts in the industry. The rest of the paper is organized as follows. The next section provides a brief literature review of the key papers dealing with advertising and recession. This is followed by the methodology and the data collection procedure. Section 4 presents the findings and discussions. Lastly, the managerial implications derived fromthe study are presented.

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