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The Slowdown & Its Impact On Digital Media in India
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As its understood by all the slowdown is here to stay and we have earlier taken the VC point of view on the slowdown but this time we spoke to Digital Media CEO’s and Business Heads to know their take on the slowdown and its impact on digital media.
We spoke to Sidharth Rao - Founder, Webchutney, Leroy Alvares - President,Tribal DDB, Manish Vij - Co-Founder, Quasar Media, Madan Sanglikar - National Director, MindShare Interaction and Manish Sinha Senior Vice-president-Strategy, Mudra.
Q1) Will the slowdown impact revenues for digital media i.e. agencies and publishers?
Leroy: In the short term I am sure it will impact as the changes in the marketplace were sudden. While most clients have not reduced spends there is a wait and watch approach with the need for changing strategies to counter the change in the environment
Sidharth: Frankly, a ‘perceived slowdown’ should have zero impact on the growth of the “stronger” digital agencies and publishers prospects. Lets face it, we still too small a part of our clients budgets for all this to matter. At 500 crores, we are too small to be toast, and traditionally large advertisers have just started tasting some good success with online and i believe we will continue seeing some great growth. In fact, its a golden opportunity to aggressively evangelize and “market” the medium and its measurability to clients vis a vis expensive print and television media. And surely Engagement Driven & RoI advertising will sound the coolest now.
Manish Vij: In our opinion not negatively impact but the growth will be impacted
Madan: The answer is a big Yes. Publishers will have to relook at their marketing & content strategies. Agencies will have to control the cost & look out for profitable accounts.
Q2) What will be the impact - positive or negative?
Leroy: I think its imperative that the when spends are tight accountability increases. For a medium that is extremely accountable and ROI focussed I see more revenues flow into this medium rather than revenues shrinking. Clients that have seen the benefits of using the digital medium will look at increasing spends.
Sidharth: Two ways to look at this: Overall advertising spends including traditional media could see a slowdown. Digital should be positive, i can say that for clients we work with for sure.
The negative impact i can see really is going to on entrepreneurship only because of the massive ripple effect. When you have business news headlines screaming slowdown and shakeout, even people who dont have anything to do with it tend to push themselves back. There are atleast a 1000 good ideas out there which would take backseat just because of this mindset. Thats going to be unfortunate because ironically, this is the best time to go for it (boot strapped), because everyone else is shit scared!
Manish Vij: Neither negative nor positive but Smart professionals can definitely find avenues for impacting it positively
Madan: Both. Positive, since budgets will get diverted to digital considering the lean back status of the traditional medium. However, advertisers will play a wait & watch games hence quarterly targets will surely shift. On another note, while the transaction oriented business will flourish, the brand building led campaigns will get delayed.
Manish Sinha (on question 1 &2):
I think the digital medium will be the least affected in the current economic slowdown as it has the least penetration in India. And at 2- 3 % of the advertising pie I believe digital media will not suffer much. In fact it will gain at the expense of traditional media.
The measurability of digital media will ensure that clients will move and not cut back on digital media. Perhaps the slow-down will act as a good opportunity when they will divert funds from traditional media to experiment with digital media.
Which may not be a risky experimentation at all as audiences across segments will continue to migrate to online and mobile channels. Online advertising and social media may provide the greatest return for some categories and a younger TG in the near term.
The next 12 months is definitely a good time to invest more in social media and mobile media. Long term revenues for publishers will be affected positively by audience migration to online sites. Despite the economic slowdown, I expect a majority of companies to continue investing, experimenting and expanding across digital media.
Q3) How long do you think the slowdown impact will last?
Leroy: Its hard to say but as things stand the year 2009 will be impacted and thus be challenging.
Sidharth: I am not a pundit on markets really, so i wouldn’t know. The digital industry, like every other, just need to pull through this with whatever it takes.
Manish Vij: Cant say infact our belief is no one can – if history is of some benchmark then may be 24 months before positive sentiments come back
Madan: Tough to say. But 2009 will be a challenging year.
Q4) Do you think investments into startups in this space will slowdown? If yes what effect will that have?
Leroy: I am a strong believer in an Idea. A great idea will always find funding. However, business plans will be doubly scrutinized to ensure that make money fast.
Sidharth: I can see angel investors surely chickening out, the appetite there is not so great to hold on for more than 2-3 years before they exit. Professional investors would get ‘cautious’ about valuations maybe. I think the India internet story fundamentally remains unchanged. And trust me, some of the best internet companies in India will be built in the next 1000 days.
Manish Vij: Yes! StartUps without strong ideas that impact hard or change the way we work will not find it difficult still but startups without clear revenue visibility will definitely be impacted
Madan: Not exactly. After all necessity is the mother of all inventions. So these touch times will lead to everyone attempting to take new & cost effective measures. In fact this is the time when advertiser & agencies will have to come out of their comfort zones & try something new.
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