Slowdown impact: Consumer goods cos tighten ad spends

The ongoing broad spectrum demand slowdown has resulted in a visible shift in the marketing and advertising strategies of consumer goods firms.

Published: 01st December 2019 11:08 AM  |   Last Updated: 01st December 2019 11:08 AM   |  A+A-

The logo of Godrej Consumer Products Ltd (GCPL) (Photo | Twitter)

Express News Service

The ongoing broad spectrum demand slowdown has resulted in a visible shift in the marketing and advertising strategies of consumer goods firms. While direct advertising expenditure has seen a steady decline across most consumer goods verticals, especially in the fast moving segment, firms have taken to using more discount-driven marketing strategies to pull volumes. According to industry reports, the overall consumer goods sector recorded a revenue growth of just between 3 and 7 per cent during the quarter ended September, and has seen little improvement in profit margins during the period. 

While some companies like HUL and Marico maintained momentum in advertising expenditure during the second quarter, the overall segment has seen ad growth slow down as smaller firms with less room in their margins, have sought to protect them. Even larger players, like Dabur Ltd and Godrej Consumer Products Ltd, have put the brakes on ad spending. Disclosures made over the last month show that Dabur’s ad spend remained flat at `111 cr in the same quarter, while GCPL slashed ad spends by 22 per cent. In contrast, HUL’s ad spends increased by 8 per cent, while Marico reported a 12 per cent rise. 

“Many smaller firms have opted to reduce ads and increase offers instead to drive volumes as margins have come under heavy pressure,” said a senior advertising executive. And while the advertising sector was hopeful of a turnaround in the trend during the festive season, market reports from industry trackers show that spending has contracted in most segments in the Dussehra-Diwali period this year. 

The latest market tracker from TAM Adex shows that last year’s top categories — personal care/hygiene, and food and beverages — recorded sharp contractions of 9 per cent and 12 per cent in advertising volumes, respectively. Other segments which saw a substantial decline year-on-year include durables, which fell a whopping 30 per cent, and personal accessories, which plunged 26 per cent. Even the segments, which saw an increase in advertising during the period have recorded slower growth figures year-on-year. Verticals like personal healthcare products, hair care and household goods rose by 22 per cent, 12 per cent and nine per cent, respectively.


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