Market crash jolts recovery hopes: Is AdEx revival at risk again?

The recent plunge in Indian stock markets—wiping out investor wealth worth ?14 lakh crore—has sparked fresh concerns among advertisers, marketers, and the broader advertising industry.

The sell-off came in the wake of global market turbulence, sparked by tariff hikes announced by U.S. President Donald Trump and retaliatory actions from China—raising fresh concerns over a potential economic slowdown.

Although the markets have had a breather on Tuesday and indices rose 1.5%, the uncertainty remains. Moreover, several  stocks, which includes India’s top advertisers like HUL,  Dabur, Aditya Birla Fashions, are trading near or below their pre-Covid levels.

The ad industry, which closely tracks consumption trends, had been pinning its hopes on a sustained recovery this fiscal, especially after the income tax reliefs announced in the Union Budget. From April 1, individuals with annual income up to ?12 lakh are exempt from paying income tax—significantly boosting middle-class purchasing power.

But just a week into the new tax regime, those hopes already appear to be under threat. A sharp drop in disposable incomes and consumer sentiment could once again stall spending, prompting brands to curtail their ad investments.

This has come at a time, when many agencies and platforms are already battling margin pressures and delayed client payments. Only digital-first players in niche segments have seen any meaningful momentum. A further dip in consumer demand could spell longer-term pain. 

"The market was just beginning to show signs of revival in the last quarter, both in rural and urban pockets where demand had been severely suppressed over the last few quarters. Tax relief gave some optimism, but the market crash is likely to offset those gains—especially in urban India, at least in the near term,” say marketers. 

Impact on GDP growth 

Trump's new tariff regime imposes a flat 26% levy on Indian imports into the U.S.— for sectors like automotive, electronics, textiles, FMCG, IT, retail, and gems. The development threatens the Reserve Bank of India's (RBI) estimate of 6.7% economic growth in 2025-26 and the government's economic survey forecast of 6.3%-6.8%. 

Analysts believe that India's economic growth could slow by 20-40 basis points, to remain at around 6%, in the ongoing financial year due to the higher tariffs, which would prompt deeper interest rate cuts by the central bank and impact consumer spending. 

In India, GDP growth is often considered as a good predictor of advertising expenditure (AdEx) of businesses. The average growth of the AdEx is usually expected to be around 1.5 times of the GDP growth. 

Large-ticket purchases may be paused”

The ad industry needs stability—whether it’s economic or political—to confidently invest in growth and brand building. Without clear indicators of recovery, most brands will continue to play it safe, industry leaders say.

Shradha Agarwal, Co-founder and CEO of Grapes, opines, “Being highly sceptical of the dynamic market, consumers are very likely to cut down on their discretionary spending, with high-end purchases taking a major setback. Commodities such as cars, electronics, luxury items, etc., are the first to take a backseat in the preference list with the onset of a slowdown in the economy.”

While rural demand is more agri-dependent, urban consumption—particularly discretionary spending—may see a temporary slowdown as financial insecurity sets in. The timing is unfortunate, given early signs of recovery were just beginning to surface, says Anil Solanki, Senior Director, Media Lead, DentsuX. 

However, Sandeep Gidwani, Co-Founder & Director, Shimmers Cosmetics, has a different point of view, “Consumers may postpone large-ticket purchases, but daily personal-care rituals will stay strong, especially in urban India. The demand for value-driven innovation is rising, and brands that offer quality with efficacy continue to thrive. So, while there may be cautious spending, we don’t foresee a major slowdown, just a more mindful consumer,” 

Ad spends to be recalibrated

India’s advertising market, which is estimated to be Rs 1.1 lakh crore, is already grappling with cautious brand budgets and muted growth in FY2025. If consumption falters, advertisers will inevitably recalibrate their media plans, warn media buying agencies. 

Brands might reassess their advertising budgets and media mix strategies for the upcoming quarters. This includes spend recalibrations, channel preferences (digital vs. TV vs. print), and campaign pacing, industry leaders speculate. 

Agarwal noted, “With business activities taking a setback, it can delay purchases, leading to low ROI on ads. Given the reduced conversion rates, brands are very likely to pull back their advertising spends to implement cost control measures. There will be increased focus on optimising ad budgets to bring about the desired result without breaking the bank.” 

Performance-led channels to gain

There will be a further shift from brand building to performance-based advertising, industry experts say.

Digital advertising expected to witness a surge in demand for its ability to fetch measurable performance and enable targeted reach. While OOH activations might experience a brief hiatus, industry players will be very selective for influencer marketing, with a high preference for micro-influencer activations, Agarwal noted. 

Rather than pulling back during the slowdown phase, advertisers will focus on smart spending, says Gidwani, who feels, “There’s a visible shift towards digital storytelling and influencer-led content that drives community and relatability. Brands now prefer targeted, high-return content over big, one-size-fits-all campaigns.”

Mohit Ghate, Co-founder at Wit & Chai, also expects a shift from big-budget legacy media to sharper, performance-led channels like digital, influencer collabs, and regional content. “Even during slowdowns, brands that stay visible—cleverly, not loudly—win the long game. Creativity shines brightest when budgets tighten”, says Ghate, adding, “On a lighter note, even chai tastes better with a little stir.”

Sayak Mukherjee, Founder at Brandwizz & Creatorcult Media, struck an optimistic note: “The overall recovery trend is still positive, and with the right steps, confidence will bounce back soon. Even during the slowdown, brands won’t stop—they’ll shift. Expect a stronger focus on emotional resonance, innovation, and ROI-driven storytelling. It’s a chance to build trust and long-term value.”