War clouds over adland: Will Middle East tensions derail India’s recovery?

After a sluggish FY25 and a sharp market correction, India’s media and advertising sector faces fresh uncertainty as tensions escalate in the Middle East. The intensifying Iran-Israel conflict — compounded by recent US airstrikes on Iranian nuclear sites — threatens to derail India’s fragile trade recovery and dampen economic sentiment.

On June 23, the Sensex plunged over 900 points and Nifty slipped below 24,850 amid a global selloff triggered by fears of a wider conflict. Reports suggest Iran may consider closing the Strait of Hormuz — a vital route for nearly 20% of global oil supply and over 60% of India’s crude imports — raising concerns over inflation and supply disruptions.

The timing and nature of Iran’s response remain uncertain. A severe escalation could deepen the crisis, with potential ripple effects on energy security, investor confidence, and advertising sentiment.

While the Indian advertising sector is no stranger to external shocks — from the pandemic to economic slowdowns — the unfolding Middle East crisis adds another layer of unpredictability. With brands already operating in cautious mode in the Q1, the next few weeks will be crucial.

Trade Shockwaves and Shipping Uncertainty

The Strait of Hormuz, through which nearly 65% of India’s crude oil passes, has become a hotspot, raising fears of supply chain shocks, surging insurance premiums, and volatile fuel costs.

According to the Global Trade Research Initiative (GTRI), even a partial disruption in the Hormuz Strait could significantly impact India’s energy security and trigger inflationary pressures — conditions that historically precede advertising slowdowns. Exports of perishable commodities like basmati rice, bananas, tea, and soya meal to Iran and Israel are particularly vulnerable, the GTRI said.

India’s trade exposure to the region is substantial. In FY25, India exported $1.24 billion worth of goods to Iran and $2.1 billion to Israel. Imports from both countries stood at $441.8 million and $1.6 billion respectively. Fuel availability and its cost will hugely impact the Indian economy.

Adland’s Short-Term Worries, Long-Term Hopes

The mood in the market is gradually shifting from optimism to caution, industry experts told e4m.

Ashish Bhasin, Founder of Bhasin Consulting and a veteran ad industry leader, believes the situation warrants a watchful eye, not panic.

“When there’s uncertainty, clients adopt a ‘wait and watch’ stance. But unless this expands beyond the region, there won’t be a significant long-term impact,” he said.

“India is no longer as vulnerable—we import crude from multiple countries, not just the Gulf. Plus, there are positive offsets: good monsoon forecasts, rural demand revival, and improving urban consumption.”

Bhasin expects a short-term dip in sentiment, especially in categories like discretionary travel, jewellery, and automobiles, but believes festive season spending will rebound if the situation stabilizes. “Unlike the West, India’s advertising is largely sentiment-driven. If consumer confidence returns by Q3, brands will resume spending,” he added.

According to the latest Pitch Madison Annual Report, India’s advertising spend in 2024 was above Rs 1.08 lakh crore. Of this, the festive season commands nearly 30-40 per cent share.

‘Domino Effect’ from Global Headquarters

Ramesh Narayan, Chairman of the Advertising Council of India (ACI), offered a more cautious outlook: “If this war intensifies and actions like closing the Hormuz Strait become reality, India’s economy will start feeling the pain. Advertising and marketing reflect the state of the economy, so they will be adversely hit as well.”

He added that travel freezes imposed by multinational network agencies—common during global crises—could impact campaign planning, shoots, and international brand coordination. “Most MNC companies would err on the side of caution. A domino effect may follow in India too, especially if global budgets are frozen,” Narayan said.

Anil Solanki, Media Lead, dentsuX, echoes the sentiments. “Multinational brands might cautiously spend on advertising. Sectors like FMCG, Auto, BFSI might take a wait and watch approach. This is mainly because the content consumption might shift to TV and Digital news from comedy or other genres.”

Also, restriction on oil might increase the raw material price in India, companies might cut marketing budget to fill in the gap, Solanki noted.

Investment Sentiment

Sayak Mukherjee, Founder of Brandwizz Communications, noted that while mergers and acquisitions in India haven't yet been impacted, market volatility is prompting investors to play it safe.

“Private equity and strategic investors tend to pause or redirect capital toward domestic or safer markets during global uncertainty. That said, digital, SaaS, and consumer tech remain strong as they are less exposed to geopolitical disruptions,” he said.

Prasanna Iyer, CEO of Rezilient Digital, echoed this sentiment: “While the direct impact on India is limited for now, deal sourcing and closures may go on hold until there is medium-term clarity.”

Cautious Messaging

Nimesh Shah, a senior advertising strategist, said a sense of “no wild bets” has set in among clients. “If the situation escalates, we may see more severe spending curbs as a safeguard mechanism.”

Sachin Kumar, founder of Bottleopeners, believes the ongoing geopolitical tension may prompt a behavioural shift in Indian consumers—especially when it comes to travel. “We’re likely to see an increase in domestic tourism as people become more risk-averse in the face of global uncertainty,” he noted. This shift could benefit local travel and hospitality sectors but may reduce ad spending by international travel brands and luxury destinations.

He also flagged caution in advertising from petroleum and petrochemical brands, which are closely tied to global oil dynamics. “With the Strait of Hormuz under threat and oil price volatility in play, brands in this sector may adopt a wait-and-watch approach for Q2,” Kumar said. He expects them to revisit media strategies based on how the conflict evolves in the weeks ahead.

The degree of escalation—and the resilience of consumer sentiment—will determine whether India’s ad industry can bounce back by the festive quarter or if 2025 will turn into another year of defensive budgeting and muted campaigns, industry experts warn.

In April only, a plunge in Indian stock markets — wiping out investor wealth worth Rs14 lakh crore — sparked 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 the US President Donald Trump and retaliatory actions from China — raising fresh concerns over a potential economic slowdown.

Although Trump put a hold on tariff hike for now, the ad industry is bracing for the tough time ahead.

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. Income Tax relief offered by the Union government from April 1 this year 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.