Addressing a special session on ‘If India is booming, why is AdEx not’ at the unveiling of Pitch Madison Advertising Report (PMAR) 2024, Abheek Singhi, Managing Director & Senior Partner, Boston Consulting Group (BCG), discussed challenges for the advertising industry, a three-pronged strategic call for the transformation of the industry and the creation of global Indian brands.

At thePMAR 2024launch, Singhi began the session by highlighting how India's economic growth has been remarkable, with the country reaching its first trillion-dollar milestone after over six decades, and then achieving the next trillion in seven years and the next in just three years. Projections suggest that India's economy, currently around $3.5 trillion, is poised to expand further, possibly reaching $8.5 to $9 trillion in the coming years. From being outside the top 20 economies, India has now ascended to the top 5 and is on track to potentially be in the top 3 by 2030, he shared.

This growth can be attributed to various factors: a GDP growth rate of around 7%, a burgeoning market with over 1.4 billion consumers driving over $2 trillion in consumption, and significant advancements in digital penetration.

“So, if everything is going well, why am I talking about India booming and AdEx not booming,” Singhi asked. “If you look at it in real terms, AdEx is growing less than the GDP.”

“What has happened in the last 15-20 years is that the shape of consumption has changed. We as a society are consuming more. We are consuming more in terms of services rather than just products,” he added.

Singhi then talked about the changing patterns of consumption in urban India. “Like, there has been a noticeable shift from DIY practices such as home hair dyeing and facials towards availing professional services at salons." Similarly, there has been a transition from homemade meals towards dining out. This shift in consumption patterns is significant, reflecting a broader trend towards premiumization across various sectors.”

“We are seeing growth in premium. We are seeing growth in services. We are seeing growth in certain channels." Singhi said. “But while all of India is growing GDP-wise and consumption- wise, the sectoral revenue growth is sluggish. So, the first thing to keep in mind is how to de-average and segment the data.”

He gave the example of FMCG. The growth rate has been low, hovering around “8-10% over the past five years and even lower in the last 12 months." This slowdown in sectoral revenue growth contrasts with the overall economic and consumption growth in India.

Singhi then took the session forward and highlighted how predominantly advertising is still viewed as an expense. “One thing for the industry to think about is how do you actually change? How do you change from being an expense to an investment? Should we even call it AdEx? Why not call it AdIn? The moment we say AdEx, it just reinforces the point that it is an expenditure. And on expenditure, nobody thinks about a return whereas on an investment, people actually think about return.”

He argued that the first change should be brought about by changing the vocabulary. He further talked about a three-pronged strategy for the advertising industry to work on.

“The first is who do you think of as your customer? One thing which may be worth thinking about in addition to the chief marketing officer, in addition to the brand head, in addition to the category head, how do you think of the CFO being your customer? Also, when you think about investment, I think the entire vocabulary starts changing,” Singhi pointed out.

The second aspect, according to Singhi, involves considering the various roles within the advertising value chain. “Is it possible to create a network that not only provides media and creative services but also takes ownership of the entire customer-consumer journey, delivering outcomes aligned with the objectives set by stakeholders such as brand managers, category heads, and CFOs?” This approach aims to go beyond mere programmatic advertising.

There's recognition of advertising's traditional role in prompting action and issuing calls to action. However, there's also value in establishing a presence throughout the customer journey. It's about finding a balance where one can separate and yet take ownership of both aspects effectively, the managing director argued.

“The third is to have sharper segmentation and focus.”

In terms of sectors, there are certain categories, spaces, or channels where growth is evident. It's essential for advertisers to anticipate these trends and assist their clients in navigating the landscape effectively. By staying ahead of the curve, they can advise the clients on where to invest their resources to achieve their desired outcomes.

Singhi concluded the session by highlighting how India does not find its fair share among the top global brands.

"So, can the advertising agency in India actually help Indian CEOs, CMOs, CFOs, brand managers to create the next set of global brands, some of which will be from India?"