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Ad & digital leaders show how to decipher the demonetisation realities

Even as the country is reeling under the sudden demonetisation drive of the Government, marketers, media and advertising agencies are gearing up to operate in a new currency regime. It’s been around 10 days now since Prime Minister Modi announced that Rs 500 and Rs 1,000 would no longer have legal tender and ever since, India Inc has been on a wait and watch. Along with the demonetisation, the Government has also announced several measures to curb black money in the economy. The noose on corrupt practices have never been tighter.

Amid this scenario, Adgully reached out to several of India’s marketers, media and ad agencies, broadcast and print players to have some clarity as to the impact of demonetisation, especially on the media and entertainment industry. Most refrained from commenting on the issue, stating that it was still early days and that they were waiting for further developments. However, most of the industry leaders that Adgully spoke to agreed in unison that the impact of demonetisation would be in the short term.

At the same time, the industry leaders also stated that if things didn’t improve beyond December, then the impact could be long lasting. They further said that no new deals or negotiations were taking place till the current situation stabilised. The deals conducted earlier would roll over to the next one or two months. As expected, marketers are playing safe.

The industry experts further stated that sectors like jewellery, retail, e-commerce, some bit of FMCG and two-wheelers were not seeing much movement, post the demonetisation announcement.

E-commerce players, after announcing a hold on cash on delivery immediately following the demonetisation announcement, are gradually resuming this payment option. Flipkart in an official note issued stated: “Flipkart has resumed cash on delivery fully up to any amount. As the government announced demonetization, Flipkart proactively reached out to its customers whose orders were in flight to educate them and offer additional time to procure cash. We significantly ramped up our card on delivery facility and covered majority of pin-codes, also reaching remote towns. The government's decision has given a big push to adoption of digital instruments like wallets and UPI.”

Some of India’s leading names in advertising and digital media have some deep insights to share on the demonetisation impact. Read on to know more...

Sam Balsara, Chairman, Madison World



What, according to you, would be the long term impact of demonetisation on:
(a) The economy as a whole
I am no economist, but if we can reduce black money in the economy, imagine how much more money will come into our banking system and this will give a tremendous boost to investment and in time, consumption.

(b) The M&E industry
What’s good for the economy is good for the M&E industry. They both go in tandem. The M&E industry grows at least at twice the rate of GDP growth in a growing economy like India.

Which are the sectors that you see getting impacted the most and in what ways?
Almost all sectors of the economy will get affected, because the economy runs on money and if we overnight remove 87 per cent of the money, naturally there will be a short term crippling. It’s a good thing that some concessions have been given, so a lot of people are accepting Rs 500 and Rs 1,000 notes. The FMCG industry is the largest contributor to the TV industry, so a cut or postponement in their ad spends is likely to hurt the M&E industry the most.

Mobile wallet companies have emerged as the biggest gainers. How can they consolidate their gains? Which other sectors do you think have benefitted out of demonetisation?
They should step up their educative efforts, not just branding efforts. I feel they are promoting their brand name, but that is not enough. They should put out a large number of educative ads on how to use. There is a large portion of India that is not as digitally or tech savvy as they want them to be and they have to be educated.

Getting used to cashless/ online business transactions - how ready is India for this? Any special insights for the M&E industry?
India is not ready for it, but it is being made ready for it. Necessity is the mother of invention. The M&E industry is going to have a trying four weeks. Because of shortage of cash, demand for a lot of categories has gone down and, therefore, advertisers don’t want to advertise at a time when demand is low or cannot be fulfilled. But we must remember: “No Pain;No Gain”.

KV Sridhar



What, according to you, would be the long term impact of demonetisation on:
(a) The economy as a whole
(b) The M&E industry
It will be very positive, you will start seeing it very soon because there is more money in the banks and there is more whites pending, so more taxes and also there is more money available in the banks to fund. New companies, new loans will become easier. The economy will grow because opportunities will be much higher. If the money is not blocked anywhere, if the money is in circulation, suddenly you will see growth like thousand times growth, which is relying on banks. Suddenly it makes the flow of cash much easier, since money will be much easier, therefore, availability of funds will be much higher. That will encourage the industry and people also to spend more.

Which are the sectors that you see getting impacted the most and in what ways?
Where there is a scope of primary corruption and black money – real estate and we know real estate is 50 per cent black money, and you have gold, which has cash transaction, and there are many land, properties, any high value items.

 A lot of wedding planners will go out of business now as cash transaction in this business is very high. Even commodity trading and things like that. These things will get affected quite a lot.

Mobile wallet companies have emerged as the biggest gainers. How can they consolidate their gains? Which other sectors do you think have benefitted out of demonetisation?
I think all the banks will benefit, the organised financial sector will benefit and consumers will benefit. At the end of the day, for small time entrepreneurs and start-up companies, funds will be easily available for them. All the banks, Paytm, Ola Cabs and their establishment, shops which are doing transaction via credit cards, where you can see all the access is white.

Almost 90 per cent of the transactions in kirana shops are in cash without any receipts, so the money never gets paid to the government. These will be streamlined now. The less you go to the bank, the more money you make and then more transactions will happen smoothly. So they all will benefit.

Getting used to cashless/ online business transactions - how ready is India for this? Any special insights for the M&E industry?
Everything is white money in the media and entertainment industry, except when you go to content creation and film making, because there is a lot of cash transaction going on there and various things are accounted or unaccounted and then they show too much of expenses. All these things will affect the entertainment industry where a lot of content creation is involved, because on paper you may show Rs 10 lakh, but you pay far more than that be it the technician, the actor or the director, anybody. So the entertainment industry will be affected in this way – film production and events, but not the media. Media is all online transaction, it is white money. In media, you negotiate the price, but you don’t give them cash, but in the entertainment industry, especially content creation, there is a lot of cash involved in content creation. Though the channels and buyers may take in white, but the production companies have to manage with both black and white, because the people who are involved in, whether they are technicians or celebrities pay only cash. Therefore, they have to flip their black money into white and doing cash payment for everyone.

The economy will be growing. GDP will be far more transparent than it is. And lots of taxes will be deducted. We will have a very healthy economy. We will be able to do a lot more for the country’s infrastructure. All the development companies will grow and increase employment.

Rajiv Dingra, Founder and CEO, WATConsult



What, according to you, would be the long term impact of demonetization on:
(a) The economy as a whole
Definitely the banking sector will benefit immensely from this. Retail industry right firm small sellers to big retailers will be affected adversely in short term but in the longer term they too will benefit from this. So far the execution seems to be mired in controversy but overall it seems it is having a desired impact. According to me, even if 50 per cent of the money that was in cash is deposited into banks that would give a big boost to economy in long run.

(b) The M&E industry
I think overall the media and entertainment industry would only benefit in long term as largely it has corporate players dealing in white money.

Which are the sectors that you see getting impacted the most and in what ways?
Small time retail sellers, agriculture, real estate and construction companies will be hit badly in short term.

Mobile wallet companies have emerged as the biggest gainers. How can they consolidate their gains? Which other sectors do you think have benefitted out of demonetization?
Banks, wallets and credit cards will do very well.

Getting used to cashless/ online business transactions - how ready is India for this? Any special insights for the M&E industry?
India has no choice now. With the noose tightened on cash flow digital is the only way. It’s the best news for e-commerce, online sellers and digital payment guys. For agencies and advertisers it will have negative impact for one or two quarters but the long term benefits outweigh the negatives.

Vivek Bhargava, CEO, iProspect India



What, according to you, would be the long term impact of demonetization on:
(a) The economy as a whole
(b) The M&E industry
The demonetization move is a positive one for India in the long term and a huge win for us. Let’s do some number crunching. Currently, around 14 lakh crore of Indian currency is legit and will get replaced – the remaining 7 lakh crore, people will either have to destroy or declare it. With a minimum 60% tax on it, the minimum benefit to the Government is about 4 lakh crore which is the current year’s deficit. The other longer term benefit would be that people will increase consumption rather than hoard cash which will make the organized market competitive against the unorganized market – both now come on an equal footing.

As far as the M&E industry is concerned, while there will ofcourse be short-term challenges, especially for TV production units, etc. – I don’t see any long term issues owing to demonization. Everyone understands that there will be inconvenience faced by all for a few weeks, it’s eventually all for the larger good inclusive of the rapidly growing M&E businesses.

Which are the sectors that you see getting impacted the most and in what ways?
All sectors connected to the unorganized economy are likely to be affected. Agriculture, commodities, jewellery, luxury goods, entertainment, restaurants and traditional retail may take a hit. The biggest one to be negatively impacted though is the real estate sector, especially the repurchase and big ticket deals as in India, between 10% and 70% of the value of a property being bought or sold takes place in cash.

Mobile wallet companies have emerged as the biggest gainers. How can they consolidate their gains? Which other sectors do you think have benefitted out of demonetization?
Technology and financial services are expected to gain in the medium to long term as a result of demonetization. Payment gateways, online banking, mobile wallets and e-commerce in general will thrive and have infact already begun to consolidate their gains. PayTM has seen a 435% in overall traffic, 200 per cent hike in number of app downloads and 250 per cent surge in number of overall transactions and transaction.

Getting used to cashless/ online business transactions - how ready is India for this? Any special insights for the M&E industry?
The whole world is currently using electronic transactions and India will eventually move this way too. Like the spread of WhatsApp to the interiors of the country and lower income groups, mobile wallets will be adopted at the same speed in the next 2-3 years. Soon a majority of the people will be using m-wallets and undertaking online transactions. India is ready to shift from a cash economy to a digital economy and this move has accelerated the process. This is an apt investment in the best interests of the next generation as well. The M&E industry is no exception and will gradually adapt to this revolutionary movement.

Jehil Thakkar, Head, Media & Entertainment Sector, KPMG India



What, according to you, would be the long term impact of demonetization on:
(a) The economy as a whole
(b) The M&E industry
On economy as a whole I haven’t evaluated, to be honest. I am not an economist.

In the media and entertainment industry there will be some negative impact and some positive. In the short term, films and box office collection can get impacted, especially silver screen. When the exhibitors will digitalise their ticket sell then it will benefit the industry overall. There will be improvement in box office collection and more confidence in the system. And on the television side this will only help digitalisation of cable. Cash transaction will reduce hopefully. So over the long term it will have positive impact for the television distribution industry and therefore broadcasting.

Which are the sectors that you see getting impacted the most and in what ways?
Films and television.

Mobile wallet companies have emerged as the biggest gainers. How can they consolidate their gains? Which other sectors do you think have benefitted out of demonetization?
Clearly they have been benefitted significantly. And lots of transaction will grow to evolve it. With the absence of credit in the country mobile wallet are going to be medium of choice for payment. I think the way they will consolidate their games is really to concentrate on expanding the vendor network. Vendors who accept mobile wallet. I think it's critical to do that very very quickly. Consumers are opting for them but the company needs to get more vendors on the platform.

Getting used to cashless/ online business transactions - how ready is India for this? Any special insights for the M&E industry?
I think it's really come as a surprise to the entire entertainment industry and it has all other industry. But I think in long run it will be extremely beneficial because it will lead to better reporting, it will lead to cleaner transaction, and will have more predictable in the unpredictable industry.

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