Indepth Part 2: Rs 7-15 cr could be the cost of cancelling big-ticket industry events
In this two-part indepth report, Adgully takes a look at the major industry events that have had to be either cancelled or postponed in light of the ongoing COVID-19 crisis. Part 2 of this report
In Part 1 of the report, some leading names of the advertising industry speak on what this entails for Indian advertising, their reactions to the cancellations and what can be done in sucn an unprecedented situation.
Cost to the Event Management Industry
Media and Entertainment is one of the top 5 spenders on live events in India, according to FICCI-E&Y Media and Entertainment report. A survey of marketers showed that 5% of marketing budgets are allocated for live events.
The organised live events segment in India grew at a robust 10% in 2019. It was expected to continue in that trajectory till 2-3 years with more IPs being launched.
While explaining how the industry is coping during the crisis times, Brian Tellis, Co-founder & CEO, Fountainhead MKTG, says, “The events business is one that survives on the now. Given the immediacy of our business, the instant impact has been tremendous. Events that are not timely or open on timelines can be postponed but events like product launches can't be deferred easily. It is still the early days and while the monetary impact can be far-reaching, we have to see how things pan out. The event business by nature requires people to come together and the required social distancing doesn’t augur well for the business at the moment. We should look at creating financial efficiencies like managing debtors/ creditors cleverly, cutting off all additional expenses, restrictions on all business travel and using the available man-hours to up the game on creativity, business development, training programs, etc., along with other relevant product development.”
Corporates are looking to experiential marketing agencies to provide innovative technology solutions in this crisis. Recently, XP&D, Multi TV and FCB India joined hands to launch a virtual experiential platform, called Be.Live, to create customised OTT platforms for clients.
An E&Y survey found that managed events are the most popular types of events as compared to activations, IP and digital events.
Organisations that have responded proactively to the COVID-19 crisis have been able to avoid incurring steep costs. Many like Goafest had the foresight to see that public concerns around the health crisis mandated a swift response. AdFest, London International Awards, and Cannes Lions 2020 have also taken similar steps.
An industry source claimed that the cost of cancelling such events could be anywhere between Rs 7 crore and Rs 15 crore, depending on the size and scale.
Speaking on the decision to call off the festival, Nakul Chopra, Chairman, Goafest and immediate past President, AAAI, explained, “An option was to wait and watch – as the festival was still some time away. Many smaller events took this option. In our case this was not possible as that could have likely translated into substantial costs – today in hindsight we know that this was the right call.”
He further told Adgully, “The outlay for Goafest – depending on the outlook for the year – currently varies between Rs 8 crore and Rs 10 crore. Had we cancelled the festival with say only 10 days to go – this would have meant substantial costs would have had to be written off – as we took the call with a month to go this was fortunately not the case. Given that both AAAI and The Ad Club are ‘not for profit’ organisations – the ability to take losses is understandably very low. We also had to bear in mind that as we got closer to the festival – our patrons, sponsors and other participants would all also start incurring costs that may or may not be recoverable. So, while the decision to cancel was not at all related to the financial aspects of the festival – and was made solely for health reasons – the timing of the cancellation was influenced somewhat by the financial factors.”