One year after demonetisation, digital looks at sharper, smarter spends
It’s been a year since the Modi Government introduced its demonetisation drive in India. The policy decision taken to curb black money in the society and also fasttrack the country’s move to digital payments is most remembered for the haunting images of people standing in long queues outside banks and ATMs in search of elusive cash. Overnight, 86 per cent of the country’s currency, especially 500 and 1,000 denomination notes was rendered invalid.
We at Adgully have been following up with industry stalwarts on the impact of the demonetisation drive across media, marketing and advertising. Print players, broadcast experts and radio majors have reminisced about how the initial days after demonetisation were, analysed the short term and long term impact, how they coped with the challenges that cropped up and what the industry did to tide over the impact of demonetisation.
Now on the first anniversary of demonetisation, Adgully spoke to a cross-section of digital industry leaders, who shared their insights, experiences, advice, analyses and much more…
Immediately following demonetisation, Network18 Digital experienced a drop in advertising, driven by primarily real estate clients, admitted the company’s CEO Manish Maheshwari. He explained that many of the new launches of real estate clients were postponed, which impacted their marketing plans and consequently their media spends. “This was also a time when e-commerce companies faced a problem with their cash-on-delivery (COD) business and moderated their ad spends until they fully understood the impact. Also, an immediate increase in ad spends from digital wallet players following demonetisation was noticed, Maheshwari added.
On how his company combated the impact, Maheshwari said, “There are two things we did immediately to minimise the adverse impact for us. First, we re-purposed our sales team from real estate to BFSI clients, who we thought would benefit from demonetisation. Second, we got our sales team to pitch long-term brand building campaigns where the client was not looking for immediate sales bump.”
“Last year’s growth in the overall digital industry was generally muted, since most advertisers adopted a wait-and-watch approach,” he added.
At the same time, many in the industry felt that even as demonetisation affected the ad industry on a very vast level, it worked as a catalyst in boosting the growth rate of the digital ad industry. “The digital industry has been fortunate in leveraging the benefits of demonetisation as it brought a major shift in advertisers from television to digital. Our payment model emerged as a major reason behind this shift,” said Ashish Bahukhandi, Founder & CEO, Apps Discover.
He further said, “Initially, majority of mainline ad campaigns were either held back or faced cost cuts, which played a key role in creating business for digital industry, even during demonetisation. Whereas we are in the digital space and we have always been promoting the concept of digital transactions as they are more transparent and smooth. Therefore, even after demonetisation nothing has changed in our payment method. During any sort of budgetary crisis, all non-measurable expenses are curtailed and unlike other advertising mediums, we are economical and promote online transaction, which worked as a shield in protecting us from the effects of demonetisation.”
He affirmed that the impact on digital ad spends was minimal as digital ads are known for being budget-friendly. “So, the only impact demonetisation had on our ad spends is that it increased business for us,” Bahukhandi added
Sahil Chopra, CEO and founder, iCubesWire, too, noted that The advertisement budgets overall were at all time low compared to the preceding times leading to lesser inflow. At a personal level it was a matter of unrestfor everyone but at the organizational level we suffered because our partners experienced the drastic impact on advertisement spends, in turn affecting our business as well.
He further added, "Just like the 2 sides of the coin, it was an opportunity for some while a threat for few. The FMCG, e-commerce, retail and various other industries were at the receiving end where COD had been a prominent contributor to them by the end users had received a massive hit, overall giving a drastic blow to the revenues, making it all time low. While on the other side, the digital wallets, UPI apps and other advocating for e-money made gains by rising to the need and gained the limelight overnight. Kotak Mahindra introducing 811, UPI as well as banking app, being specific to the date itself,Paytm enjoying the growth like never before and all the others UPI and wallets from Axis, HDFC, ICICI and many more in the same league advocating e-money, not only outgrew comparatively but also had the maximum advertisement spends compared to the preceding times to viral the brand by manifolds."
Ritesh Singh, Co-founder and MD, #ARM Worldwide, too, noted that post-demonetisation, customers as well as brands stopped spending as much as they were before. Few businesses started holding on to their spends, while there were few other businesses who shuffled their budgets and started spending more on digital. The first half of the festive period went well, but the second half saw a dip in advertising budgets.
On overcoming the effects of demonetisation, he said, “Our business is dependent on the aggression and desire for growth of our customers. In Q4, we tried our best to raise the bar as much as we could do. Also, as a de-risking measure, we rescheduled the plans of our international expansion.”
For Pooja Jauhari, CEO, The Glitch, “At first it was caution and understanding what the possible effects of it could be. Clients were cautious, as FMCG and any other categories which are fast moving and operate on cash would be. They were learning how this would affect their business and in turn, marketing spends had to be made wisely.”
She added, “Honestly, we are not a cash business and apart from the initial settling-in period, the effects were not drastic and things got back to normal very quickly. However, we focused on stronger e-commerce strategies to help our clients ride this wave. A few clients did stop spending, but a few saw the opportunity in making their e-commerce presence stronger.”
Jauhari added, “At The Glitch, this helped us push for sharper e-commerce strategies, which opened up newer avenues for our clients. In my opinion, spends have become sharper and smarter. And that is always a positive thing.”
On one year of Demonetisation, Geetika Dayal, Executive Director, TiE Delhi-NCR, said, "Demonitization was a sudden announcement, be it any organization or business, everyone faced some friction. Many start-ups and small and medium-sized enterprises (SMEs) associated with TiE experienced a slowdown in funding and expansion plans. Some of our members reported issues. Overall, more startups and businesses experienced unavoidable delays in receivables. However, few startups observed ramp up in funding specially in the finance technology sector, with millions of Indians looking for alternate ways of transactions."
Dayal, further noted that after demonetization a rise in plastic money was observed, more people started using their debit cards for payments rather than for withdrawing cash at ATMs due to the long ques. Debit card transactions rose to more than 1billion in January from 817 million reported transaction in the previous year.
"While major ecommerce players suffered a dip in sales as well as order value, e-wallet companies utilized this opportunity to the fullest and experienced their biggest business boost yet. The number of mobile wallet transactions increased to 63 lakhs from 17 lakhs. Paytm, one among the biggest players in the mobile wallet space revealed that it served 45 million customers within three weeks postdemonetization.", she affirmed.
According to Neena Dasgupta, CEO & Director at Zirca, Demonetization was a sudden move by the Indian government, yet we welcomed the move and the spirit behind it. This move created panic among the people who ended up rushing to exchange their old currency notes. However, ZIRCA was not impacted by this move in a big way because most of our transactions occur via cheques or via bank transfers. For example, payments to partners and vendors are made using cheques or bank transfers.
She further noted that It took a couple of months for the digital advertising industry to cope with the aftermath of demonetization. However, advertisers soon began actively advertising on digital platforms once consumer demand picked up.
"The initial slowdown and the reduced ad spends in the beginning of 2017 impacted overall annual ad spends drastically," Dasgupta noted.