Post Demonetisation, a Resilient Media Attempts to Bounce Back

Demonetisation wreaked havoc upon the best quarter for advertisers but ad firms and media houses insist that the blip was a temporary one.

A man looks at newspapers with cover stories on withdrawal of Indian 500 and 1,000 rupee notes from circulation, on a pavement in Srinagar November 9, 2016. Credit: Danish Ismail/Reuters/Files

A man looks at newspapers with cover stories on withdrawal of Indian 500 and 1,000 rupee notes from circulation, on a pavement in Srinagar November 9, 2016. Credit: Danish Ismail/Reuters/Files

New Delhi: Naysayers have had their day, but optimism prevails in the advertising and media industries. The demonetisation of Rs 500 and Rs 1000 notes, a process initiated on November 8 by the Narendra Modi government, wreaked havoc upon the best quarter for advertisers – October to December 2016 – but ad firms and media houses insist that the blip was a temporary one. The advertising industry suffered losses to the tune of Rs 2,000 crore; news print experienced a dip in pagination, and in some cases, a complete shutdown of editions. To blame demonetisation alone would be an oversimplification of the myriad issues that have assailed advertisers and media business in the past, but recent economic measures have attributed to shrinking revenues and a fall in the demand of insecure consumers.


A decline in advertising revenues has impacted newsprint in particular – mainstream media has been compelled to scrap editions or reduce the number of pages. HT Media, which publishes the Hindustan Times and the English financial publication Mint, shut down four editions and the business bureau for Hindustan Times in Delhi and Mumbai. In a circular addressed to its employees, HT Media reportedly stated a greater focus on their digitisation plans as a reason for the shutting down of editions in several Indian cities, including Ranchi, Bhopal, Indore, and possibly Allahabad, Varanasi and Kanpur. Ad revenues for HT Media in the print segment declined by 5.7% to Rs 511.4 crore.

Indiscriminate job cuts and a retrenchment drive at the Kolkata-based ABP Group – both within its English daily The Telegraph and its flagship Ananda Bazar Patrika – have been widely reported recently and a decline in advertising revenue has been cited as a compelling reason for downsizing staff by as much as 40%. Key advertisers like Hindustan Unilever (HUL) and ITC, which reportedly down-stocked at various trade points during the liquidity crunch, also held back on advertising campaigns.

Other publications too, have been compelled to adhere to ‘rationalising’ measures during November and December last year, when 86% of the cash in circulation was rendered illegal due to demonetisation. Varghese Chandy, vice president of Malayala Manorama, mentions “strict page management” as a buoy during the months of economic uncertainty and a reduction in the availability of cash. “If there are fewer ads in a particular month, we simply reduce the number of pages – this is something we have always done, in order to curtail the cost of newsprint,” says Chandy. Malayala Manorama, which has a subscriber base of 2.44 million, recorded an increase of around 60,000 copies from July to December last year.

In Manipur – where distributors and hawkers buy newspapers from the distribution sections of newspaper officers with cash, and sell them for a small profit to readers – the scarcity of smaller bank notes compelled them to buy papers with notes that were suddenly illegal tender. The All Manipur Newspaper Publishers’ Association, in a statement on November 15, stated that the distribution of newspapers would not be possible, as they could no longer transact legal tender with distributors and hawkers. Consequently, newspaper houses suspended publications, urging the government to add newspapers to the services that could accept banned notes until November 24 – government hospitals, air and rail ticketing, milk booths, pharmacies, crematoriums and burial grounds.

Apart from national dailies and regional publications, magazines, which run advertising campaigns for luxury watches, perfumes and automobiles, experienced a decline in ad revenues. Manas Mohan, chief executive and publisher, Open Media Network, speaks of “sitting out the difficult phases” and of looking forward to the summer months. Open magazine, which has a circulation of 1.3 lakh copies a week, saw an almost 50% decline in ad revenues in November last year, and a 20-25% dip in circulation. “In the magazine business, there is a certain degree of fluidity between editorial and advertising. We simply increased the editorial pages when there were lesser ads,”  says Mohan, adding, “we have advertisers from the banking and financial sectors, like Mahindra Mutual Fund, and we expect to grow by 50-55% in ad sales revenues, this year.” Mohan also suggests developing a core subscription base as a strategy to counter arbitrary economic measures. “If one is serious about the magazine business, one can’t afford to ignore cultivating a strong group of subscribers, especially now, with the advent of digital media.”


The advertising industry felt a slackening in the pace of work within agencies, which led to losses during what is usually a busy period. Ashish Bhasin, chairman and CEO-South Asia, Dentsu Aegis Network, observed that demonetisation, which was announced soon after Diwali, curtailed spending : “Almost 35-40% of the year’s business comes from the October to December quarter. The Indian ad industry market is estimated to be Rs 50,000 crore and 40%, or Rs 20,000 crore gets spent in this quarter. Now half of that, which is Rs 10,000 crore worth of business is unaffected as half of the quarter had passed. It is the balance Rs 10,000 crore worth of business that has been impacted by 15% to 20%.” He estimated around Rs 1,500 crore to Rs 2,000 crore worth of advertising business loss during the quarter. Bhasin also added that there was a slow but certain return to normalcy. “Advertisements for mobile wallets, credit cards and electronic commerce companies like Paytm have increased, but one expects things to pick up by the next festive season.”

Independent advertising firms like Bang in the Middle have also reeled under the impact of deferred investments in mainstream media campaigns. Naresh Gupta, managing partner and CSO of the creative and design agency says that has clients like entertainment company INOX Leisure Limited, e-commerce marketplace IndiaMART, and Dulux Paints, noticed a “clear move to cut spends on paid media.” He also spoke of restructuring costs within the agency, “We are a small, tight start up. We have not downsized, but have tightened our belt, for instance, we have curtailed travel and fixed expenses, and are attempting to bring down costs by 10%.” Gupta also mentioned the fact that real estate businesses as well as the fast moving consumer goods (FMCG) segment were more susceptible to a decreased cash flow in the country. “The discretionary cash available within a household drives demand, particularly in the FMCG industry; with cash becoming scarce, people do tend to cut consumption.”

The FMCG segment, according to a report by Edelweiss Securities Limited, contributes around 28% of the revenues generated by the advertising industry. For instance, companies like Dabur India, an ayurvedic and natural health care company with products in the hair, skin, health, oral, and foods category, reportedly cut their ad spends by 50% in the month of November. There was destocking across various trade channels – distributors, particularly wholesalers and retailers, which led to a drop in primary sales, by around 30% in the month of November.

“FMCG companies are not investing in new campaigns currently, they have deferred brand campaigns or are rolling out last year’s work,” said Ashish Chakravary, chief creative officer of Contract Advertising, a subsidiary of J. Walter  Thompson.  “But it isn’t as though creative teams are twiddling their thumbs; work has already picked up and several new summer campaigns are underway,” he added.

According to the report This Year Next Year by WPP-owned media agency GroupM, India’s advertising expenditure is expected to grow at 10% and reach 61,204 crore in 2017. Digital media is expected to grow at 30%, and print media at 4.5%. The report predicts an increase in ad spends by automobiles, e-wallets as well as political parties. “The government has emerged as a sunrise sector – spending a lot during the election campaigns,” says Anita Nayyar, CEO, India and South Asia, Havas Media Group. Having said that, it will take a while before other sectors, particularly FMCG, consumer durables and real estate recover and contribute to increasing advertising revenues.

Radhika Oberoi is a freelance journalist based in New Delhi.

  • S.N.Iyer

    Above all. the Govt has been using the TIMES NOW TV channel to display ads for helping remonetisation by use of credit/debit cards so that more cash can go to the rural population. It is a well known facf the use of cards in the urban areas is very prevalent and this ad by Times Now on behalf the Govt. As it is most ATMs have no cash boards and banks are forcing to withdraw cash and may a charge! No onecan understand what the Govt is upto!