ASHISH BHASIN is not new to tectonic turbulence. Bhasin, who is a globally recognized media veteran of over three decades, is CEO APAC and Chairman India, Dentsu Aegis Network, besides being a member of the Dentsu Aegis Network’s Global Executive Team. Bhasin, who represented India as a Member of the Jury at the 63rd Cannes Lions International Festival of Creativity (2010), oversees Dentsu Aegis Network’s rezoned Greater South (Asia) regions that include India, Sri Lanka, Bangladesh, Indonesia, Thailand, Vietnam, Philippines, Malaysia, and Myanmar, and is also the first Indian ever to head DAN’s APAC business. Widely regarded as a formidable thought leader in the advertising industry, Bhasin, in an interview with Creative Brands says, “digital and contact-less will become more and more of a trend all the way to finishing the entire sales transaction… I also think performance measurement will take more precedence than ROI.” Bhasin views the unprecedented turbulence caused by Covid-19 pragmatically and says the current transformation within the industry “would have happened anyway — it’s only that the pandemic is accelerating it.”[Excerpts]
Creative Brands: As we speak we’ve found ourselves amidst unprecedented times. Never before in living human memory or history has humanity as a whole is faced with a crisis as colossal as this. Data is terrifying. What is even more terrifying is that the situation seems to be fluid and is seemingly unpredictable. How do you view it all?
Ashish Bhasin: Currently, it’s an emergency, which started off as a health emergency and now is rapidly becoming a financial and economic emergency as well. Yes, as leaders, our first priority was to ensure safety of our people and offices and so on. Then the next phase was how do you ensure business continuity planning. For example, we at Dentsu have 14,000 people in APAC, 3,700 people in India, and all of a sudden they have had to work from home. This called for a significant amount of arrangements and planning. I always say our unsung heroes are our IT guys, look at the stuff they handle — equipment, bandwidth, technology, and so on. And now we are in the third phase, where there isn’t much business, where we are thinking about how best do we conserve cash, how do we cut down expenses. Then there will be the fourth phase — of recovery. So it will happen in phases.
However, from the perspective of the advertising industry, the second quarter of the calendar year is going to be terrible, the next quarter will also be bad. But if the monsoon is good, it is going to make a huge difference to rural demand. Agriculture accounts for about 20-22% of our GDP and a very large section of our population depends on it.
A good monsoon would mean more money in the pockets of our rural consumers and so they will buy more tea, more soap, more toothpaste, more consumables and so on. So we can expect some semblance of normalcy around Diwali. But I am afraid the next six months are going to be terrible and overall it’s not going to make it any better for advertising.
CB: For people, brands, and communication, these are shape-shifting times. Times such as these challenge all known notions of communication and branding. How do you view brands communicating with the world outside given the circumstances?
AB: Well, at the moment, most brands don’t have a need to communicate with the world because other than essential items or items of daily consumption there is hardly anything that is available in India because of the lockdown. It’s not a demand-side issue, it’s not about advertising and creating demand — it’s a supply-side issue.
If there is demand, millions of people will rush to buy mobile phones, air-conditioners, white goods, clothes, shoes or whatever. So that isn’t the issue at hand. First of all, a big consequence of it all is going to be a huge crunch, a huge pressure on liquidity, which is what drives the industry. Liquidity has dried up. From a client’s perspective, advertising is not going to be the priority, it’s going to be one of the easiest expenses to turn off. And since everybody needs to conserve cash, communicating with their audiences is not going to be on top of their minds at the moment. Survival will be a bigger issue at play on their minds.
CB: A lot of people have taken to the digital medium…
AB: Yes, brands did, and have taken to it. But in our assessment even in the month of April itself, digital will face a 70-75% drop — that’s close to a massive 80% slide!
CB: In any case, circumstances aren’t conducive, there will be large-scale economic instability, significant stasis… any recovery is a matter of conjecture.
AB: You see people seem to have this misconceived notion that suddenly on the 4th of May a switch will turn on and everything will come back to normal. That’s not going to happen! Factories have been shut for a while, workers have gone back home and by the time factories restart and put in motion the whole supply chain of raw materials and so on, on the back of a severe liquidity crunch, it’s going to be more than six months for production to come up to what it was in the months of January or February, which, in itself, wasn’t a great time hit as it was by a global slowdown. Even to get there it’s going to take 6-8 months after the restrictions are lifted. So, the feeling that all of a sudden things will swing back normal is misplaced.
CB: What sort of discussions and conversations have you had within the industry?
AB: Well, I have regular meetings and discussions with my Executive Committee members and other leaders and what I gather is the general consensus around the sensible thing to do — conserve cash, because one doesn’t know how long will this continue and even if we return to normalcy how long will it be before it is back to business.
Our industry is very unique. So if you look at the media part of the industry, it works on a 2.5% commission. But TDS or tax deducted at source is often withheld. Hundreds of crores of rupees are tied up with the government which should be coming back to us. Also this year, nobody is going to make any profit. So one of the things that we have written to the Union Information & Broadcasting Minister Prakash Javdekar was about the refunds that need to come back to us from the government so that we are able to pay our salaries.
We have also requested the government, which, including the state governments and the PSUs, is a big advertiser, to pay off our old dues, so that we can pay our salaries and meet other payables. Otherwise, agencies, particularly the smaller ones, are going to struggle during this period.
We have also made some suggestions for the period once things start opening up — because advertising creates demand, it acts like a lubricant for the entire production-consumption story. Nobody is going to ramp up their factories to full capacity or no automobile manufacturer is going into full production until he is sure there is demand. What is the point in producing cars and storing them in your warehouse! That’s where advertising is really going to help.
So we have suggested that government incentivise clients, else the incentive would be to cut expenses. So why not give them tax breaks? For example, if a client were to spend Rs. 100 on advertising, let it be considered as Rs. 200 for tax deduction, or amortise it as investment rather than expense, let’s say for a period of three years. So we need to find ways of incentivising clients to get advertising and the economy going.
CB: Have there been any responses from the government side?
AB: Not yet — we had sent it in only last week. It will take a little time for government response, but we are hopeful that there will be some sympathetic consideration because our suggestions are neutral — we are asking only for our money. In fact, if advertising starts rolling it will only be positive in terms of revenue for the government. They will get back more in taxes than they would need to dole out. I also think government subsidies should be restricted to people who really need it — the poorest of the poor, especially in a country like ours. But there are certain things the government can do to help us through these very difficult times.
CB: Today is such a time — a time of cataclysmic change. What do you think can or will emerge out of this shall we say rubble of change — in relation to brands, brand thinking, creative thinking, and advertising?
AB: I think we’ll have to rethink our strategy about the way the industry works. For example, there’s a lot of low-cost films being ‘made at home’ today. So, do you really need those big productions? Maybe you could do with a few such and then you could do the rest with a cheaper way of producing such films that can communicate pretty well and pretty effectively.
I think digital and contact-less will become more and more of a trend all the way to finishing the entire sales transaction. These are some of the trends that will emerge. I think performance measurement will take more precedence more than ROI… brands might want to know the sort of bang they are getting for the buck, because that buck would have become even more precious! I think when advertising resumes, the focus will be more on performance related advertising, resulting in sales rather than just brand building in the short term. Of course, brand building will be important, but the focus will be on sales and performance.
But you know this would have happened anyway, but the COVID situation has accelerated it. I think 50% of the jobs existing today will not exist in the years to come in advertising, because things like AI and automation will start playing a bigger role.
CB: In terms of losses would you have any ballpark estimate the industry would have sustained?
AB: The industry was expected to grow between 11-12% this year. In fact, most agency groups, including Dentsu, WPP, Madison and others, projected a growth of a similar trajectory on the basis of the industry size being Rs. 75,000 crore, so roughly Rs. 8,000 crore would have been added to it this year. I think growth will be below zero — there will be no growth. It will actually shrink and therefore it will be negative after more than a decade of growth. So it will be unlike a 12% growth, it could be a -8% de-growth, translating into a loss of Rs. 15,000 crore worth of advertising.
CB: Are you beginning to think of rationalization of the workforce within the creative industry?
AB: Look, for sure. As I said in the long term there is going to be more and more automation and greater efficiencies. In the short term most people are going to try cost-cutting measures — maybe salary cuts, meaning a little bit of hurt spread across a lot of people rather than a lot of hurt to a section of people. So, they will cut out expenses and so on. But if this situation continues longer, I am afraid the industry will see layoffs. Certainly, it’s not a good year to look for a job in advertising.