Case Study: The Effect of Regular Hikes in Media Costs and Shifting Advertising Trends to New Media in the Indian Corporate World

 

Case Study: The Effect of Regular Hikes in Media Costs and Shifting Advertising Trends to New Media in the Indian Corporate World

Abstract

This case study examines the impact of rising media costs on advertising strategies in the Indian corporate world, focusing on the shift from traditional to new media. The study explores tools to measure advertising effectiveness, provides data insights from 2024, and incorporates examples from Indian and global companies. The study provides actionable recommendations for businesses to optimize their advertising budgets and enhance ROI by analyzing the cost-benefit dynamics and technological advancements.

 

Introduction

The advertising landscape in India has undergone significant transformation over the last decade. Traditional media—television, radio, and print—has witnessed regular hikes in advertising costs, compelling companies to explore alternative media channels. This shift is not only driven by cost-effectiveness but also by the increasing penetration of digital platforms. Global examples, along with insights from Indian corporates, underscore the critical need for measuring advertising effectiveness using advanced tools and analytics.

 

Background

1. Regular Hikes in Media Costs:
• Traditional media channels like television and newspapers have increased advertising rates due to rising operational costs and declining viewership/readership.
• Example: Indian TV networks like Star India and Times Now increased ad rates by 15%-20% between 2020-2023. In 2024, further hikes of 10% were observed, impacting sectors like FMCG and automotive.
• This has impacted FMCG giants like Hindustan Unilever (HUL), which historically relied on television for mass reach but has now diversified into digital.
2. Shift to New Media:
• Companies are redirecting advertising budgets to digital platforms, including social media, search engines, and OTT platforms.
• Example: Tata Motors’ shift to YouTube and Instagram for its Nexon EV campaign significantly reduced costs while targeting urban millennials.
• Globally, companies like Nike have reduced their print advertising spend, focusing instead on interactive content and influencer marketing.
• In 2024, startups like Zomato and Swiggy allocated 60% of their ad budgets to digital platforms, leveraging AI-driven personalization.

 

Tools to Measure Advertising Effectiveness

Measuring advertising effectiveness is crucial for justifying the shift to new media. Below are some advanced tools and methodologies used by Indian and global corporates:

1. Google Analytics:
• Used for tracking website traffic, conversion rates, and user behavior.
• Example: Flipkart utilized Google Analytics to measure the impact of its Big Billion Day campaigns.
2. Social Media Analytics:
• Platforms like Sprout Social and Hootsuite track engagement metrics like clicks, shares, and comments.
• Example: Swiggy analyzed Instagram engagement for its "#SwiggyVoiceofHunger" campaign, leading to a 35% increase in app downloads.
3. TV Ad Effectiveness Tools:
• Tools like BARC (Broadcast Audience Research Council) in India help measure TRPs and viewer demographics.
• Example: Dabur analyzed BARC data to optimize its TV campaigns for Dabur Honey.
4. Nielsen Brand Effect:
• Tracks brand recall, purchase intent, and ROI from advertising campaigns.
• Example: PepsiCo India used Nielsen Brand Effect for its Kurkure campaign to measure ad impact across TV and digital.
5. AI and Machine Learning Models:
• Predictive models to assess customer response and ROI.
• Example: Amazon India deployed AI tools to measure the effectiveness of its festive season ads.
6. Heatmap Analysis:
• Tools like Crazy Egg provide insights into user interaction on websites.
• Example: Myntra optimized its landing pages using heatmaps, increasing conversions by 20% in 2024.

Data Insights and Analysis

Graph 1: Ad Spend Distribution in India (2024)

Media Type	Share (%)
Digital	50%
Television	28%
Print	12%
Outdoor & Radio	10%

Graph 2: Effectiveness Metrics by Media Type (2024)

Metric	Television	Digital	Print
Brand Recall (%)	70	88	45
ROI	1.4x	3.5x	1.0x
Customer Engagement	Medium	High	Low

 

Here is the comparative table of media cost hikes over the last five years (2020-2024):

Year	TV Ad Cost Hike (%)	Print Ad Cost Hike (%)	Digital Ad Cost Hike (%)
2020	5	4	3
2021	7	6	4
2022	10	8	6
2023	8	7	5
2024	10	9	6

 

Corporate Incidents

1. Indian Example: BYJU’s:
• Problem: Increasing costs of traditional ads during IPL sponsorships.
• Solution: Shifted focus to personalized campaigns on LinkedIn and Instagram.
• Outcome: Reduced CPL (Cost Per Lead) by 40%.
2. Global Example: Coca-Cola:
• Problem: Declining TV viewership in the US market.
• Solution: Launched "Share a Coke" campaign on Facebook and Twitter.
• Outcome: Increased sales by 2% globally, with significant traction in India.
3. Indian Example: Reliance Jio:
• Problem: High costs of print media for rural campaigns.
• Solution: Used WhatsApp Business API to reach remote areas.
• Outcome: Added 10 million rural subscribers in 2024.
4. Global Example: Unilever:
• Problem: Inefficient ad spend on traditional media.
• Solution: Leveraged AI to automate ad placements on Google and Meta platforms.
• Outcome: Increased global digital ad efficiency by 25%.

Leveraging VR and AR in Advertising

Global companies are increasingly adopting VR and AR technologies to revolutionize advertising. These technologies create immersive experiences, enhance customer engagement, and provide tangible benefits for brand awareness and sales conversion.

Examples of AR and VR in Advertising:

1. IKEA Place App (AR):
• The app allows customers to visualize IKEA furniture in their homes before purchase.
• Impact: Reduced returns and increased customer satisfaction by 25%.
• Indian Potential: Furniture brands like Pepperfry and Urban Ladder could adopt similar technology to engage tech-savvy customers.
2. L'Oréal Makeup Genius (AR):
• A virtual makeup app that enables customers to try on cosmetics using their smartphones.
• Impact: A 20% increase in online sales.
• Indian Perspective: Brands like Nykaa and Lakmé can integrate AR to replicate the in-store trial experience online.
3. Coca-Cola VR Christmas Campaign:
• VR storytelling allowed users to experience a magical holiday journey with the brand.
• Impact: Boosted brand sentiment and social media engagement by 40%.
• Indian Context: Beverage companies could use VR to create engaging seasonal campaigns.
4. Marriott Hotels’ VR Postcards:
• Guests could virtually "travel" to destinations before booking.
• Impact: Increased bookings for underperforming locations.
• Indian Application: Hospitality brands like OYO and Taj Hotels can use VR to showcase premium offerings.

Advantages of VR and AR Advertising:

• Enhanced Engagement: Creates memorable, interactive campaigns.
• Personalization: Tailors experiences to individual users.
• High ROI: Converts curious viewers into buyers by offering a tangible preview.

Tools and Technologies:

1. Unity and Unreal Engine for developing VR/AR experiences.
2. Apple ARKit and Google ARCore for mobile AR applications.
3. Adobe Aero for designing immersive AR content.

Recommendations for Indian Corporates:

1. Start Small: Experiment with pilot AR/VR campaigns to gauge effectiveness.
2. Collaborate with Tech Partners: Partner with startups specializing in AR/VR to reduce development costs.
3. Train Teams: Equip marketing teams with the skills to manage and deploy these technologies.

By adopting VR and AR, Indian companies can bridge the gap between traditional and digital advertising, creating innovative customer experiences while staying competitive in a rapidly evolving market

 

Recommendations

1. Integrate Omnichannel Strategies:
• Use a mix of traditional and new media for holistic reach.
• Example: Reliance Retail’s combination of TV ads and WhatsApp promotions.
2. Invest in Real-Time Analytics:
• Implement AI-driven tools for dynamic campaign adjustments.
3. Adopt Performance-Based Models:
• Focus on measurable KPIs like ROI, engagement, and lead conversions.
4. Leverage Regional Content:
• Create vernacular ads to tap into tier-2 and tier-3 markets.
• Example: Amul’s regional campaigns tailored for diverse audiences.

 

Discussion Questions

1. How can Indian corporates effectively balance their advertising budgets between traditional and digital media?
2. What role does consumer behavior play in determining advertising strategies?
3. How can global best practices in advertising be localized for the Indian market?
4. Are there any risks in relying too heavily on digital media for advertising?

 

Conclusion

Regular hikes in traditional media costs have catalyzed a significant shift towards new media in the Indian corporate world. By leveraging advanced tools to measure advertising effectiveness, companies can ensure better ROI, targeted reach, and higher engagement. Incorporating lessons from both Indian and global case studies, businesses can strategically navigate this evolving landscape to maximize their advertising impact.

 

References

1. BARC India Report, 2024
2. Nielsen Advertising Effectiveness Study, 2024
3. Google Analytics Case Studies
4. "Impact of Digital Media in India," IAMAI Report, 2024
5. Hootsuite Social Media Trends, 2024
6. Tata Motors Nexon EV Campaign Analysis
7. Swiggy Campaign Insights, 2024
8. Reliance Jio Subscriber Growth Data, 2024