Jio effect: Telecom firms’ ad spending rose 50% in 2016, says report

Reliance Jio, Airtel, Vodafone and Idea together spent about Rs1,000 crore on advertising in 2016, according to a Madison World report

Reliance Jio’s free data offers and voice calls prompted frenzied ad spending by Airtel, Idea and Vodafone. A Vodafone-Idea merger is also on the cards. 

 

Call it the Jio effect: telecom firms increased their advertising spends 50% to around Rs1,000 core in 2016. And they could increase it by up to another 15-20% this year, say media buyers. 

  Reliance Jio Infocomm Ltd launched its services in September last year, offering free data and voice calls till the end of March. Its high-decibel launch prompted frenzied advertising by its main rivals, Bharti Airtel Ltd, Idea Cellular Ltd and Vodafone India Ltd. Idea and Vodafone have since announced their intent to merge.

Together, the four firms spent around Rs 1,000 crore, according to the Pitch Madison Advertising Report 2017 published by media buying agency Madison World.
And almost half that was spent by the market leader; Airtel spent Rs450-550 crore on advertising as against Rs250-350 crore in 2015, while Reliance Jio just spent Rs 100-150 crore, according to the Pitch Madison report.

“With Jio coming in, it is almost like a telecom services war. The leaders of yesterday are under threat. Everyone is trying to occupy a larger space. Airtel, Vodafone and Idea will have to be on the top of the game to engage consumers and users,” said Anita Nayyar, chief executive officer of Havas Media Group, India and South Asia.

Reliance Jio recently crossed the milestone of 100 million subscribers in 170 days, adding seven customers every second.

Spokespersons for Airtel and Idea declined to comment. Reliance Jio did not respond to e-mails seeking comment.

“2016 was an exciting year for Vodafone and can be summed up as the ‘year of digitization’ since we leveraged our digital platforms innovatively and introduced several differentiated offerings,” said Siddharth Banerjee, executive vice president, marketing, Vodafone India.

This year will see even more intense competition among the telecom firms, and, as a result, more ad spending.

“We expect both Jio and Airtel to continue aggressive spending and if the Idea/Vodafone merger operationalizes during the year, they will join in,” said Sam Balsara, chairman and managing director at Madison World.