On 24th May, the combined value of all listed companies on the Bombay Stock Exchange crossed US$ 3 Trillion mark, for the very first time, taking the market capitalization to the country’s GDP ratio to 110%; a ratio Warren Buffet looks at to check the elasticity potential of global markets. The global average stands at 130. Let’s look at some data points:
- The $3 trillion reality came into existence, despite the Covid-19 waves. This helps hold Indian markets in very good stead and a favorite even for the foreign investors.
- India is 8th largest in terms market cap in the world, potentially heading to become the 5th largest, after US, China, HK and Japan.
- The Buffet ratio indicates that all other large markers (barring China)are ahead of the global average, US at 222. This means still very good head room in the Indian markets.
- Not only did India provide the world’s highest returns in the past 12-month period, but even the last decade indicates healthy CAGR.
- In addition to the IPO lineup of Paytm, Delhivery, Zomato, Nykaa, Lava, Go Air and Car Trade, at least 50 other unicorns would go the listed way soon.
- Govt’s privatization drive will mean tighter-run, more profitable public sector companies. Core sector is growing so is the Forex reserves.
- April GST collection is all-time high. Govt subsidies that will fuel growth, coupled with healthy receipts will keep a check on the fiscal deficit.
- Enough liquidity in the market with RBI’s decision.
- Expectation of good monsoon and potential of greater produce with adequate labor force in the rural markets.
- An aggressive vaccination drive could mean India fully vaccinated by year-end. Increased consumer confidence will reflect across all categories.
- Central Government will push for growth and development considering their remaining 3-year term.
- Critical state elections where both anti and pro incumbency factor will work in favor of developments.
- A very profitable corporate sector will mean newer employment opportunities and rise in salary levels.
So, in all good times are ahead for the advertising and marketing sector. But, when sectorial growth happens, it will be just a few companies in that sector that usually take the larger pie, not necessarily because they think differently, but because they are infrastructurally poised well to capitalize on the momentum.
However, with the pandemic-induced changes in consumer behavior and sustainability + purpose at the core of what will define success in future, all companies will necessarily have to start thinking differently. The primary need is to understand consumers as people and also differentiate between brand equity and come and buy me advertising. As marketers struggle to ensure their tag lines have life beyond the wordsmith’s imagination, it sets a very good platform for agencies to move beyond the traditional charter and become trusted advisors to clients. For this agency must possess the skillsets for genome editing in the marketing DNA much like how the IT consultants do this at a fundamental level.
It is certain that disruption at scale is what will welcome us in the next decade, either because of intentional strategies by some companies or forced by markets/consumers. Google which kept denying that they never abused their monopolistic position in terms of passing the ad requests in favor of their own ad marketplace, finally bowed down to antitrust pressure.
Auto sector will face its own internal challenges as the markets move towards EV. Projections indicate almost 50% of new cars getting sold globally by 2030 will be EVs, with India at 20%. They are also struggling as they don’t know their customers; entire “relationship” is managed by the dealers. Mercedes recently decided to disrupt this with their decision to sell to customers directly. Same is the case with the other potential growth sector, insurance, which sells “fear” and finally getting a conducive customer mindset. Growth will happen with bigger churn, unless the lifetime value of the customers is in focus.
The Kantar brand footprint 2021 report as usual has certain beverages and snacks on top slots. There’s an opportunity for some here to make people think about what’s going into their bodies and the connection between that and immunity. Health and wellbeing can take an altogether different shape. So is the case with travel/tourism/entertainment.
Android smartphone sellers other than Samsung is reportedly fighting value erosion, while iPhone is likely to be controlling 40% of the total market in size next year despite 22% volumes, largely owing to brand equity/loyalty, in addition to the robust hardware and software, while the others focused on features and price and are no longer a differentiator.
On the world tobacco day, a bunch of college girls took a pledge that they will never accept a marriage proposal from a smoker. This could be a signal on how customers can force companies to change their strategies. The tobacco major’s heightened focus on their food and Agribusiness will soon be on cards.The news of a large FMCG company’s internal data revealing their “unhealthy” food items will mean a reorientation of their strategy which will include trust building. Butit could alsobe business opportunity for others.
Privacy issues, end of third-party cookie, ad frauds and saturation will continue to pose challenges for digital advertising. Media owners with their own walled gardens will emerge in importance, particularly the regional ones. The challenges in the digital conversion; connecting intent to actual transactions,will work in favor of traditional media, particularly print. It could also mean a redesign of the media-mix with a larger e-commerce share. Large digital media owners with credible first-party data can also capitalize on this.
If the Sensex journey from 1000 to 50000 took 30 years, the 50 K to 100K could just be around the corner. While investors can place the right bets and sit tight, hope my fellow ad/marketing colleagues will, in addition to the above opportunities, also identify the next unicorn before anyone else could and work with them, courageously inventing innovative engagement structures.
The article is authored by S Yesudas. The author is an Entrepreneur/ Marathoner/ Cyclist/ Author/ Speaker/ Mentor/ Investor/ Consultant and as he describes, in continuous learning process in the university of life.