The telecom industry's pricing war is spreading to advertising, as top carriers Bharti Airtel, Vodafone India and Idea Cellular jacked up spending on promoting their latest price points and services to ring-fence users from jumping ship to Reliance Jio Infocomm.While the three incumbents have While the three incumbents have already increased ad spending by 10-15% each since Jio launched services early September, they are expected to further rev up expenses by at least 20% on year each this fiscal through March 2017, heads of advertising and marke ting agencies involved in planning telco strategies said.
Jio is expected to raise its spending by 50% on year this fiscal in the firefight to swiftly build on the 100 million user base, especially in the crucial months immediately after it starts to charge for services from April 1. Jio will have to promote its offers to get users to make it the primary SIM. Currently, most of its customers use it as a secondary operator, and for customers to shift loyalty, Jio will have to advertise heavily, experts said. Jio did not respond to ET's query.
ET spoke to ad makers working with these telecos on their marke ting campaigns across media platforms. There seems to be a consensus that with Jio rolling out its tariffs, campaigning wars will only intensify. This would pressurise telcos at a time when revenues are falling and margins are thinning, but this is unavoidable, they said.
Arun Iyer, chief creative officer, Lowe Lintas, working on the Idea Cellular account, said the field has become `hyper competitive.' The Kumar Mangalam Birla company brought out a `tactical' television ad that spoke on quality rather than free offers, cocking a snook at the six months of freebies rolled out by Mukesh Ambani-owned Reliance Jio.
“Everybody is currently talking about plans and tariffs. Going forward is when the power of the brands will come in,"said Iyer. Idea Cellular did not respond to ET's queries. Reliance Jio's television ads on its new tariff plans are already on air. The company, however, did not respond to ET's queries. According to media analyst estimates, the telecom sector spent Rs 4,500 crore in advertising in 2016.
Shashi Sinha, CEO IPG Mediabrands, said that about 35% of these numbers are of telecom operators while the rest mainly are of handset makers.
Also, spending on television ads would go up by at least 15% in the next few quarters, now that Jio has started charging customers.
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