Adland gives Union Budget 24-25 a thumbs-up

The Union Budget 2024-25, unveiled by Finance Minister Nirmala Sitharaman on July 23, has garnered mixed reactions. The financial outlay for the year ahead got a thumbs up for its focus on agriculture, new employment schemes, lending programmes and financial support for small businesses.

Many welcomed the push for infrastructure development and the cut in customs duties. However, the hike in taxes on Long Term Capital Gains (LTCG) from 10% to 12.5% and the scrapping of indexation benefits have been met with some frustration.  

Amidst these debates about the Union Budget, it appears that the expectations of folks from the advertising and marketing industry were not dashed. As a sector that enjoys indirect benefits from the Budget, people that Campaign spoke appear to be more focused on the opportunities it presents them with, rather than mull over what Sitharaman could have introduced.

One of the biggest highlights of the Budget is the change in income tax slabs. Aimed at leaving more money with salaried employees, it will now see them with annual savings of INR 17,500.

The government's move to reform the tax code by introducing deductions for salaried individuals and pensioners clearly aims to boost the disposable income of the middle class, which in turn is expected to drive consumer spending. Folks from adland that it will be evident especially during the upcoming festive season.

Whose job is it, anyway?

While presenting her seventh Union Budget, Sitharaman seemed to have taken the results of the Economic Survey 2023-24 to heart. This report highlighted that while India's top industrialists and business elites were enjoying significant profits, the government's priority wasn't to tax those gains for development. The Budget therefore aimed at reducing regulatory burdens and encouraging the private sector to create employment for India’s growing youth population.

Finance Minister Nirmala Sitharaman. Source: BJP TV.

Emphasising job creation, the Union Budget introduced new schemes and increased funding for skill development. The government plans to generate around 4.1 crore jobs in the next five years, supported by an allocation of INR 2 lakh crore. Of this, INR 1.48 crore is dedicated to skilling initiatives, aiming to train 20 lakh youth within the same period.

The latest ManpowerGroup Employment Outlook Survey reveals that about 80% of employers in India are struggling to find the right talent in 2024. This also underpins the challenge in finding skilled workers continues.  

Creating jobs helps integrate the expanding workforce, boosts productivity, raises disposable incomes, and enhances individual purchasing power, ultimately contributing to overall economic growth. Moreover, upskilling and reskilling initiatives will also help to tackle the growing talent divide that is visible across sectors, and which is felt most severely in the advertising and marketing domains.

Rural India finally gets some love

This year's Budget emphasises employment, skills development, MSMEs, and support for the middle class, with a focus on nine key priorities, including infrastructure. Notably, INR 2.66 lakh crore has been allocated for rural development, including infrastructure projects, and INR 1.52 lakh crore for agriculture and allied sectors. This is expected to stabilise rural economies and ensure that farmers have access to essential resources.

Saugata Gupta, managing director and CEO of Marico Limited felt that the government has taken big strides towards realising the Viksit Bharat vision by 2047 with the Union Budget. Calling it a forward-looking roadmap, he expects it to accelerate the country’s economic journey holistically. “Several measures geared towards the upskilling of the youth, encouragement to employers and first-time employees will help in job creation for the next generation,” he added.

Saugata Gupta, managing director and CEO of Marico Limited.

Explaining how this investment in rural development and agricultural schemes will help, Somdutta Singh, founder and CEO of Assiduus said that this will enhance the purchasing power and digital connectivity of rural populations. As these areas become more integrated into the formal economy and digital ecosystem, they will represent a significant untapped market for advertisers.

The focus on natural farming, bio-input resource centres, and climate-resilient crops will also create new opportunities for promoting agricultural products and sustainable farming practices, further expanding the advertising market. “Additionally, the improvement in agricultural productivity and self-sufficiency will likely result in increased income for farmers, leading to higher consumption and demand for a variety of goods and services, which in turn drives advertising needs,” Singh said.

Yasin Hamidani, director of Media Care Brand Solutions echoed that investment in rural development and agricultural schemes will ensure rich dividends for the advertising and marketing sector. For starters, it will help brands tap into the increasing consumer spending power in rural areas, especially with ads in vernacular medium and with colloquial connotations. “This growth can open new opportunities for targeted campaigns and product promotions, enhancing engagement with a previously underserved demographic,” he noted.

Giving startups a leg-up

Another high spot of the Union Budget is the push for better digital infrastructure and connectivity in core areas of the Indian economy, including credit, agriculture, ecommerce, education, health, law and justice, logistics, MSME, services delivery, and urban governance.

This has come as music to the ears of professionals in the advertising industry. Krishna Iyer, director—marketing at MullenLowe Lintas Group pointed out that as a tertiary industry, advertising often benefits from ripple effects stemming from broader economic policies. He added that the abolition of the angel tax and the reduction in long-term capital gains tax for startups to 12.5% marked a pivotal shift for the country as it is likely to spur investments in startups and will bolster marketing and advertising budgets.

Krishna Iyer, director—marketing at MullenLowe Lintas Group.

According to Inc42’s ‘Indian startup founder sentiment’ 2023 survey, 76% of the over 400 startup founders it surveyed said that they planned to raise their advertising spending by 20% to 30% in FY25. With more funds in their kitty, due to the abolition of the angel tax, it is likely that they will pump more in their advertising and marketing efforts.

The simplification of tax structures and the reduction of TDS for e-commerce operators can further enhance operational efficiency and cash flow for businesses. “E-commerce players can use this additional cash flow to focus on market expansion and increased consumer spending, which will naturally stimulate the advertising industry, leading to a ripple effect across related fields such as media, content creation, and digital services,” Iyer opined.

Riding high on tech

The budget’s emphasis on digital infrastructure and advanced technologies such as AI, AR, and VR is also expected to impact India’s rapidly growing digital advertising landscape. Statista reports that this market surged to over INR 400 billion in 2023, marking significant growth from its 2016 figures. With the digital media market thriving, the AR and VR market, especially, is projected to grow at over 38% CAGR from 2023 to 2028, reaching approximately $6.5 billion.

This surge highlights the immense potential for immersive tech to revolutionise advertising. Embracing AI, AR, and VR will create a more vibrant digital landscape, equipping advertisers with innovative tools and platforms, allowing them to craft more engaging and impactful campaigns, setting the stage for future success.

Calling the Union Budget 2024-25 a “consumption-oriented” one with heavy focus on infrastructure investment, Ambika Sharma, founder and chief strategist of Pulp Strategy believed that it will propel economic activity. This, in turn, will expand the consumer base, and provide new opportunities for advertisers to target these emerging markets, if the government sticks to its resolve towards fiscal prudence and inclusive growth.