Will the auto slump impact experiential spends in the sector?

Experiential marketing is the backbone of the auto industry. All the players in this category uses this immersive marketing technique to woo customers and to push sales.

2019 has not been a great year for the auto sector. Almost all the top brands witnessed dip in sales. Being a sector that relies heavily on experiential, it is expected that experiential spends could take a hit in 2020. For the auto sector in particular, experiential is now an essential part of the marketing mix. But keeping the current slowdown in mind, auto marketers and decision-makers in this sector are now focusing on expanding or adjusting their experiential budgets in 2020.

If we see event marketing trends overall, the industry has been thriving globally and 90 percent of industry professionals say live events are critical to a brand’s success.

If we look closely at experiential marketing in the auto industry, it has a checkered history. The economic reforms policies of 1991 opened the floodgates for aspirational consumers, soon after, an Indian company called Mahindra & Mahindra took a bold and risky decision: it wanted to become a major player in the Indian automobile industry. It might sound incredible today, but M&M back then decided that "experiential" will be a key component of the marketing strategy of the company as it launched itself into uncharted territory. Back in those days, the Indian auto industry had a handful of automakers. Today, about three decades later, there are about 30 carmakers in the country with over 200 products on sale.

When asked about the impact of low auto sales on the experiential spends, Navneeth Mohan, Director & Chief Executive Officer -Laqshya Live Experiences says, “Tech is the biggest spender as per the FICCI frames report while the Auto industry is at number two in terms of spending. As far as the impact of slow down of auto sales on experiential spends is concerned, there will for sure be a slowdown in spending and margins will go through stress.”

If we look at the ad spend trends, auto is the second largest contributor in the overall advertising pie, with FMCG at the top. While auto contributed Rs 4,755 crore in 2018, FMCG had spent as much as Rs 14,717 crore on advertising in the same year. With the increasing use of ad-blocking technologies, experiential marketing has become all the more relevant for brands. It must be mentioned that India is among the top 10 markets for the brand activation agencies with the organised events sector in India pegged at Rs 6,500 crore and expected to chart a growth of 13-14%.

Harish Bijoor, Brand-strategy specialist & Founder, Harish Bijoor Consults Inc. agrees that the slowdown in auto sales can have a significant impact on the experiential spends.  “"In the new economy ahead we have a new consumer. Yes, the consumer wants experiences, but these experiences are even better if they are flexi-experiences as opposed to locked-in experiences. Owning a car is a locked in experience. Hiring a car is not. You can hire a Merc today for a big wedding and you can hire an SX4 for another. The new consumer hates being locked in. And with that mindset, the auto sector crisis deepens”,he explains.

(With inputs from Savi Khanna)