In India, Bollywood to Slash Ad Budgets; BBH Takes Blame

(MoneyWatch)  The recession in the Indian advertising business will be led by Bollywood studios who are poised to cut their marketing budgets by 10-15 percent. Bartle Bogle Hegarty and McCann both opened shops in India in the last few days, so you'd be forgiven for thinking that things are going great over there. Not so:

Television marketing for films makes up for approximately 60% of the [Bollywood studio] budget ... However, according to Rajesh Jain, Head Information, Communication and Entertainment KPMG India Pvt Ltd and Sandip Tarkas, President, Customer Strategy Future Group this is likely to fall by 10% over the next 5 years. Similarly advertising in newspapers, magazines (print media) is also likely to fall from 15% to 10%.

It's the same with PR:

Renewal of existing contracts is getting postponed in several cases, leaving PR firm owners on the tenterhooks. Senior PR professionals said companies now want to work on a project-based model, instead of the popular retainership model.

But in a kind of curry-flavored deja vu, the web ad economy is likely to keep growing because it's so darn cheap:

Online advertising, radio and Out of Home (OOH) will increase from the current 3% to as much as 15%. Other avenues likely to open up soon will be advertising directly on mobile phones, via broadband etc.

The web is still in a relatively nascent state in India:

Despite its advantages, Internet advertising constitutes a very small chunk of the overall ad pie in India, due to low penetration levels.

What caused the Indian recession? John Hegarty (pictured) says he did:

"We started BBH in 1982, and there was a dreadful recession that time as well ... When we started in New York, in 1999, within a year, the dotcom boom had crashed."