Shifting Tides: The Decline of Mobile Ad Spending Amidst Geopolitical Tensions

The landscape of mobile advertising witnesses a significant downturn as Chinese companies withdraw their investments.

During FY22, expenditure on media by mobile manufacturers plummeted to ₹560 crore, marking a stark contrast from the ₹1,200 crore recorded in FY20. This sharp decline was also evident compared to the ₹860 crore spent in marketing efforts through traditional advertising channels in FY21. Geopolitical tensions played a pivotal role in this shift, prompting aggressive Chinese firms to curtail their expenditures, as per industry estimates.

Forecasts from experts indicate a stagnant trajectory for advertising spending in the ongoing fiscal year, which commenced on April 1. This projection stems from the continued conservative approach of Chinese brands towards expenditure. Moreover, with the rise of direct-to-consumer business models, brands are inclined towards channel refinement to capitalize on emerging opportunities.

Rammohan Sundaram, managing partner at Integrated Media, DDB Mudra Group, noted, “Despite the surge in smartphone demand amidst the pandemic, handset manufacturers significantly reduced their marketing investments due to geopolitical tensions. While sales may have remained unaffected, brands opted to scale back on promotional activities.”

The case of Vivo, a prominent Chinese handset manufacturer, exemplifies this trend. The brand secured the title sponsorship for the Indian Premier League from 2018 to 2022 for a staggering ₹2,200 crore. However, amidst escalating cross-border tensions, Vivo temporarily withdrew its sponsorship in 2020. Although it resumed sponsorship in 2021, it eventually relinquished title sponsorship rights to the Tata Group for the 2022 and 2023 seasons. Vivo’s annual media spend on IPL title sponsorship alone amounted to ₹440 crore.

Industry executives highlight that Chinese handset brands like Vivo and Oppo not only pursued major sponsorships but also engaged Bollywood celebrities to endorse their products, leading to increased media spending.

“However, these brands are now adopting a more subdued approach, with many discontinuing celebrity-led campaigns. Even Xiaomi, despite holding the largest market share by sales volume, has reduced its presence on high-impact platforms like television,” commented a media planner who preferred anonymity.