Advertising is a high-demand requisite to promote business growth. Markets use this unique tool to educate customers about the brands. Goods and Services Tax (GST), the revolutionary tax reform, would probably result in major transformations in India’s advertising trends. Advertising agencies that come under the broad umbrella of service sector are liable to pay 18 percent tax for traditional advertising under the GST regime, up 3 percent from the previous rate of 15 percent.
GST has indeed negatively impacted on print and TV advertising in the country. The brands that are the ultimate benefactors of the service are the obvious payers of this tax. Thus, traditional advertisements have turned out to be an additional expense for several companies.
Every cloud has a silver lining. Thus the burden of extra tax on traditional advertising unlocks the endless opportunities of a much cost effective alternative – digital advertising. Reportedly, digital advertising which is growing at a fast pace of 14 percent per annum in India has entered the club of $1 billion or above industries. With the decline of traditional advertising, the overall advertising share of the digital media is expected to double by 2020, means 100 percent more of the Pre-GST era.
As India is celebrating a digital revolution, the nation is expected to have 800 million smartphone users by 2020 and this is likely to catalyse digital advertising in the coming days. Having an edge over TV and print advertising on the basis of more interactive and engaging content, advertising on a digital platform becomes cost effective as well as highly penetrating. Moreover, the unprecedented progress of social media, native advertising, and content marketing on a comparatively low cost is luring both customers and marketers towards digital advertising.
Advertising industry have been facing certain hiccups and teething problems after the rollout of GST. The leading brands have already felt the major drift in the advertising sector. It’s high time for emerging brands to turn into utilizing the seamless opportunities of digital advertising and marketing. In this scenario of extra tax on conventional advertising, digital advertising can play a counterbalancing act as it is equipped with smart and cost effective solutions. In order to rationalize advertising goals, big and medium companies are ready to spend their major chunk of advertising budget for digital advertising, thus opening up new vistas.