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B'casters react to TV ad spends growth rate pegged in Pitch-Madison report

B'casters react to TV ad spends growth rate pegged in Pitch-Madison report

Author | Abhinav Trivedi | Thursday, Feb 27,2014 10:02 AM

B'casters react to TV ad spends growth rate pegged in Pitch-Madison report

The Pitch Madison Media Advertising Outlook 2014 has predicted that the TV ad spends will grow by 15 per cent in the year 2014. The reported, which had predicted a cautious 2013, had projected a 6 per cent growth in TV ad spends. The actual TV ad spends grew by 8 per cent in 2013, as per the report. The report predicts that TV ad spends will reach Rs 14,282 crore in 2014 from Rs 12,419 crore last year.

Industry reactions
People in the broadcasting industry feel that a growth of 15 per cent might be difficult to achieve in 2014.

The broadcast industry is faced with the 12-minute ad cap, and a final decision is expected to be reached before June 2014. This is expected to lead to a hike in ad rates, which in certain has already increased by 15-20 per cent.

Ashish Sehgal, Chief Revenue Officer, ZEE Media remarked, “I think 15 per cent would be over-optimistic. The industry shall grow between 12 per cent and 13 per cent. The first two months of 2014 have been slow, but I expect sales to pick up from March.” He further said, “Among the sectors that might increase their ad spends could be e-commerce and mobile. Ad spends of the BFSI and auto sectors are also likely to go up this year.”

Marketers from sectors such as Auto, BFSI and FMCG have indicated that media spends on television will be definitely high till June owning to quite events such as the Lok Sabha Elections, the Indian Premier League and the FIFA World Cup. These sectors will be the driver of ad revenues.

Apart from this, analysts indicate that the entry of players such as Amazon will further boost the e-commerce market, which would propel advertising from other players such as Flipkart, Snapdeal, eBay, etc. Broadcasters we spoke to also feel that certain trends would appear this year – such as news channels will remain the favourite among marketers till June, irrespective of their target audience. Beyond June, spends are likely to get fragmented.

Mohan Nair, CEO, Mathrubhumi TV said, “I think spends would increase till June from certain markets and sectors, and then from General Elections. Beyond June, there will be a dip. I don’t think 15 per cent would be a figure that would be achievable. However, TV spends will continue to be robust, barring a few glitches, and industry should grow by 12 per cent.”

PMMAO has predicted that the ad market is expected to grow by 16.8 per cent in 2014 and the biggest contributor to this growth, estimated at over Rs 5,000 crore, will be the upcoming Lok Sabha Elections and State Assembly Elections. Analysts feel that though the bulk of the political ads go to OOH and BTL activities, per unit cost of such platforms is very low. Therefore, the actual political ad spends as compared to the projected spends are very low.

Rohit Gupta, President, MSM shared, “We expect 10 per cent growth minus the election spends. The election spends remain uncertain.”

Avinash Pandey, COO, ABP News pointed out, “There has been a 10-15 per cent increase in ad rates, but that will not impact the overall ad pie. I don’t think TV news will grow beyond 12-13 per cent. Even if one considers the elections, which are considered to be robust for news channels, things will not change much. The rate at which DAVP buys is very low. News channels air 28 minutes of ads. I am not saying that there will be no growth, but the rate of 15 per cent is slightly optimistic.”

Overall, some broadcasters also feel that certain genres will grow in the first six months, while for some the growth will come in the second half of the year. This growth would come from the regular advertisers and not from the political parties.

“The growth this year would be organic and would happen post June, when there would be stability not only in the political environment, but also on the economic front. Sectors such as telecom and consumer durables might then open their purses. Fifteen per cent is difficult to achieve as spends might fluctuate citing developments on the regulatory front,” said a broadcaster on condition of anonymity.

Finally, spends on TV will also depend on some regulatory decisions such as TAM ratings blackout, BARC commencing operations, and the future of ad cap. These factors, according to analysts, could suddenly change the tide.

Meanwhile, commenting on the broadcasters’ views, Sam Balsara, Chairman and MD, Madison World remarked, “If broadcasters are talking of a 12-14 per cent growth and we are forecasting it at 15 per cent, then there is not much difference and that is normal. Secondly, half of the Rs 5,000 crore election spends projected will be coming from the Lok Sabha Elections and four State Assembly elections, where political parties and individual candidates are likely to spend.”

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