The TV industry might have lost Rs 850 crore on the account of demonetisation but things are definitely looking up. Surprisingly total ad insertions across TV channels in January 2017 reported to surpass that of November 2016, when the impact of the cash crunch was only beginning to be felt by the medium.
Media reports had mentioned that according to TV rating agency BARC India, advertisers placed 4.79 million ads across channels in January 2017, compared to 3.98 million in December 2016 and 4.56 million in November 2016.
With the broadcasting industry on the recovery path post-demonetisation, media experts and broadcasting industry heads speculate on when the medium is expected to get back to its aggressive self.
Forecasting the growth
MK Anand, MD & CEO at Times Network, says, “The recent election results are a manifestation of the fact that demonetisation is forgotten and a thing of the past. The mood of the business is extremely positive and markets are at an all time high. In the coming year, Q1 onwards, you should see good ad revenue traction.”
Manav Dhanda, Group CEO, SAB Group, predicts that by August 2017 the industry will pick up. But, having said that, he mentions that most of their channels ‘are already overfull on the inventory levels.’ He says, “Our inventory levels are back to the pre-demonetisation level. March 2017, so far, has been an extremely good month for us. If it sustains for even a month or two more then things will come back to normalcy much before than one had perceived at the onset of 2017. We are talking about rate hikes to clients given that spending is back on channels. Our current growth is well on double digit.”
Pawan Jailkhani, Chief Revenue Officer, 9X Media, opines that the industry will take another quarter to recover fully and that tent-pole properties, for instance, IPL cannot help the industry to get back to its normal health in one stroke. He says, “For the industry to get back to the same average rate pre-demonetisation will take another quarter or so. The primary reason is that TV is dependent on FMCG whose third quarter results haven’t been that impressive. They will recover but not to that large extent in the fourth quarter. That’s the whole scenario. One can’t predict the health of industry with one big event like IPL or Champion’s Trophy.” 9X Media, which was registering double digit growth before the cash crunch hit the nation, is currently on a recovery path too.
Though Anita Nayyar, Havas Media Group, India and South Asia, is skeptical about the double digit growth she believes the industry to be back to its robust self in the second half of 2017 as she says, “No one can predict the single or double digit growth at this point in time. But by August this year it should get back on track. I am looking at the second half because that’s when the festive period is.”
PM Balakrishna, CEO, Allied Media Network who finds demonetisation ‘just a blip’, expects the bounce back to happen in the next quarter. He says, “All the categories which are TV heavy be it insurance, automobile or telecom, are bouncing back. The upsurge is being visibly noticed from ground and that will soon reflect in the New Year budget. They will be able to get back to the same kind of growth they were seeing over the last couple of years. The positive side of demonetisation is already coming into place. It’s just a matter of near term correction that will happen. The fiscal year from April 2017 to March 2018 will see the buoyancy and the projected double digit growth of 10-11 per cent.”
Debraj Tripathy, Managing Director, MediaCom, expects the industry to be back in full swing by mid April or the latest by June 2017, as he says, “We have already started seeing investments returning back though it’s still not at the same level as we would expect. We believe it to be back in full swing by end of March or mid April. However there is a chance that it might extend until June end. But it won’t be as acute as it is right now or in the last two months.” He is expecting TV to report 8 per cent growth rate this year.
Who will be the key drivers?
Despite FMCG being the worst affected by demonetisation, the broadcasting industry is still optimistic about the sector bouncing back and bringing in ad revenues. Aggressive growth of FMCG players will definitely help it achieve the Rs 21,300 crore figure, according to the Pitch Madison Advertising Report 2017. Patanjali Ayurved’s aggression in advertising spends will definitely play a big role as will the launch of ayurveda lines by other FMCG giants.
Also according to market research firm Nielson, growth in the FMCG sector in December 2016 and January 2017 was close to 11 percent across both food and non-food segments. Consumer goods sales in November last year had declined 1-1.5 percent to Rs 3,840 crore compared to the previous month, according to data released by the market research firm in December 2016.
Anand adds, “I think the most prominent ad categories will bounce back with auto, telecom, banking, e-commerce etc certainly being bullish.”
Dhanda is also extremely positive about these categories with automobile performing significantly better than the previous quarter. He adds, “February 2017 has seen the highest sale in automobiles in a long time because of the deferred purchases perhaps. It’s not driven by exponential discounting and falling interest rates has also been a trigger. That’s a good sign. If auto numbers hold on for one more month then automobile will be a key driver as well. Even the numbers of FMCG seem fine. With summers approaching categories such as soap, deodorants, talcum powder and fairness cream will be a trigger as these verticals were not impacted by demonetisation back then.”
Jailkhani also feels FMCG firms will amp up their spends in the next two quarters. He says, “FMCG, telecom, automobile, and to a large extent, ecommerce they are going beyond metros. Growth is coming from smaller cities where TV is well penetrated.”
Even media experts are of the same opinion about the abovementioned categories. Apart from the usual suspects, Nayyar also expects government to be another key driver for the broadcasting industry. She shares, “The categories that should lead are the FMCG (which should swing back), automobiles, mobile wallets like Paytm and mobile handsets like Vivo and Oppo (who are spending throughout). It will be sometime before real estate gets back into action. E-commerce is a big question. Government is also one of the key drivers of revenue for the broadcast industry because of the previous elections in the five states which brought in a lot of input from both the state and central government. There has been a lot of advertising. So in the next 2.5 years government will also be spending decently. The broadcast industry is hoping that government will help them recover.”
Balakrishna is also optimistic about FMCG even though he feels the ‘momentum will take some more time.’ He adds, “Automobile, insurance and finance services have started bouncing back. So there is no reason to suspect that FMCG will not follow. From consumable FMCG to cosmetics all these categories will definitely get into a rebound mode and they will start reflecting. Once the demand gets fuelled then the supply side will get activated and then they start pushing the advertisers. Therefore that cycle will start. The bounce back will happen from June 2017 onwards.”
Tripathy sharing his take, says, “FMCG will be back by March for sure. Automobiles will be back. Luxury will take little time. Real estate might go little slow.”