It is understood that ad revenues for most broadcasters have increased in the first quarter of FY 2014. We spoke to experts to decode the reasons for this hike...
“We had a great quarter with IPL, with revenues growing over 30 per cent. Most of our channels in the network have recorded growth of over 25 per cent in the first quarter,” said Rohit Gupta, President Sales, MSM Networks.
According to some experts, the relative share of channels has gone up post digitisation and helped broadcasters command more money from advertisers. Also, channels are preparing for the 10+2 regulation, which is likely to be implemented post October. By hiking ad rates in a phased manner, rather than suddenly, broadcasters are paying extra attention to safeguard their revenue prospects.
“Our ad growth rate has been 18.5 per cent YoY for the first quarter and we see the figure likely to increase substantially in the coming months. Sectors such as FMCG, telecom and e-commerce have increased their ad spend, and auto is likely to follow. This is one of the natural reasons for the ad revenue increase. However, spends from sector such as BFSI has gone down,” said Ashish Sehgal, Chief Sales Officer, ZEE.
There is also a line of thought that the broadcasting industry is going through varied changes and advertisers are experimenting with probabilities of ad placement in various media. So, they are meticulously planning their budgets to be prepared for the scenario post 10+2 ad cap.
A Business Head of a leading GEC, on condition of anonymity, said, “Our ad revenues have gained almost by 13-15 per cent in the first quarter. The trend is likely to grow and revenue is likely to come from the consumer durables segment.”
Unlike SUN Network, which recently hiked its ad rates by more than 100 per cent for prime time slots, national channels have taken a cautious approach towards ad rate increase.
Balance sheet representing earnings of the first quarter of Network18 and ZEE have shown surging ad revenues, coupled with increased subscription revenue. Critics have often argued that 10+2 and digitisation will ensure better revenue prospects for broadcasters, and with digitisation the channels are likely to derive more benefit out of the same proposition and content offering.
“Most broadcasters have increased their ad rates by 10-15 per cent and this is the reason for increase in revenues. Numbers vary from region to region. All of us are waiting for 10+2 to reach a credible conclusion about numbers. If an advertiser was paying Rs 100 for a spot, he is now paying Rs 115 for the same spot, but that necessarily cannot be called increase in ad spend,” explained Anil Sathiraju, AVP and Head South, Mudra Max.
Since most broadcasting companies are not public and most channels we spoke to refused to reveal the actual numbers, it is difficult to arrive at a figure for the increase in ad revenues. However, industry sources reveal that an increase is inevitable in the current scenario, but numbers may vary from channel to channel. While some may see a considerable increase, others might see only a marginal rise.