10+2 ad cap could impact smaller channels the most: Experts

Industry experts feel that the ad cap will be an impediment to those channels that depend on discounts to attract volumes, but don't have a strong content line-up

e4m by Abid Hasan
Updated: Aug 1, 2013 8:47 AM
10+2 ad cap could impact smaller channels the most: Experts

With the 10+2 ad cap sword hanging over channels, broadcasters have started to hike their ad rates to offset the impending revenue losses. At present, channels are continuing with airing 20 minutes of ads in a clock hour of programming. But all that will change from October 1, 2013 onwards, when TRAI’s 10+2 ad cap order comes into play.

Industry experts see this order adversely impacting the smaller channels the most, as they may have to hike their ad rates by almost 50 per cent in order to be economically viable. With the inventory decreasing, advertisers will become more judicious about the channels where they air their ads.

Speaking with exchange4media, Satyajit Sen, CEO, ZenithOptimedia India remarked, “Definitely this will be an impediment to the marginal channels who are discounting to attract volumes. The reality is that demand-supply will even out and hence, appeal-poor content will suffer from lack of adequate monetisation.”

On the way ahead for the smaller channels, Sen said, “Advertising is not the only source of monetisation. In an attention deficient marketing economy, smaller channels can look at creating content for advertisers, which is a viable option. Smaller channels can look at geographies to accentuate their appeal. Direct TV can be a way of looking at opportunities, such as like coaching classes/ medical attention. But TV channels with undifferentiated content will have difficulty in revenue expectations. But then that’s true of any business.”

Sen further said that while smaller channels can increase their ad rates, the question remains whether the marketers have TV budgets that will grow commensurate to this sudden demand-supply acrimony. “Hence, if the TV budgets die out faster in the long tail, there is likely to be a dollar drought for them,” he added.

In the meantime, news channels have appealed to the Telecom Disputes Settlement and Appellate Tribunal (TDSAT) against TRAI’s order and have asked the Tribunal to come up with a fresh resolution. TDSAT has given two weeks’ time to TRAI to respond to the appeal filed by the broadcasters.

Sharing his point of view, Rohit Bansal, CEO and Co-Founder, India Strategy Group, Hammurabi & Solomon Consulting said, “The question isn’t about ‘small’ or ‘big’ channels, but whether or not the concerned channel’s ‘bhagya vidhatas’ can smell the coffee.”

He added, “Irrespective of the ‘caps’, advertisers will reward all those who come good on the parameters of Marketing 1.1; viz., sophisticated appreciation of an unsolved problem; offering solutions among a defined set of audiences, preferably in a future-ready platform-agnostic manner; creating crystal-sharp differentiators, and having the ability to convey those differentiators with requisite authenticity.”

Suggesting the way ahead for the channels, Bansal advised, “Embrace change as an opportunity, think deeply about the internet and the smart phone, and take comfort that the bigger guys will find it more difficult to change.”

Sharing his view about increasing ad rates, Bansal said, “Media planners would certainly twist arms where they can. That said, when inventory is squeezed, money save from punishing inefficient channels must go to someone else.”

On the other hand, Pradeep Iyengar, President, EMM India felt that the 10+2 ad cap won’t be implemented October 1, 2013, but will be pushed forward as there is tremendous pressure from the broadcasters lobby who are insisting that the digitisation process in the country should be completed first before ad restrictions are implemented.

According to him, “No channels will shut down business as there is too much at stake for all. Having said that, I strongly feel that this cap will indeed be a boon or should be a boon for all broadcasters to actually find more efficient means of working in all areas (staffing, content creation, etc.), trim the excess fat and they should insist on cost control at all places.”

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