10+2 ad cap to affect education, FMCG & auto the most

Sectors that buy cheap inventories on promise of large volumes might be hugely affected post 10+2, with cost dynamics not suiting the new regulated screen space

e4m by Abhinav Trivedi
Updated: Jul 8, 2013 9:52 AM
10+2 ad cap to affect education, FMCG & auto the most

Post the 10+2 ad cap, as expected and conveyed by broadcasters and advertisers, the inventory ad rates of channels would increase. That would mean decrease in the volume of ads and increase in value: A 10-second slot is likely to create a deeper hole in the pocket of advertisers than it did earlier.

So who would be the effected lot? Either there would be a change in the planning aspect of advertisers – allocating more budgets to other media platforms, or there would be a change in buying approaches of the inventory.

Industry experts believe there would be certain sectors that would feel the pinch of the 10+2 ad cap the most post October.

We usually see very few education advertisements and the trend is likely to see a downfall post the 10+2 scenario.  Amit Pandey, Media Analyst, D-Money brokerage firm said, “It is unlikely that education clients would buy expensive ads post October. As most of the inventory costs are likely to escalate, where would be the scope of investing. TV advertisement is anyways not a result-oriented platform. Unless there is a huge value offered by the medium like a customised approach, I doubt that the medium would be ‘education-friendly’. ”

The sector would not curtail its spends but this is one sector where players buy cheap inventories. Since FMCG is advertised on almost all channels, it is likely to curtail its spends on the mass medium to either be more effective or more target oriented, but this depends upon the products it is serving. “I don’t think it (10+2) will have a huge impact on the spending approaches; but yes, considering the amount of money an FMCG client invests, it is expected that the players will get more cautious. In case of FMCG, it is not the value but the volume which matters. Players might escalate or cut down their budgets but they would definitely not reduce the volume of their ads. They might be more widespread in the future,” said an SVP of a media agency in Delhi.

This sector is ambiguous. Experts predict that auto sector will have high demand, so players would be more than willing to spend, but increase in the inventory space might make the decision a bit expensive. Ashutosh Bajaj, an Auto Analyst from Hirmani financial services said, “Auto has high input cost, low IIP and high labour cost. But marketing has always been a priority for the sector. However, there might be a lesser showcase in terms of volumes. Focus would be on new launches of variants with periodical old variants. Most of the players would take decision regarding spends from the second quarter only. But if need be, auto would not be shying away from spends. It all depends upon the state of the sector at that moment.”

Increase in marketing budgets?
Experts predict that almost all sectors are likely to get affected post the ad cap. It is difficult to say which one would be most. They feel one cannot predict this at the moment but certain sectors which buy cheap inventories today on promise of large volumes could be the ones which would be hit the most. There is also a possibility that as a medium TV might slash such advertisers as well. Therefore, some other sectors such as real estate, banking, franchise businesses (Domino’s, Pizza hut, etc.), auto, financial services, etc. might escalate their marketing budgets.

“One has to be real. Marketing budgets cannot be increased just like that. Why not think of the money spent on TV to be utilised effectively on other media such as digital. In the future, advertisers would resort to effectiveness and only effectiveness. If TV would become more expensive, advertisers would surely look for other avenues which are not only customised but are also result-oriented. TV remains a mass medium. There can be an increase in budgets, but I don’t think this might happen in the near future,” said Amin Shekhar, independent media analyst.

The overall state of the economy is not very good as the GDP numbers show. With the huge decline in the value of rupee, the condition has worsened. Therefore, the 10+2 cap effect on sector TV spends would be best seen in the future.

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