10+2 ad cap: B'casters might resort to frugal techniques of inventory booking

The Sun TV model of sourcing part of the ad inventory through content partners has hurt their revenues. In case national b'casters hike their inventory cost following the ad cap, frugal techniques will be in play, say experts

e4m by Abhinav Trivedi
Updated: Dec 30, 2013 8:57 AM
10+2 ad cap: B'casters might resort to frugal techniques of inventory booking

As Sun TV in Chennai cuts down its ad inventory through a ‘unique model’ of selling ad space through content partners, the ‘jugad’ technique, as labelled by some media analysts, against the mandated ad cap has again come into the limelight.

Sun TV has reportedly reduced the inventory it offers to its content partners from four minutes in an hour to three minutes. Most of the content of Sun TV is in-house. A part of it is outsourced to a third party. The ad inventory within it is also sourced through the partners for a fixed fee. Reportedly, the southern media giant has suffered a loss in ad revenue as the third party offered low rates as compared to the network itself. As a result, many advertisers sourced their slot booking through partners as it was cheaper and hence, the broadcaster suffered a loss in revenue.

“12 minutes is a reality which will be in place sometime. But in the media business, advertising is the lifeline and citing the present infrastructure, players will protect their turf of ad revenue. Sun TV is one example. But they have not done anything illegal. How they sell their inventories is their business. But since ad cap will propel broadcasters to hike their ad rates, advertisers will also look for options where they can get cheaper slots. In case of Sun TV, there was window to facilitate such demand through content partners, and hence this was inevitable,” observed a senior media analyst.

Demand and Supply
Although the Sun TV instance highlights the market rule of demand and supply, this might also open a Pandora’s Box of debate on the future of slot booking on television.

As is known, advertisers citing the current economic situation had opposed the ad cap as they cannot cater to the increase in ad rates. However, as per senior sources, some national broadcasters (who have been following the 12-minute ad cap) are increasing their ad rates in phases and some big advertisers are even buying slots at increased prices. However, such deals are customised and not universal. But how would the other advertisers who cannot afford to buy costly ad spaces react to it?

It would be interesting to see how things shape in the future as far as the game of demand and supply is concerned. Will some broadcasters resort to frugal techniques of selling spaces? Will advertisers respond to it? If yes, then what about the customised deals that have been closed at an increased price?

As reported earlier by exchange4media, after TRAI’s mandated ad cap and its subsequent opposition by many broadcasters, some section of the broadcasting community were resorting to ‘jugad’ techniques of advertising. These include strip ads, screen pop-up ads, branded content, and so on. The Sun TV model is another example where a broadcaster outsources its inventory for a fixed fee. But in this case, the strategy backfired as mainline advertisers started shifting to that section of inventories.

Analysts feel that even if the 10+2 ad cap is made mandatory, such techniques will co-exist because “everybody cannot be everything”. Hence, not all broadcasters will benefit from the ad cap and not all advertisers will go by increased ad rates. Therefore, models like these and many others will keep emerging from time to time. Which ones will be successful will only be judged with the RoI that the model would offer to broadcasters and advertisers. The probability of revenue shifting to other media platforms will also gain ground.

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