Are growth in ad volumes converting into healthy revenues for TV?

Industry players say discounted ad rates, absence of fresh content on TV and lack of new campaigns have been some of the hurdles but revenues are expected to pick up on the back of the festive season

e4m by exchange4media Staff
Updated: Jun 22, 2020 7:59 AM

While broadcasters are seeing positive growth in advertising volume, industry players say the increase has not really converted into meaningful revenues for the TV industry as the ad spends are still lower than pre-COVID times.

A look at the total advertising volume on television shows a growth of 63 per cent in the past six weeks - from Week 19 to Week 24 - as per TAM AdEx-Television Advertising Report-I for Jan-Jun 2020. The average ad volumes have grown by 32 per cent during Week 22-23 compared to Week 19-21. After a slight decline in Week 23, the it increased by 17 per cent in Week 24. The report also states that in June, the average ad volumes per day grew by 42 per cent compared to April.

Industry experts deliberate if ad volume growth has been translating into revenues for TV.

Mayank Bhatnagar, Executive Vice President, Carat India, believes that as compared to April and May, AdEx Value volume has improved, but the advertising spends are almost 30-35% down than the pre-COVID times. “In June there was a substantial improvement in AdEx, which rapidly increased every week. But it looks difficult that things will come to a pre-COVID level. Inventory demand has reduced as brands have cancelled campaigns or put them on hold. And due to this, channels are offering huge discounts to advertisers on regular deals. Moreover, in the absence of big-ticket or Impact properties, channels have not been able to drive incremental revenues.”

Even in Week 23, the top ten advertisers witnessed an increase of 20.82% in the total number of ad insertions whereas top brands total number of insertions increased by 8.22%, as per the Broadcast Audience Research Council (BARC) India data.

According to Karan Taurani, VP- Research, Elara Capital, “The revenue isn’t increasing at the same pace since deep discounts are being offered across most genres. The ad volume isn’t converting into revenue due to the pricing impact and also many verticals like consumer durables and retail aren’t advertising much.”

As per the TAM report, a positive growth in ad volumes was observed across the top five channel genres - News, GEC, Movies, Music and Kids - in May 2020 compared to April 2020. Between April 1 and June 13, News led the volume share with 35 per cent, followed by GEC at 24 per cent and Movies at 23 per cent share. Music and Kids with 7 per cent and 3 per cent shares stood at fourth and fifth positions respectively. However, the growth in May compared to April was positive. While the news genre grew 16 per cent in May, GECs were up 25 per cent, Movies grew 20 per cent, Music 6 per cent and Kids 13 per cent in May 2020.

With respect to genres, Bhatnagar said: “GEC, Hindi News, Hindi Movies are the key genres that have a high share of spends and volume. We have noticed revenue growth in Hindi Movies, GEC, Regional channels, and Volume growth in Movies & Regional channels.”

The absence of new programming or fresh content or big properties on Television has also impacted revenues for the broadcasters, explained a senior executive of a leading broadcaster. He pointed out that there were multiple factors for revenues not picking up and deep discounts was one of the major reasons. “Though the ease in lockdown has definitely proven positive for the industry with ad volume growing and new brands coming in every week, but the clients are still under pressure,” the senior executive said.

Taurani believes it will take 4-6 months for the industry to come back into a single-digit positive trajectory.

According to Bhatnagar, the coming few months will be tough as brands are still not advertising and they will not plan big launches or big campaigns any time soon. “Additionally, to mitigate risk, advertisers have increased their focus on digital.”

Sharing a reason to keep up the hope, he said, “I believe brands and channels would try to leverage the festive period. Hence, as demand increases channels will be able to drive higher revenues.”

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