Can broadcasters stand tall against lockdown 2.0?

Experts weigh in on the impact of the second lockdown on the TV industry and its ad revenue

e4m by Sonam Saini
Published: Apr 7, 2021 8:57 AM  | 4 min read

With the second wave of COVID-19 and lockdown imposed in many states of India, businesses are already battening down the hatches for a potential economic crisis. The several sectors in the Media & entertainment industry, including Cinema and Out of Home (OOH), which were yet to recover from last year impact, have been dealt a mighty second blow.

As per the Pitch Madison Advertising report 2021, TV AdEx moved like a yo-yo. The year started poorly with Q1 registering an unusual 13% de-growth over Q1 2019, which then de-grew to 61% in Q2 due to COVID-19. Q3 saw a quick recovery to match the 2019 levels, but then came Q4, which saw an astounding increase of 56%, thanks to the IPL and the festive season. 

While the number of active COVID-19 cases in the country has been rising, media industry experts think that the TV biz is in for the long haul. They think that the ongoing lockdown and curfew won't have a significant impact on the advertising industry this time. 

“Unlike last year, the companies are well prepared this time as per the protocol. Primarily, FMCG which is the biggest advertiser on TV is unlikely to get affected. The second lockdown could possibly impact retail offline business, but which again seems temporary,” said, Ashish Sehgal, Chief Growth Officer, ZEEL. 

Sehgal also shared that he hasn’t seen any impact on advertising spends. In fact, it's been business as usual with April bringing in the expected revenue like every year, he pointed out. "It is going as per plan. As the second lockdown is limited and restricted to only a few states, we don’t see any impact,” Sehgal averred. 

Reiterating the sentiments, Pawan Jailkhani, the outgoing Chief Revenue Officer at 9X Media Group, believes that there will be no adverse effect on advertising. Last year was a first-of-its-kind situation with the world clueless about the virus or its implications, he said. "There was a complete breakdown in terms of distribution channels, factories were shut, production was paused and the entire supply chain came to a complete halt. We are not in a similar situation right now," he pointed out.

Last year, the buying power was completely snatched away from the consumer. Since we have seen a steep fall in the economy, Jailhani said that no one can afford to go back to the same level. “It won’t have an adverse effect on the economy; rather people will tend to buy and advertising will play an important role as it creates demand. We might see a few ups and downs for the next year, but it won’t have much impact on supply chain, buying power and advertising,” said Jailkhani. 

The top three categories that contributed to the adex growth were FMCGs, E-commerce and Telecom. As per the PMAR report 2021, in terms of categories, the biggest growth in the pandemic year has come predictably from the e-commerce category which recorded a 95% growth over 2019 and with its share in TV ADEX moving up by 6% points from 5% to 11%. Within e-commerce in addition to online shopping, mobile wallets, media and entertainment, social media and OTT were the leading categories.

The report stated that FMCG, the largest contributor conventionally for TV ADEX increased its TV dominance, upping its share from 49% to 51%. However, in value terms, the category de-grew by 9% almost in line with the TV degrowth of 11%. Within FMCG, newer COVID-19 categories like sanitisers, hand wash liquids and disinfecting sprays emerged with as many as 140 brands being advertised.

Despite things looking up, there could be some niggling worries in certain sectors like retail, believes Dinesh Singh Rathore, CEO, Madison Omega. He said, “Retailers are likely to get impacted during this second lockdown which also impacts the advertising spends. Lockdown definitely has a direct impact not only on the economy but also on advertising. Though we are not in the same position as we were a year ago,” shared Rathore. 

He also mentioned that the mini lockdown may not have a significant impact on advertising revenue since other categories will continue advertising. However, other sectors like Radio, OOH and Cinema advertising are likely to take a major hit. 

Apart from the retail category, restaurant, alcoholic beverages and the auto sector are likely to bear some of the brunts of this second lockdown, while FMCG and e-commerce (the biggest advertisers on TV in 2020) will remain strong,  said Karan Taurani, VP, Elara Capital. He explained, “The October-November-December quarter grew almost 7-8% last year but the momentum was not carried out in the month of Jan- Feb-March, despite March being a low base. 

"We estimate that going forward, the April-May-June quarter will be dry. It won’t be right to compare numbers with last year but April-May-June 2021 as compared to April- May-June 2019, there could be a shortfall of 10-15%. However, as compared to last year there will be growth.” 

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