News channels ride on elections to beat slump during festive season

Industry experts say investing in regional channels a smarter option due to higher viewership numbers in rural areas

e4m by exchange4media Staff
Updated: Oct 25, 2019 10:43 AM
News

With the Lok Sabha elections and now state polls in Haryana and Maharashtra, 2019 has been a rewarding year for news channels with a sizeable increase in viewership and thus the advertising revenues. Hindi news channels, in particular, saw an unprecedented rise in viewership during the General Elections in April-May.

As per GroupM’s ‘This Year, Next Year’ (TYNY) 2019 report, India’s advertising investment has been estimated to reach Rs 80,678 crore this year. The Cricket World Cup and Elections were expected to boost ad spends, as per the report. 

While the estimates were made earlier this year and the dynamics of the economy changed post September with the slowdown upsetting the advertising scene, broadcasters are still making the most of the state elections after recording almost 50 per cent hike in ad revenues during the Lok Sabha polls.

Slowdown effect

According to Avinash Pandey, CEO, ABP News Network, news channels did feel the impact of the economic slowdown on ad spends. “Typically, we would have expected to earn somewhat higher revenues vis-à-vis the earlier elections. Having said that, the possibility of revenues being static cannot be discounted due to decelerating economic growth and allied headwinds.”

Krishnakumar Naidu, Business Director, Carat India, also said the economic slowdown could have had an impact on the revenue from the recently concluded assembly elections. “News channels would have seen a 50 per cent growth in revenue during the assembly elections but due to the slowdown it may not be more than 20 to 25 per cent.”

Most leading networks made an additional 50-60 per cent revenue gain in the first quarter of the fiscal and TV took away the biggest share of this bonus, said media buyers. “The viewership of news channels across languages has gone up and broadcasters are making the most of the elections, especially because the market has been quite flat during the festive season. It is on days like the Exit Polls or Election Results that news channels stand a chance to gross GEC ratings and they sell that well to advertisers. With LS polls and now the state elections, 30 per cent of ad revenues are either from political ads or ads placed during the election season by regular broadcasters to leverage the reach and popularity of the polls,” said an industry player.

The regional way out

According to Naidu, investing in regional channels could be a smarter option. “Local advertisers (retailers) are major contributors to regional news channels during elections. Also due to the slowdown, even national advertisers may seek a smarter option to invest in regional news channels as both (national and regional news channels) will demand a rate hike nearly 20 times higher than the base cost for special days like Counting and Exit Polls, and this will still be lower than that of national news channels.”

Naidu also pointed out that the investment shift on regional news channels vs national news channels could be 1:4 as the economic slowdown is for across sectors. Like the slump in the auto industry led to a chain reaction and hit other industries like that of tyres, paints and accessories.

Pandey also said that regional channels were meant to make the most of the growth, including that in revenues. “Given the higher population and viewership numbers in rural regions, regional news channels were bound to garner greater growth, including revenues, sooner or later. Bear in mind, though, that the greater growth percentage is also due to the lower revenue base of regional channels. Rupee for rupee, however, both national and regional advertising may currently be holding an even split. Moreover, thanks to the national presence and infrastructure, our regional costs are not as high as that of standalone regional channels. Additionally, by offering a national and regional combo bouquet, we deliver a better value proposition for advertisers.”

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