Road to recovery: GECs look at regaining 80% revenue in Sept

With fresh content and live sporting action back on TV sets, advertisers are making a comeback but the price point of ads may not come back to what it was pre-COVID, say industry players

e4m by Sonam Saini
Published: Aug 27, 2020 8:58 AM  | 6 min read

With businesses inching towards normalcy, the media and entertainment sector too is looking at signs of recovery. As for the television industry, General Entertainment Channels (GECs) are looking at regaining 80-90% of revenue in September.

GEC players are banking on fresh content, impact properties and above all the Indian Premier League.

Also, most advertisers who had paused advertising in the first half of the year are coming back to GECs now.

Sharing key insights, Ashish Sehgal, Chief Growth Officer - Ad revenue, ZEEL, said: “If we talk about the ad inventory on GECs, Free Commercial Time (FCT) has been already filled up. However, the price point has not come back to what it used to be pre-COVID. Therefore, not September, but normalcy should be back in October. September should be about 80%.”
According to Sehgal, the first factor to propel the advertising pie is the return of fresh content. “During lockdown GECs viewership dropped due to lack of original or fresh content but now both regional as well as Hindi GECs are more or less back to pre-COVID level of TRPs. Secondly, FMCG – the main advertiser for GECs – has seen an increase in consumption but demand is still not 100% of what it used to be before COVID levels and hence pricing has been slightly impacted. With new programming back, ratings are also gaining. I feel September and October should increase the demand and this will push back the pricing back to pre-COVID levels.”

Stating similar thoughts, Rohit Gupta, President, Sony Pictures Networks India, said, “Yes, the revenues are coming back on GECs. In fact, August has been very good and with most of the impact properties coming back September should see return of 80-90% revenue depending upon the genres and channels. It looks like things are coming back to normal sooner than we expected.”

As per the Pitch Madison Advertising Outlook H1 2020, TV AdEx dropped more than 60% in Q2 ’20. This degrowth has been attributed to absence of tentpole properties like IPL and World Cup. Also, TV dropped by more than 40% in H1’20 with a total AdEx of Rs 8,084 crore and registered a share of 38% of the advertising pie. In Q2 2020, TV’s share was as high as 51%.
The report also states that 1,171 advertisers skipped advertising altogether and many large advertisers who continued to advertise brought down their advertising budgets.

Regarding ad rates on GECs, Sehgal said that the pricing is in the process of correction and it’s seeing an upward trend when compared to the levels it had dropped to after COVID struck. “Hopefully by September and October the price level should be higher than what it was post COVID. The rates have come back to 70-80% of what it used to be pre-COVID and by September and October we should see at least see the price point back to pre-COVID levels.”

The Pitch Madison report also states that more than 20 advertisers of the top 50 and 8 of the top 10 are from the FMCG sector in H1 2020. The only two non-FMCG advertisers in the top 10 are Amazon and Maruti Suzuki. As per the report, HUL continues to top the list with spends of about Rs 1300-1500 crore, followed by P&G, Reckitt Benckiser, Amazon and Maruti. Among the top 50 players, 24 players have gained in rank and 10 have dropped in rank. Thirteen new players have entered the list - Hotstar, Pepsi, Rohit Surfactants,, SBI, Abbott, Ultratech Cement, Nivea, Vicco Labs, Unicharm, Himalaya Drug, Torque Pharma and PolicyBazaar.

The categories that could be seen advertising in the coming months includes online gaming, online education, pharma and healthcare. It is expected that categories like auto and consumer durables will start advertising from September onwards along with Telecom.

According to Vaishali Verma, CEO, Initiative, “The festive season does come with a ray of hope on the back of the pandemic but the advertisers are very conscious and they are not firing away typically the way a festive season would be. The entire mood and tone is extremely conservative and they have been going with all conscious safety measures.”

Sounding a word of caution, she said, “Yes, GEC has seen a revival after they got back their original shows because for a long time they were airing repeats or old shows. From mid-July and August they have come back with fresh content and so they are hopeful. Then we also have the IPL starting from mid-September but it's not like IPL will suddenly get additional money from industry. My forecast says that we will exit 2020 with TV, in particular, seeing a deficit of 15 to 18% as compared to last year because even if the brands are coming back they will not compensate for the Q2 loss.”

Verma also pointed out that investments now will get divided between entertainment and sports (read IPL). The Indian Premier League will continue till the first week of November, which is bang on festive season. There will be advertisers who would get onto sponsorship and spots on IPL but still be on GECs. “Advertising volumes are limited and definitely everybody is seeing growth over the last quarter and I am sure GECs will see a phenomenal growth but the base of the last quarter was artificial. That's not the real growth. It needs to be seen vis-à-vis last year but will there be growth over last September, I doubt. Also, categories like consumer durables, retail, e-commerce spend more in September than January. Some channels might see a phenomenal growth but then those channels also dipped by 50%. They might see a growth of 40-60%.”

The Pitch Madison report has predicted that AdEx would recover in H2 ’20 and grow at a dramatic rate of 60-72% of the collapsed H1 or grow 6-13% versus H2 ’19.

Detailing more on the trends, Dinesh Singh Rathore, CEO, Madison Media Omega, shared: “With original programming coming back, advertisers too are back on TV for the festive season. Therefore, there is recovery and revenue is coming back. The FTA comeback has also pushed revenue for GECs. A lot of advertisers were not there in the first quarter but now in September they are definitely coming back.”

As for Pawan Jailkhani, Chief Revenue Officer of 9X Media, there has been a huge growth between June and August. “I don’t think pre-Covid levels will be back before Jan-Feb but having said that there is a positive sign. In fact, adex is growing at a fast pace. The first quarter was a complete washout and it started picking up from July onwards. Now in September it is likely to be around 80-90% of what pre-COVID levels were. Therefore, we will regain almost 80% of revenue back by September.”

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