Top GECs seek to hike ad rates to offset 10+2 ad cap impact
To ensure advertising revenues remain unaffected in the wake of the proposed 10+2 ad cap, Hindi GECs look to increasing ad rates by almost 20-30 per cent
Published - 03-June-2013
The regulation of the cap on advertising inventory, which is expected to come to effect from October 1, 2013, has led to Hindi GE channels undertaking measures to ensure that their advertising revenues remain unaffected in the wake of the proposed 10+2 ad cap.
As was reported earlier, Colors has decided to increase advertising rate by almost 30 per cent. Other top Hindi GECs are also set to adopt changes in their advertising rates.
According to Punit Goenka, MD and CEO, Zee Entertainment Enterprises (ZEE), increasing rates to keep up with the increased reach of their media brands have been an ongoing endeavour of the sales team. In light of the TRAI directive, requiring ZEE to reduce inventory, which will enhance the overall viewing experience to a more engaged audience, the advertisers only stand to benefit multifold.
“With our advertisers getting a much better media proposition, the value for the same will also be at a premium. As such, our efforts to increase rates will only get further intensified. The extent of increase in rates will vary across genres and will be through a process of renegotiation of all contracts in a phased manner between July and October,” added Goenka.
Raj Nayak, CEO, Colors also believes that in the current scenario, there is already a shortage of ad inventory on GEC channels, with most of them having over-sold. With the cap coming into play, the pipeline is only going to get narrower and change the supply-demand ratio.
When asked about the ad hike, Rohit Gupta, President, MSM stated, “We have our own strategy in place. We have been increasing our ad rates consistently since a long time, with our advertising revenue having observed a growth of above 35 per cent every year. The situation is very critical right now and one has to wait and watch.”
Star Plus is also slated to increase their ad rates by 20 per cent from October, 2013.
According to broadcasters, an average of 30-40 per cent revenue will be impacted if the 10+2 ad cap is implemented at this point in time. Also, they are yet to experince the full impact of digitisation in the form of of either a fair share of reduction in carriage fees or subscription revenues. A hike in ad rates would help maintain and reach their revenue objectives till the dust settles.
But though players in the Hindi GEC space would be adopting changes in their ad rates, experts believe that 20 to 30 per cent increase is quite steep and might lead to the loss of certain advertisers, also maintaining the fact that the advertisers would also look for more viable options.
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