We have a problem of ad inventory shortage, but it's a good problem to have: Mahesh Shetty
Shetty, Head – Network Sales, Viacom18, talks about the advertising demand, categories that are driving this demand, and Viacom18's strategy to make the most out of this favourable situation
Mahesh Shetty, Head – Network Sales, Viacom18, believes that the AdEx growth on TV during the festive season this year will surpass the 2019 numbers due to revenge spending by consumers which has generated huge demand in the market. The return of consumption growth has also encouraged advertisers to spend heavily on marketing activities.
This investment cycle has proved beneficial for the ad-led media businesses, so much so that TV broadcasters are unable to take new ad bookings due to a short supply of inventory. This gap in demand and supply has also allowed broadcasters like Viacom18 to increase ad rates almost 1.5 years after the Covid-19 induced lockdown had ravaged the ad market.
Shetty spoke to exchange4media about the advertising demand, categories that are driving this demand, and Viacom18's strategy to make the most out of this favourable situation.
Media experts say that advertisers are spending big time, so much so that there is a shortage of ad inventory. How is Viacom18 taking advantage of this situation?
We have a problem of ad inventory shortage, but it's a good problem to have. There is a very strong bounce-back in the economy. There is a bounce-back of brands in terms of their businesses, and hence there is a strong bounce-back in terms of their ad spends and investments, especially during the festive season. From a consumer point of view, there is a bounce-back in spending by the consumers. It is coming together during the festive season and thanks to that, the ad demand is fabulous because there is no better medium than TV broadcast if one wants to communicate to the entire country. We are seeing very strong demand across all our channels across genres.
Will the ad spends during this year's festive season exceed the 2019 number?
It will emphatically cross the 2019 number. Even last year, the ad volumes were looking good during June. The growth will be manifold in comparison to the last year because of the relatively lower base. The June to September base was lower, but in October the business had picked up. Overall, the business is far better than last year and my estimate is that overall, it will be better than two years back. The presence of part IPL and ICC T20 World Cup will add to the total ad spends.
Apart from sports, there are lots of high-impact entertainment properties. Viacom18 has Bigg Boss and The Big Picture. How has the response from brands been?
We were confident that the ad demand would come back strongly, that's why we planned a very aggressive content calendar for the festive season and beyond. Traditionally, we have been doing one impact property at a time. When we do Bigg Boss, we don't do anything else. This year, we went on the frontfoot with two properties and despite the second wave, we stuck to our plan. The momentum in the vaccination drive also gave us confidence that the consumers will come back and brands will show good growth, and that will lead to good demand for advertising and big-ticket properties. These are high-cost properties, but we are very confident that there will be good demand.
We just launched Bigg Boss over the weekend, with 13 sponsors on Colors and five on Voot. We have 18 odd sponsors just on Bigg Boss, which is a very good indication of the kind of demand that the property has. On Bigg Boss S15, we have TRESemme (HUL) as Co-Presenting sponsor, Lotus While Glow (Lotus Herbals), Dabur Red Toothpaste (Dabur India), and Knorr (HUL) as Co-Powered by sponsors. The associate sponsors include Jeevansaathi.com (Infoedge), KK Smart Tyre, Hershey’s Kisses, Garnier Men (L'Oréal), Wow Skin Science (Body Cupid), Spotify, Moj App, Fogg Deo (Vini Cosmetics), and Haier Washing Machine.
For The Big Picture, there is a lot of excitement among the brands because it's Ranveer Singh's debut on television and so the traction from brands is very good. We already have six odd brands on The Big Picture. These include Byju's as Co-Presenting sponsor besides Bikaji, LIC, and Haier Refrigerator as Associate sponsors on TV and additionally two sponsors on Voot. We have two more weeks to go, and many more brands will come on board.
What kind of ad revenue growth are you expecting on a QoQ basis?
We will exceed the industry growth. Even in the Q1 of this fiscal, we posted very strong growth, which is better than the industry. The Q1 growth was almost 3X of Q1 FY21, and it was broadly close to the growth two years back. This quarter is also looking very strong. We are expecting strong double-digit growth. The industry is also growing very strongly and there are a couple of factors which are working for us. Some of our key channels are doing far better than what they were doing last year. In the quarter just gone by, we had Khatron Ke Khiladi on Colors and Dance Deewane. As I mentioned earlier, the strategy of having two strong high-impact properties also adds to our overall revenue.
Even in the regional portfolio, we had a pretty successful Bigg Boss Kannada. We also launched interesting properties in Bangla and Tamil clusters. We also launched Bigg Boss Marathi recently, which started very well. On one side, our channels are doing well and on the other side, we are also investing a lot in terms of big properties which is also adding to our overall growth.
Within the network, which genres are driving growth for the company?
Hindi GEC is a big driver because of the absolute weight of the genre. The good part for us is that Colors is doing very well. We are a strong number 2 brand and there is a big gap between us and other competitors. Our FTA cluster of channels is also a very strong growth driver. There is strong advertising demand for our FTA bouquet channels. Regional has also been a strong growth driver. Kids' business has been steady.
How is each of these genres growing as a category?
The demand for the FTA category is very strong because brands in the highly distributed categories were looking for a mix of urban and rural. The rural focussed brands, in particular, are looking at our FTA bouquet because it delivers very strongly for them. Overall traction for Hindi GECs is very strong. When overall growth happens in advertising, the biggest category gains the most and the biggest category is Hindi GEC. Because Colors is doing very well, we are gaining higher than the industry. A similar trend follows in the regional. Our kids' portfolio has recorded strong growth, so we have seen good growth there. We see strong traction for our properties on MTV whether it is Roadies, Splitsvilla, or Supermodel. There is strong traction for creating branded content in our youth cluster. The music portfolio is also doing well. We are going full as far as inventory is concerned. The English cluster has seen headwinds in the last few years, however, it is quite steady this year compared to last year.
Which categories are advertising heavily on the network?
The festive season sees a lot of new brands come on to the advertising channel. FMCG brands continue to advertise heavily. I see a huge burst from e-commerce brands. Again, it is latching on to the revenge spending that is happening around the country. All the e-commerce brands are going to break their previous records. They are investing heavily in promoting their sales. We are also seeing a lot of traction from cryptocurrency, fintech, and e-wallets. Some big releases will happen on OTT platforms, so I expect some OTT guys to spend heavily on TV. Auto has bounced back as a category, but they are facing internal issues like shortage of semiconductors, which will impact their supply.
Isn't it the right time for broadcasters to take a rate hike, considering there is so much demand?
The ad rate is a demand-supply equation. At the end of the day, we have limited inventory. We are not able to service our clients because our inventory is limited. We have been increasing prices over the last few months. It is not something that is just during the festive season. The advertiser traction has been very good since August, so our price increase started then. We have taken price increases across the board, and it's not just us, but the entire industry. It was long overdue.
There has been a sea change in the kind of advertisers that are advertising on TV. Has the emergence of new advertisers reduced dependence on traditional advertisers?
Three years ago, 72-73% of ad GRPs were consumed by FMCG. That has come down to about 70%. The inventory consumption by a lot of digital brands has gone up. OTTs and social media apps, which used to be 1-3% of the ad pie about three years back, have now gone up to 6%. Even the e-commerce marketplaces like Amazon, Flipkart, AJIO, and Myntra used to be 2% of the total advertising have now doubled to 4%. Edtech, which was not there at all, has become 1% of the ad pie. E-wallets which were very small have become 1% of the market. New categories have come and driven the overall growth. Even as these categories have increased their outlays, certain traditional categories like telecom, handset, and apparel have come down. While FMCG continues to be the biggest ad category on TV, the shifts have happened in the balance of 30% advertisers.
Viacom18 has a strong slate of high-impact non-fiction properties. How important are these properties from an advertising standpoint?
Non-fiction properties help us to offer variety to our viewers on top of the fiction properties that we have. This helps us cover viewer appetite for entertainment. For the advertisers, these high-impact non-fiction properties help in breaking the clutter. Also, some of these properties fit very well with a certain category of advertisers; it looks as if these properties have been made for those brands. The kind of integrations that you can do in a Bigg Boss is a brand manager's dream where he is not able to showcase the brand through passive integration but also usage of the brand to active integrations and how influencers talk about it. So, in a way, it is a complete package.
How is the non-FCT advertising piece growing for your company?
At one end, the bread & butter FCT business continues to grow which is what advertisers look at in terms of reaching consumers. However, they look at integrations or sponsorships when they want to engage with audiences or for building salience. The investment in engagement and salience has only grown. If you want to stand out from the clutter, you have to invest in high-impact properties. The biggest property in the country is IPL and you can the amount of brand traction for the property. It is a high-cost property, however, brands have realised the value that it delivers. The same way we deliver value through our bunch of impact properties. Additionally, brands are engaging in creating bespoke solutions. Using the power of our channels and creative teams. We are witnessing a lot of growth in customised integration in our shows and creating customised shows for brands.
Has the time come for big networks to sell TV and digital together?
Many brands take sponsorship on both TV and digital, particularly with our impact properties because they want to connect with an entire bunch of consumers. Some brands take both, and there is merit in taking both. Some brands are taking standalone TV or digital. India is a TV + OTT market. Some brands only use TV, depending on the kind of consumers they want to reach. Likewise, some brands are only taking digital. Some brands are doing both.
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