“We will look at new value equation if ad rates increase”
Shashank Srivastava, Maruti Suzuki’s Chief GM – Marketing states that an increase in TV ad rates may lead other media to become the focus of ad spends
Published - 17-May-2012
The Telecom Regulatory Authority of India (TRAI) ad regulation of a cap of 10+2 minutes of advertising for every clock hour of programming is being considered positive by most advertisers. But the move will have a wider impact on television. Shashank Srivastava, Chief General Manager – Marketing of Maruti Suzuki speaks on some of the effects that this move brings.
On TRAI ad regulation reiterating a 10+2 cap on commercial time...
The 10+2 cap on commercial time will surely lead to better viewer experience and this means that actually the ratings may go up. In fact, the rating in commercial time is already substantially lower than the ratings of the program itself. The above regulation will bring the two ratings closer. In such a scenario the advertiser will benefit, as what is good for the viewer is intuitively good for the advertiser. However, for some channels the ad rates may go up and this means advertisers will have to look at the new value equation.
On whether increased ad rates can create problem for television as an ad medium...
I am not quite sure about that. It is true that content cost has increased dramatically, as also the placement fees, due to limited bandwidth availability. And this means that most channels have to substantially increase ad rates to recover lost revenues. This is logical. But then there is also the economic logic that pricing ultimately is a function of demand and supply. If advertisers are unwilling to commit large amounts, then the prices may not increase dramatically.
If it transpires that there is a huge increase in ad rates, then there is a high probability that other media may become the focus of advertising spends. A lot also depends on the level of digitisation rollout. If revenue leakages are plugged, then it is possible that channels may not hike the rates after all.
On no part screen or drop down advertising...
That clause of the regulation does affect many advertisers or channels. This is especially true for ‘Live’ genres such as news and sports. The inability now to monetise the ‘action time’ will adversely affect these channels. For advertisers also, this is a negative clause, as part screen and drop down advertising are cost effective ways, and by now audiences are used to this kind of advertising.
On impact on smaller channels...
Advertisers have always been very choosy about the channels they advertise in. Smaller channels have anyway not been able to command higher rates and this regulation of 10+2 will not change things drastically although in relative terms they will be affected more. Yes, I do believe there will be survival issues for some channels especially if the benefits of digitisation do not accrue completely.
WhatsApp, Instagram, LinkedIn, Twitter, Facebook & Youtube