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Market forces will decide ad rates: Media planners

16-May-2012
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Market forces will decide ad rates: Media planners

As the broadcast fraternity gears to begin a dialogue with TRAI (Telecom Regulatory Authority of India) on the various problems that its regulation on advertising on television is expected to create for the television business, the other side of the industry – the media planners and buyers – believe that TRAI’s regulation would mean good news for the consumers, and hence for the advertisers.

Increase in viewership
Some agency heads see a direct and positive impact on viewership with these regulations. “I believe these regulations are extremely useful,” said Ajit Varghese, MD, Maxus South Asia and Motivator. He added, “This works from a consumer viewpoint, as it means better, less interrupted and good quality of viewing experience. This, hence, means that viewership will go up. Intuitively what is good for a consumer is good for advertisers.”

The TRAI regulation has not only mandated a cap of 12 minutes of commercial time including channel promos in a clock hour but also specified that there would be a 15-minute gap between two ads. In the case of movies, there will be a 30-minute gap.

Harish Shriyan, COO, OMD India pointed out that the definition of clock hour was also the right way to approach this. “TRAI should mean clock hour, when the hour starts and not when the programme time starts. This is a good decision as far as the advertising time is concerned.”

According to Amin Lakhani, Principal Partner, Mindshare India, this will bring “some sense of discipline” to the current scenario. He explained, “If you see the current levels of inventory, many channels follow the 10+2 rule strictly but there is a host of others who don’t. From a purist standpoint, this regulation will play a key role in reducing the clutter we see on television.”

Ad rates hike - why?
Many broadcasters have pointed out that the cutting down of ad time would imply an increase in ad rates. For the agency heads, the situation is not black and white. Shriyan stated, “The stipulated ad ratio is a sensible and sufficient one. Many channels follow this even now. I don’t think there is any justification for anyone who would hike ad rate on the basis of this regulation.”

For agencies, ad rate is a function dictated by the market. Both Shriyan and Varghese asserted that ad rates would be dependent on the market demand and supply function.

Lakhani takes note of the fact that broadcasters would want to increase ad rates but not all of them would be able to command or justify an increase. He observed, “The recommendation earlier of a six-minute cap was very strict. The 10+2 regulation, which means four breaks in an hour for a show is acceptable and while it means limited inventory, there are only a few channels that would be able to increase their ad rates due to that. Smaller channels that operate on miniscule ratings, where ad breaks don’t show elasticity to overall viewership, will find it tough.”

The biggest takeaway for media agency heads is that content will prevail in these discussions. The likes of news channels or special interest channels don’t invest in the manner that general entertainment channels do and hence media agency heads believe that some of these channels will not be able to make a convincing argument to increase their ad rates.

All agency heads believe that sports, specifically cricket would command a separate discussion altogether due to the nature of the property and the fact that while the property has become expensive over the years, it still is seen impactful by many advertisers. But apart from this, media planners see TRAI’s ad cap as positive.

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