The coming storm?

MUMBAI: The two-week long standoff between IBF, AAAI and ISA finally ended mid-last week as the three constituents came up with a consensus. However, if one goes through it, it clearly appears that the three bodies bought in a forced peace.


Industry watchers are asking how long before something else flares up. A big question mark still hangs over the ad rate hike which is expected to be made by broadcasters following the imposition of an ad cap by the TRAI. 1 October is not so very far away. Will advertisers, agencies and broadcasters sort out any moves in this direction in a calm composed manner? Or will they get into another round of fisticuffs?


“Rate hike is a definite thing now. The more important question here is that by how much percentage it’s going to go up by. Channels, of course, can’t increase it at one go and hence, will do it in parts,” says a south Indian media planner, who didn’t wish to be named.


Even another media planner from the city feels that it is market forces which will define by how much one can charge and how much will one pay. Most agree that with the new TAM viewership metric television viewership per thousand (TVT) coming soon, the channels will try to make the best of it.


Almost everyone agrees that GECs will benefit when the ad cap comes into play. However, none of them wanted to comment on it. Whereas smaller channels were more than pleased to express what it could do for them.


Sony Max senior vice-president and business head Neeraj Vyas told last week: “It is the biggest blessing that is going to happen to the genre. One needs to understand that the biggest problem for the genre is the time spent, so our time spent was close to around 65 to 68 minutes a week and 122 to 130 minutes for the GECs. Now there are clear reasons, GECs shows you original content everyday; and out here, there are repeats all the time. So now, if ads come down, ad time comes down, a viewer tends to stick on and watch more.”


He further stated that the time is right for the movie channels to push for higher ad rates. “Traditionally, the Hindi movie channels have been sold at a a very low rate. The correction should have happened years ago, which did not happen. So probably this is the right time to make that switch. It is a survival issue for all.” (Read interview: "Bollywood is not making films suited for home viewing on TV today")


Agreeing with him, Food Food channel promoter Sanjeev Kapoor states as a matter-of-fact that someone will have to pay for it. And broadcasters cannot afford to pay, so either the viewers will pay or the brands will. “Fortunately for us, it’s not much of a problem because we are a new channel. In a new channel the inventory consumption is not 100 per cent in the beginning, it builds over time. So we are in a process of building that. And hence, our impact may be lower than others whose inventory consumption may be 100 per cent. However, that doesn’t mean we won’t be affected at all. I think older players, where time for ads is much higher, will be impacted by about 25 per cent. So either the brands will pay or both or it will be a three way split.”


Even news channels which have filed an appeal with TDSAT regarding the ad cap feel that the only way ahead they can see is through a steep increase in ad rates. Zee News’ CEO Alok Agarwal feels that there could be a 70-100 per cent hike in the genre!


The only party which will have to shell out money from their pockets is the advertisers. But they are trying to find a silver lining in the dark cloud.


HDFC Life EVP - marketing & direct channels Sanjay Tripathy asserts, “At this moment there is a lot of speculation going on. Once the ad cap happens, we will be clear on what exactly the scenario will be. To be frank, it will be a demand and supply situation. Popular channels will quite likely get better price increments. The less popular ones will face a tough time. So just let’s wait for the right time and let’s not speculate more on this without knowing any facts.”


Godrej & Boyce Manufacturing , vice-president (sales & marketing) Kamal Nandi says, “When you say that it would be tough on the advertisers, I would say there is a flipside to it that the TV viewing experience of viewers will improve on account of and less clutter. We are internally speaking to our media partners to develop an ROI to work out the cost vs benefit. Also, because of the reduced number of ads, the possibility of our commercial connecting and being viewed by the viewer at home will be higher.”


While an industry expert feels that it is a complicated situation and keeping in mind the current economic scenario, it will be difficult to come up with a “solution” soon. “I wish it was simple. But no other country in the world has more than 650 channels that too in various languages catering to a very wide audience. Hence, all parties will have to sit and work on the economics of price, time, volume and content,” he explains.


So can one expect fireworks again? He laughs and says, “The intelligent channels have already started working out things while others are waiting and will blame it on the market or industry.”


For instance, the Sun Network announced a hike in ad rates of 19 per cent for its weekday prime time slots in late-May. Then Colors and Star India had said that it was taking up ad rates by 30 per cent and 20 per cent respectively in late May too. Colors CEO Raj Nayak last week told that advertisers had responded well to the increase in rates and the channel had managed an average uptick of between 12 and 18 per cent following the hike.


Another expert from the opposite side of the table says, “It’s a flea market. Anyone can demand whatever they like, of course, depending on the ratings. And whoever is willing to shell out that much will advertise on it or else look for another option.”


He goes on to clarify, “If by any chance there is a standoff, then I don't expect collective action from the three associations, as prices are dictated by market forces and intervention is not something that will work.”


Knowing the hyperactive Indian Broadcasting Foundation, don't expect it to take things lying down in case advertisers and agencies stonewall broadcasters. Will it be fireworks before Diwali?

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