Television

'If you are up in the hierarchy, you will get pricing power' : Star India president ad sales Kevin Vaz

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Leading broadcasters will continue to post strong ad revenue growth while the long tail will be severely hurt as advertisers tend to consolidate their spends in a cautionary environment.

Genre leaders will benefit as advertising monies get rejigged. It is the weaker performers that will not find support from advertisers; they will degrow.

The television sector will see a 13-15 per cent growth in ad revenue this fiscal while print will be pushed back in a slowing economy.

Star India, which has leader channels in most genres, has done more annual and network deals this year. Its top 10 clients, for instance, have done deals stretching from a minimum of 12 months to three years.

The Hindi general entertainment channel (GEC) genre is on an upswing even as ad monies are moving away from cricket.

The Hindi movie channel genre is set to grow at 15-20 per cent. The news genre will, however, continue to struggle this year.

In an interview with Indiantelevision.com‘s Sibabrata Das, Star India president ad sales Kevin Vaz talks about the changing equations in the television advertising space.

Excerpts:

Is India‘s leading broadcasting network ready to announce that the advertising economy is slowing down?

The ad market is not as buoyant as it was in January. The television sector will not see a 20-25 per cent growth in ad revenue this fiscal as was forecasted earlier. But it will still post a 13-15 per cent growth while print will be pushed back in a slowing economy. With print crawling at a 0-3 per cent growth rate, ad monies will move to television.

Even then it is a slower growth for the TV broadcast segment. Is Star beginning to feel the heat?

Leading broadcasters will continue to post healthy growth while the long tail will be severely hurt as advertisers tend to consolidate their spends in a cautionary environment.

Genre leaders will benefit as advertising monies get rejigged. It is the weaker performers that will not find support from advertisers; they will degrow.

Aren‘t Star‘s top advertisers noticing a slowdown?

We have actually done more annual and network deals this year. Our top 10 clients, who account for 30 per cent of our revenues, have done deals stretching from a minimum of 12 months to 36 months. We will buck the trend and grow much faster than the industry. Having leader channels in most genres has helped us stitch long term deals.

The fiscal first-quarter is indicating a slowdown for certain listed media companies. So isn‘t there a negative sentiment already prevailing in the market?

The April-June quarter has been good for us. And the July-September quarter is even better. Of course, the channel performance has also improved. If you are up in the hierarchy, you will get pricing power.

‘The hard core press categories are shifting more to TV. The automobiles category is now spending 60 per cent of its ad budgets on

TV, up from 30 per cent. The consumer durables segment is also

following this trend‘

But aren‘t we seeing a small dip in FMCG spending in the first quarter?

The FMCG category is going to be aggressive this year. Some of them may have issues, but as a whole they will continue to spend more. P&G, Marico and ITC, for instance, will not shrink their promotional budgets. There are variants being launched and competition in the category is fierce. TV is the last thing they will cut down on as it is the most efficient medium for the category. And within TV, they will consolidate their spends.

In a toughening economy, advertisers tend to flirt less; they commit their spends to the bigger players and keep aside a lesser amount for shopping with the rest.

Are Hindi general entertainment channels going to benefit because cricket is not delivering due to India‘s poor performance?

Cricket is hit in a big way. GECs are on an upswing even as ad monies are moving away from cricket. The Hindi GEC genre, pegged at Rs 37-40 billion, will grow at 12-15 per cent this year.

It is important to note that cricket is losing out because of India‘s dismal performance; this has nothing to do with a slowdown. In fact, the Indian Premier League (IPL) will be tested next year; as ratings slip, there will be a churn.

So what is working well for us? Cricket and print are on the losing side this fiscal.

Are tentpole properties bringing in revenue spikes in GECs?

Advertisers are supporting tentpole properties as they look at buying impact. Brands like Maruti and Cadbury, who are on cricket, are sponsors of Just Dance. Kaun Banega Crorepati has got Idea. If cricket was doing well, we could have come under some pressure. Even in regional language channels, we are seeing tentpole properties being created.

What about the Hindi movie channel space?

The ad revenue market for this genre is around Rs 8 billion. It is set to grow this year at 15-20 per cent.

Star Gold will capitalise heavily as the channel is performing very well. We have cut the ad inventory time by 33 per cent with effect from 15 August to give it a Hindi GEC environment (Channel V saw a similar ad cut time from 1 January) and ramped up our investment on movie acquisitions.

How will the launch of a Hindi movie channel by Viacom18 impact the market?

We will see a huge erosion in viewership for some channels who have not invested in movies. But from a revenue perspective, we must remember that it is a very efficient genre.

In the Bengali and Marathi regional markets, it is becoming a three-horse race with Star performing well. So how will this fragmentation impact?

The successful launch of Star Jalsha has actually grown the market. The Bangla GEC advertising market has grown from Rs 3 billion two years ago to a size of Rs 6 billion. Even in Marathi, there will be a revenue expansion as we start monetising the growth of Star Pravah. In these stand-by-itself markets, advertisers had only limited GRPs to buy. Now that the supply has increased, we expect a 30-40 per cent expansion. National brands are going deeper and deeper and local brands are getting more aggressive.

Now that Star is also handling ad sales of NDTV, how do you see the growth in the news genre?

The news genre will continue to struggle this year. Banking, finance and automobile categories are seeing a huge hit; so news television will feel the impact. With the resurgence of GECs, the news genre has actually stagnated for the last few years.

Regarding NDTV, we are selling it along with the network. So we are bringing in a wider range of advertisers.

Do you see consortium selling growing as a concept?

Yes, leading broadcasters will become the rallying point. It has happened in the case of distribution (Star and Zee merger) because they sensed value; we will see it in the advertising arena as well.

Is the English entertainment segment under pressure?

English general entertainment channels will benefit as the premium segment grows. High-end cars, for instance, will increase their exposure to TV. The English GEC genre will see a 30 per cent growth this fiscal.

So is TV gaining at the cost of print?

The hard core press categories are shifting more to TV. The

automobiles category is now spending 60 per cent of its ad budgets on TV, up from 30 per cent. The consumer durables segment is also following this trend.

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