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HUL, Star end 3 months of ad negotiations

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MUMBAI: Hindustan Unilever (HUL), India‘s largest advertiser on television, has returned to Star Network after three months of absence and hard negotiations from either sides.

The exact nature of the deal could not be ascertained as both Star and HUL were not ready to disclose the details.

Star India president ad sales Kevin Vaz confirmed the news to Indiantelevision.com but said the terms were confidential. "Yes, Hindustan Unilever is on," he said.

In a slowdown environment, FMCG companies have been increasing their ad spends as their sales have increased. Other high-spending sectors like telecom and financial services have softened their marketing expenses, thus allowing room for the FMCG companies to look for better rates on television channels who depend largely on advertising revenues.

For the fiscal ended 31 March 2012, HUL had actually reduced its spend on advertising and promotions by 3.58 per cent compared to the year-ago period. The FMCG major had spent Rs 26.97 billion on promotions, down from Rs 27.97 billion.

"Both HUL and Star needed each other. Star has powerful channels in Hindi GEC, Hindi movies, English entertainment, infotainment and regional-language genres. HUL is the largest advertiser and has increased its spends this fiscal," a media analyst said.

In the fiscal-first quarter, HUL has upped its ad and promotional spends by 29.5 per cent to Rs 8.2 billion.

HUL is present on the other entertainment networks like Zee, Sony and Viacom18.

"This neutralises the upside possibility that the other major networks could have had if HUL had stayed out of Star for a longer period," a media analyst at a broking firm said.

Zee Entertainment Enterprises Ltd chief sales officer Ashish Sehgal does not believe that an upside opportunity existed for the company. "We have already done a deal with HUL and got an upside as our flagship channel Zee TV‘s ratings have seen an improvement. HUL is also increasing its overall ad spends this fiscal. There was no scope for a further upside as we have got other advertisers on board and our inventory is full for our major network channels. There is some inventory left on our smaller channels and HUL is not a spender on those," he said.

For the first quarter of this fiscal, Zeel reported 18 per cent rise in its ad revenue to Rs 4.47 billion.

The second half of this fiscal is crucial for the television networks as the previous six-month period had seen a slowdown. This also coincides with the festive season during which spread brands tend to free their wallets to promote their products.

The advertising expenditure on television is estimated to grow at 5.6 per cent to gross Rs 148.12 billion in calendar year 2012, according to a GroupM revised forecast.

"The Telecom category cut down spends substantially in the first half of the year. Financial services have been adversely affected by poorer economic conditions here as elsewhere in the world. Even consumer durables spent less in the first half of 2012 than the prior year period. Occupancy of premium inventory has decreased with advertisers choosing to stay with safer tried-and-tested formats," the WPP agency explained in its report.

The Indian economy has seen a new energy after the government‘s series of reform policies including higher FDI in retail, broadcast-carriage services sector and aviation. The stock market has rallied recently and touched a 17-month high.

Advertisers, however, are still cautious and will wait longer before becoming extravagant on their marketing spends.

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