Television advertisement rates have fallen 10-15% in the last two months as top advertisers battling high input costs and falling profitability have reduced ad spends by 20-30%. After the advertising blitz during the World Cup and IPL jamborees, telecom, FMCG, auto and banking companies have rationalised spending, adding to the on-air inventory pile-up. These sectors contribute 70-80% to TV ad revenues, which stood at R10,300 crore at the end of last year and was projected to grow at 14-15%.
In April-June, advertising at broadcast majors Zee Entertainment and Sun TV Network witnessed low single-digit growth, pointing to the gradual slowdown in TV advertising. Media buyers say that in the last two months, spot rates have fallen 15-20%, while long-term deals ? which are about 60% of the inventory ? have remained unaffected. Says Samir Khanna, media head, Mudra Max: ?During IPL, general entertainment channels (GECs) brought down ad rates by 10-14% fearing a drop in viewership. Since IPL failed to deliver, they hiked their rates for new advertisers by almost 20%. But long-term deals with large advertisers are unchanged.?
For the first time in three years, FMCG companies, which contribute 50-60% of ad revenues have reduced spending by 16-20%. Says Harsh Mariwala, CMD, Marico: ?Given the inflationary environment and the moderation in demand, there will be some cuts in ad spends. We will avoid going over the top.?
While telecom companies like Aircel, Airtel and Tata Docomo are spending 30-40% less, banks and mutual funds are ?non-existent? on TV, say media buyers. Many auto companies have pulled ads from GECs. Adds Khanna: ?In the first half of the year, companies went out of their way to invest in cricket. In the last few months, they rationalised their ad budgets as their bottomline was getting eroded.?
However, broadcasters beg to differ. They claim TV advertising is growing at a healthy rate of 20%, aided by a shift in advertising volumes from print, radio and outdoor media towards television. Says Rohit Gupta, president (ad sales) Multi-Screen Media: ?FMCG players have cut their spends in below-the-line activities, print and outdoor advertising. But TV hasn?t suffered. Ad rates have increased 25-30% across our network.?
According to sources, 10-second spots on top two GECs ? Star Plus and Colors ? are selling at R90,000-1.1 lakh, while spot rates for Sony stand at R75,000-90,000, except for some popular programmes.
Zee, on the other hand, sells spots at R50,000-60,000. However, experts feel the festive season could generate a spurt in advertising from consumer durables and auto companies.