TV ad inventory volumes bounce back, but broadcasters still offering deep discounts

Zee Entertainment has posted a Rs 768-crore loss in the fourth quarter of FY20. The company's ad revenues dipped by 14.7 per cent in the quarter ended March 31. With April and May being a complete wash-out in terms of advertising spends, one can expect Q1FY20 to be even worse not just  for ZEE Entertainment but the broadcast industry at large. Ad revenues dipped by 60-70 per cent between mid March and end of of May (almost 60 per cent of revenue of the broadcast networks come from advertising). TV viewership, ironically, saw a huge spike during the lockdown but none of it translated into revenue. "Though media viewership was at an all-time high, it didn't make sense to advertise as supply had come to a complete halt, factories were shut and production wasn't happening," explains Navin Khemka, CEO, Mediacom (South Asia).

Advertising volumes witnessed a 26 per cent decline and the total billing fell by 70-75 per cent during this period. An hour of content on television typically has 10 minutes of advertising and through the months of April and May the ad breaks were far and few. When the supply chain disruption straightened up and production restarted by end of May, ad inventory volumes began to grow, but at a snail's pace. It was only in mid-July when the channels resumed original content that ad inventory volumes began to improve. Though the ad inventory volumes are bouncing back, the ad rates are nowhere near pre-COVID levels. In fact, most broadcasters during the lockdown are known to have resorted to deep discounting in order to woo advertisers.

"The discounts have been as steep as 60-70 per cent and broadcasters are unable to roll back the discounts. Only when they do that, revenue will be back to pre-COVID levels," points out a senior media industry professional. She says that advertisers aren't willing to pay the pre-COVID rates. In fact, ad rates of marquee shows such as KBC or Bigg Boss are upwards of Rs 1.5 lakh for a 10-second spot while a prime-time fiction shown can cost upwards of Rs 50,000, and the media professional says that advertisers aren't willing to pay such steep prices. "Most broadcasters have told advertisers that they would revert to pre-COVID pricing, but its not easy for them to roll back to their earlier rate cards, as advertiser appetite to invest is extremely low," adds a senior media planner.

In fact, the surprise winner is DD Free Dish, as advertisers are more than willing to advertise on the channels available there, because it enables them to reach out to rural audiences. Rural India by virtue of largely being untouched by the pandemic has emerged an outlier in terms of consumption. A reasonably good monsoon and higher MNREGA allocations have ensured more consumption power in the hands of rural consumers. No wonder, leading broadcast networks such as Disney-Star India, Zee Entertainment, Viacom 18 and Sony Pictures Network have reinstated their channels back (Sony Pal, Colors Rishtey, Star Utsav, ZEE Anmol and ZEE Cinema) on DD Free Dish.

When TRAI announced the new tariff regime last year, enabling consumers to buy channels a-la-carte, the big broadcasters converted their FTA (Free-To-Air) channels into pay channels and severed ties with DD Free Dish, which only offered free content. "DD Free Dish used to enable them to generate Rs 2,000 crore of advertising revenue without making too much investment. Now that advertisers are flocking to Free Dish in order to reach out to rural consumers, the broadcasters have no choice but to go back to DD Free Dish," explains the senior media planner. A 10-second slot on a channel on DD Free Dish costs in the region of Rs 4,000-5,000 and promises an assured reach of over 22 million homes, making it a compelling option for advertisers to invest.

A recent report by Elara Capital predicts TV advertising to experience a 20 per cent dip in FY21. The month of June, as per the report, did see a revival of ad inventory volumes, with the de-growth being in the region of 40 per cent, as opposed to April and May when the de-growth was upwards of 60 per cent. However, the pricing recovery, as per the report, will be gradual.

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