In January and February of this year, something interesting happened in the TV advertising space. Ad volumes hit an all-time high since 2017, according to Broadcast Audience Research Council India (BARC) data.
But what led to this growth?
According to Karan Taurani, Vice-President, Elara Capital, contribution from sports, new channels that launched in the last few months are some of the reasons that led to the growth in ad volumes.
"Many sporting events were delayed due to coronavirus which happened on a back to back basis this year. So, that was one reason. Plus, after BARC blackout, news channels have increased inventory because they are suffering in terms of pricing," he said.
BARC had suspended ratings for news channels in October last year.
Taurani added, "There is also contribution in terms of ad volumes coming from genres that are trying to get back to pre-COVID pricing but they haven't been able to. So, they are increasing ad inventories."
Adding to this, Anand Bhadkamkar, CEO, DAN India, a marketing and advertising company, said, "Growth in ad volumes is a positive sign. What has supported this growth is the contribution from top advertisers that have increased their spends. FMCG is driving the growth. Along with that, advertisers in the fintech, education-technology and ecommerce are continuing to advertise on TV in the current year.
"Adding on to the contribution in ad volume is auto sector which was quite for a long time. They are now quite active as the last two quarters have been good for auto."
The BARC data also pointed out that amid channel categories movies and music saw highest growth as compared to other genres. Bhadkamkar explained these genres help in better TV plan as they offer good audience mix of both male and female viewers and these channels are also cost efficient.
But is increase in ad volumes really good news?
Taurani said that ad volumes do not necessarily give the right picture in terms of overall advertising growth on TV. In fact, he pointed out that even now ad revenue growth is in single digit at around five to six percent. He added that players who are heavy on regional are growing by five to seven percent.
He noted that ad rates are back to pre-COVID levels only for categories like sports thanks to the Indian Premier League (IPL) and general entertainment channels (GECs). However, he pointed out under GECs regional is not back to pre-COVID levels because local advertising hasn't comeback.
He further said, "News genre only the larger networks are going back to pre-COVID levels but smaller networks and niche channels are suffering. For infotainment channels they are finding it tough to go back to pre-COVID levels."
While ad revenues are not growing as aggressively as ad volumes, there are two aspects that will add to the overall growth in the TV ad space.
One is e-commerce which increased ad volumes last year during lockdown and have continued the momentum this year as well. The category grew by 21 percent in January-February this year versus 2020.
"E-commerce is promising. If you see the TV ad split, FMCG, auto, telecom they contribute 75 percent of ad spends and e-commerce is the fourth largest and this category has grown handsomely in the last five years. While TV advertising has grown eight to nine percent, e-commerce has grown around 15 percent," said Taurani.
Another thing to cheer about is the upcoming season of IPL which will start from April 9. "IPL will have the momentum going in April-May. So, sentiments are positive currently," said Bhadkamkar.
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