Broadcasters face an unusual situation this year.
While the Indian Premier League (IPL) is expected to fuel ad spends in the second half of 2020, which is normally dominated by festival-season advertising, other big properties such as Kaun Banega Crorepati (KBC) and Bigg Boss may lose some sheen because of the cricket tournament.
“The nation is starved of any live sporting event. With IPL happening around the festive period, viewership is expected to be higher than in the previous seasons,” said Priya Jacob, President, Media, Network Advertising.
Advertisers are therefore expected to aggressively spend on the IPL, well more than on any other property in the second half of the year. The cricket league is normally held during the summer months.
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Experts expect broadcasters of reality shows to feel the impact of the spend on the IPL on their ad revenues from such shows.
Programmes such as KBC have always drawn advertisers during the festive season. Categories such as consumer durables, e-commerce and auto prominently advertised during KBC season 11, last year.
The ad rates for the quiz show last year were around Rs 4 lakh for a 10-second slot, up from Rs 3 lakh in 2018.
According to Jacob, some large media houses are expected to postpone their tentpole properties to avoid clashing with the IPL. Dates for the new seasons of shows such as KBC and Bigg Boss are yet to be announced.
She added: “While more brands are returning to advertising and the discounts being offered are slowly reducing, an increase in ad rates does not seem likely during this festive period, especially because the IPL is already threatening to devour ratings. Any change in original programming cannot command an increase in ad rates.”
Star India is selling the IPL’s remaining ad inventory — 20 percent — in the range of Rs 12-13 lakh for a 10-second slot. This is an increase from Rs 10 to Rs 11 lakh in 2019.
Covid-19 pressure to continue
While the IPL will help improve advertising expenditure from the first half of 2020, overall advertising expenditure during the ongoing festive period will still be lower than last year.
AdEx had collapsed by as much as 65 percent because of Covid-19 in the April-June period after contracting 8 percent in the January- March period, according to a Pitch Madison report.
AdEx in the first half of 2020 dropped Rs 14,000 crore — from Rs 35,110 crore in H1 2019 to Rs 21,298 crore in H1 2020.
The good news is that the second half will see a recovery of sorts — ad spends are estimated to grow 60-72 percent from the first half of 2020.
Harikrishnan Pillai, Co-founder and Chief Executive Officer at TheSmallBigIdea, estimates that festival season ad spends this year will touch 80-90 percent of last year’s levels.
Expenditure on advertising during festive period last year was around Rs 25,000 crore, said Jacob, the same level as in 2018.
While the contraction this year is limited, the cause of concern is that ad spends have been under pressure since last year due to the economic slowdown.
And now, due to the coronavirus, though ad rates are expected to be revised upwards in the festive season, the scope for growth will be limited for a few non-fiction properties such as KBC and Big Boss.
Ad rates may not match last year’s price for all properties given that some verticals such as travel, hospitality and retail apparel remain under pressure, said Karan Taurani, Vice President, Elara Capital.
Pillai also thinks that Chinese brands might pull back on advertising and this will affect the numbers as well.
Vivo has exited as the IPL title sponsor due to the anti-China sentiment and experts believe that other Chinese handset makers will lie low for the same reason. They estimate a revenue erosion of Rs 500 crore for Star India, the official broadcaster of the IPL and Disney+Hotstar, the digital partner of the league, from this.
New players give hope
New advertisers coming on board will give some respite to broadcasters in the festive period and the latter will not have to depend solely on traditional categories such as FMCG and auto.
According to Jacob, online gaming, education technology companies, healthcare, OTT players and online retail are some of the newer categories expected to advertise aggressively during the festive period, especially on IPL game days.
She added that FMCG will continue to be the biggest contributor to ad spends in the festive period. “Auto, which saw a slump in the initial quarters, is also likely to pick up.”