Television continued to be a medium of glory in 2011. Everything seemed right about it â€“ the top genres such as general entertainment channels (GECs) and Hindi movies were innovating and competing aggressively. Infotainment was redefined to be factual entertainment and music genreâ€™s experiments moved beyond reality and format shows to appointment viewing.
Enough channel launches had happened to create newer genres like Food & Lifestyle. English entertainment genre saw many new players enter the space and increase the overall genre share. Finally, thanks to the ICC Cricket World Cup 2011, the sports genre was more vibrant than ever.
Much of this upbeat spirit that dominated the first half of 2011 however, saw restrain in the second half. Increasing concern over inputs costs and growing conversations of the return of slowdown led to caution in the market once again. The growth of the first half seemed to experience a standstill.
It was this, coupled with a few other reasons, that pulled television significantly back from its projected growth rate in advertising revenues.
Television ensured that in 2011, it had the largest share of the Indian advertising pie, a milestone that it gained in 2009, but its growth from 44.5 per cent of 2010 to 44.8 per cent in 2011 was far lower than the expected mark of 45.7 per cent of the pie. Pitch Madison Media Advertising Outlook 2012 puts TV ad spends at Rs 11,478 crore in 2011. In 2010, this number was at Rs 10,530 crore, indicating a 9 per cent growth in the mediumâ€™s ad revenues. This is lesser than half of what was expected from TV in 2011.
Key players of the Indian broadcasting industry indicate that they were expecting anywhere between 14-18 per cent growth in the ad spends on the medium from 2010 to 2011. â€œI expect television ad revenues in 2011 to grow by a minimum of 14-15 per cent over last year. Various factors have contributed to this growth. While a few genres on television were hit, they were the comparatively smaller genres such as news. The genres that command a lionâ€™s share, which is GECs and cricket, had a great year,â€ says Kevin Vaz, President, Ad Sales, Star India.
Rohit Gupta, President, Multi Screen Media, adds, â€œMost of the GECs have seen viewership growth, across tiers. Top channels have seen better inventory utilisation and have been able to increase rates as well. For us, it was the best year ever. Even without IPL, we saw 40 per cent growth in our numbers this year. For the medium overall, I would have expected a 15-18 per cent growth.â€
Inconsistent GEC growth
Vaz admits, â€œI perhaps see things differently and much more positively, because Star India has done very well in the year and has taken leadership in most genres â€“ whether it is Hindi movies with Star Gold, Hindi GE with Star Plus, youth and music genre with Channel V or even regional domains with Star Jalsa and Star Pravah.â€
Star Plus steadied its performance to stay on a comfortable and consistent number one position through the year. The efforts undertaken by the channel in 2010 were paying off and gave Star enough confidence to overhaul its second GEC, Star One. Star took the big step of relaunching Star One as Life OK, completely doing away with the Star brand name in the channel. However, the network significantly cut on inventory for Life OK. For competitive reasons, there also were days when Star Plus went break-free.
While Sony Entertainment Television added enough relevant content to beat Colors and take the number two spot in GE charts too often in the year, Sonyâ€™s climb was not because Colors GRPs were dropping but because Sony had seen growth in numbers. Colors maintained its viewership. Zee TV had seen some drop in numbers but the next tier of channels too maintained viewership. The setback, the Sun Network faced was evident in the course of the year, as they exited 2011 in single digit growth.
Another reason why TV ad spends were below projected, was because contrary to expectations, some key channels, like Colors, only maintained viewership and others like Sun dropped.
Regional to rescue
Regional channels managed a good year. While Mainline Hindi GECs have 16 per cent and second tier cornered 11 per cent, regional commanded 33 per cent of overall (All India, C&S 4+) viewership. Even as various south channels have been a strong contributor to regional channels, the likes of Bengali and Marathi too have been gaining significant ground now.
Vaz says, â€œRegional channels have done very well and this has been a continuing trend. There has been a 25-30 per cent growth in regional channels. One big advantage they have is that they bring the long tail advertisers, who donâ€™t have global pressures and not that badly hit or restricted due to any reasons. They form a steady revenue source.â€
That turned out to be a strong contributor to the nine per cent growth that television witnessed.
Even the language feeds of international channels have had a good year. In the case of Discovery Communication, while the company has maintained momentum of growth, according to Rahul Johri, Senior Vice President and GM, Discovery Networks, â€œThe big difference that we felt last year, and expect, we will see even more, is the structure of Discovery Tamil. It has been designed as a separate channel, with its own inventory and not just another language channel. That is where we see future growth.â€
Explaining his point further, Johri says, â€œAdvertisers buy Hindi speaking markets on the whole but when they look at south, they buy specific regional markets because that is the nature of the viewership patterns there. In the Tamil market, Discovery is now the only international channel of this kind and hence it is gaining significant traction.â€
One of the most important contributors, according to broadcasters, towards the growth of television ad spends is the increase in FMCG spends. FMCG forms almost 60 per cent of GECâ€™s ad revenues. Vaz remarks, â€œThe likes of Hindustan Unilever, Dabur, Marico, P&G, GSK and many such companies had a very aggressive year because of the increased competition in their sectors and the fact that some of these companies branched out to newer categories. Some advertisers in fact upped their spends in double digits and naturally television benefitted from this.â€
Pitch Madison Media Advertising Outlook 2012 indicates that FMCGâ€™s share on television has come down in 2011 as compared to 2010. In 2011, FMCG contributed 52.8 per cent to the TVâ€™s ad pie, as compared to 55.4 per cent in 2010. Growth in FMCG spends was not as per projected due to caution setting back in the sectors given market sentiments and rising input costs that were seen in the year.
But it was the automobile sector that contributed to television too. Lutz Kothe, Head, Marketing & PR, Volkswagen, says, â€œTV has been our lead media contributing to 42 per cent of our spends in 2011. The Cricket World Cup and the IPL 4 have been key growth drivers for advertising and viewership.â€
Vaz observes, â€œSectors such as automobile that have had a tough year, while pulled back in press in a big way, continued to spend on television. The ratio of automobile ad spends between TV and print may have been 70:30 or 65:35 in the favour of print but in 2011, it could well be 50:50 or even a 55:45 in favour of television.â€
The telecom sector was another that maintained its share of volume of television advertising at 11.5 per cent. Vodafone and Airtel were the top spenders in the year.
The silent blows
The television space is seeing a clear divide in the performance of the various players. While there are examples like Star India and Multi Screen Media that are growing well, many other players are still fighting to hold on to ad rates since even as they maintain performance, they have not been able to grow their share. Discounts, make-good and bonus spots are also contributing to a slower than expected growth in television advertising spends.
In 2011, due to the increase in the number of channels (623 channels in comparison to 552 of 2010) overall television inventory increased by 15 per cent. FCT per channel, excluding channel promos, remained constant however. And television viewership also was stagnant.
Aneesh Khanna, Senior Vice President & Head, Marketing and Product Management, IDBI Federal Life Insurance, explains, â€œWith newer channels and programming genres, viewership is getting further fragmented. The growing competition and clutter for attention in the life insurance sector has made it a challenging task for advertisers to effectively stand out.â€
More of the same
Another concern has been the lack of big advertisers or the opening up of a big category in the year.
Rohit Gupta points out that the expectations from retail and financial services, which are very big categories globally, to increase spends, have not become a reality in India yet. Shefali Chhachhi, Director, Marketing, Max Bupa, adds, â€œThe year 2010 was our year of launch, so our marketing spends were higher. In 2011, our spends were in line with our business plans. We have always followed a 360-degree integrated marketing approach.Â During our launch phase, the focus was more on ATL. Going forward, we will increase the share of BTL in our overall marketing mix.â€
Johri cites the example of e-commerce websites that had begun advertising in the year. He says, â€œIt opened as a distinct category that had contributed to the overall spends.â€
Kevin Vaz also draws attention to the fact that there were some new advertisers in the year, and also more of premium advertisers that had come on board television. He says, â€œReal estate came in a big way and the likes of India Bulls were advertising on TV. The premium section really opened up in the year, and the likes of the English entertainment genre benefited with advertisers like TAG Heur, BMW and Merc advertising significantly.â€
However, not all digital and premium advertisers amounted to big spenders in the year.
The expected number for ad spends just between ICC Cricket World Cup and IPL 4 was marked at Rs 1,500- Rs 1,600 crore according to some industry sources. However, one discussion that gained steam around the World Cup was ESPN Star Sportsâ€™ inability to have been able to truly cash on Indiaâ€™s great game and subsequent victory at the World Cup. Whether it was the caution after the previous World Cup experience or the fact that many deals were locked much in advance for ESPN to make any serious monies out of the good game, ICC Cricket World Cup did not contribute to television advertising spends in the manner that it could have.
The second half of the year turned out to be a grim one for cricket, due to a poor India performance in various tournaments. The matches played in India against England and West Indies could have been the bright spots but on the whole, the second half failed to contribute much from cricket as well.
The year 2011 was another growth year for TV, but not on the lines of expectations, the industry had set out in the beginning of the year. Despite that, television still continues to be the lead medium for various large advertisers given its nature of a low cost per contact point medium. The expectation of further growth in this medium continues for 2012 as well. Turn the pages to see whatâ€™s our Outlook for TV in 2012.