PMMAO 2012: TV Outlook: A blurred view

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TV is still the most cost effective medium in India” – just about any Indian media observer quotes this statement every time the future of television and its effectiveness as a medium for advertisers is discussed. Industry leaders believe that this continues to be the reason why television would grow further in 2012. The Pitch Madison Media Advertising Outlook 2012 expects TV ad spends to grow by 10 per cent this year. From the current base of Rs 11,478  crore, the study states that TV ad spends would be in the vicinity of
Rs 12,626 crore.

PMMAO also indicates that television would still be the largest consumer of the advertising pie with a 45.1 per cent share of the overall budget.

Aneesh Khanna, Senior Vice President and Head, Marketing and Product Management, IDBI Federal Life Insurance, reiterates this, and says, “We have been active on the television medium nationally, as it ensures reach across the length and breadth of the country.  We consider outdoor medium in select markets to create an added impact. This focus on TV has helped us increase our visibility and brand recall in our target markets. We plan to continue to invest in a similar fashion in 2012 to deliver our message in an impactful way to our target audience.”

One setback that could curtail television’s growth could be an expected tough year due to a slowdown emanating from global economic conditions. While the industry is still on wait and watch, some believe that the slowdown is not here. Rahul Johri, Senior Vice President and GM, Discovery Networks, says, “We have not felt a slowdown yet and I don’t think we would in 2012 too. But at Discovery, we work with a whole portfolio of advertisers and hence we are not dependent on any one category or advertiser.”

On the other hand, others are of the opinion that the slowdown may auger good news for the television industry. Kevin Vaz, President, Ad Sales, Star India explains, “A big reality about the Indian media industry is that television continues to be the most cost effective medium from a cost per contact point of view. In a tough year, when the economy is tighter, people will depend more on television than other mediums for that reason and we will see more shift from press to TV.”

Lutz Kothe, Head of Marketing & PR, Volkswagen, explains, “We expect that in 2012, the digital media will receive more focus but television and print will continue to have the higher pie of overall spends.” Some industry players are extremely optimistic on the television and expect the medium to grow by 12 per cent this year.

More competition
Even as many media agencies are busy setting up branded entertainment practice with a view to engage media owners, including television, in innovative ways for the benefit of advertisers, media owners are still sceptical about how much of branded content would be seen on television. A key reason pointed for that is the lack of agreement on the kind of monies that should be paid for infusing brand messages in content.

At the same time, however, advertisers are already gearing for the challenge of reduced inventory in prime time of general entertainment channels and even on other genres like movies and music. Star India cut down inventory on its movies and music channel by 33 per cent. Some of Multi Screen Media channels too have followed suit.

Vaz elaborates, “From an ad sales viewpoint, one of the biggest things we have done at Star, and a few others have followed, is reduce the inventory. For two of our key channels – Star Gold and Channel V, there has been a 33 per cent drop in inventory. We believe this is a sustainable model in the long run, as it gives more value – the longer the break, the larger the ad drops; this allowed a jump in the overall channel and break performance and people are ready to pay for better value.”

The increase in competition in the genre will lead players to innovate in different ways to attract advertisers and this can play a role in bringing in more monies on key channels.

Sunset for analogue
Finally, television in India is expected to head to digitisation with the cabinet ordinance setting a sunset date on analogue distribution. One expectation from this is a level-playing ground for stand-alone channels. It also is likely to increase extremely specialised content channels, aimed at very select audience, allowing targeted advertising, which could once again play a role in further growing television as a medium.

The other aspect that may still be in very nascent stages but has already begun is the efforts from mainline television players to strengthen their presence on the internet and mobile. While news was amongst the first to launch apps and become available on the web, the likes of Star India have invested significantly in the web medium too. If not in 2012, television players would soon look for ways of creating different revenue models, including advertising, from the web.

Regional growth
With Network18 too extending its presence in regional markets, three top networks are already racing against each other in various regional markets. Regional channels had seen growth in 2011 as well. The gone yearhas been a weak one for Sun Network. Some industry observers are watching these markets closely too. While on one hand, Sun would reinvigorate to reclaim lost ground, the change in competitive dynamics in the South would encourage more players to invest in the south

Also, while international channels have already been aggressive on language feeds, the likes of Discovery are also experimenting with separate channels for the region that has its own inventory. Johri quotes the example of Discovery Tamil that is expected to add new revenue streams to the Network.

Vaz points out that one of the biggest advantages of regional television is the local advertising it attracts, that is usually not dependent on global economic conditions.

Year of expectations
In all, 2012 is once again believed to be the year when FMCG players will continue to fight out competition and attract the consumer by advertising in mainline mediums. It is also expected that 2012 will once again see newer categories opening on television and perhaps even the comeback of some categories that had reduced its spends on the medium in 2011.

Shefali Chhachhi, Director, Marketing, Max Bupa, summarises, “Traditional mediums such as print and television will continue to drive advertising revenues. Print is expected to be the largest contributor to the overall advertising revenues closely followed by television through 2015. DTH is already witnessing high growth and will continue to grow as DTH bundles the power of TV, Print and Direct Marketing into a single platform.”

PMMAO projection of 10 per cent growth is another challenge for the television industry, one that it seems set to meet, at least for now.

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