Braving headwinds, broadcasters see an H1 of mixed performances
The beginning of 2024 was a subdued start for the broadcasting industry, attributed to a market slowdown and challenges in rural consumption that impacted FMCG ad spends. Despite these setbacks, experts retain optimism for the months ahead, looking forward to a potential boost in adex driven by election-related activities. However, concerns loom over a post-election industry slowdown, with expectations for recovery beginning around August.
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Ashish Sehgal, Chief Growth Officer, Advertisement Revenue, ZEE, shared that TV is likely to witness a higher single-digit growth between 5-10% in H1 compared to the same period last year.
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He said, "The TV industry is likely to grow in the higher single digit in H1 because of the IPL and elections coming up." Sehgal explained that the industry experienced a slowdown in March because the IPL started earlier than usual, as a result of the upcoming elections in May. "Advertisers usually spend on IPL in April and May, but due to the elections, IPL shifted to March, causing the slowdown." According to PITCH Madison Advertising Report 2024, TV is expected to add another Rs. 2,700 crores and grow by 8% in 2024 to reach a total of Rs. 35,575 crores. With this growth, says the report, TV will again lose 1% share and settle at 32%. According to Rupali Chavan, Senior Vice President – Business Head, Mudramax, the consumption of Free Commercial Time (FCT) is expected to show robust performance this year for several reasons. “IPL ratings have risen from the previous season, elections are set for the first half of the year, and the T20 World Cup will follow the Elections. These events are expected to generate significant media interest, leading to a fierce battle for share of voice among advertisers,” said Chavan. She noted that FCT consumption has increased in 2024 vis-a-vis Q1 2023. Chavan added, “The first quarter has shown positive performance, and with upcoming elections and other events scheduled throughout the year, the networks are expected to continue thriving.” It's worth noting that the broadcasting industry typically experiences a slowdown in ad spends during January and February. This slowdown follows the festive period when many brands exhaust their annual advertising budgets. Looking ahead, many industry insiders view the current year as a foundational one that will set the tone for the next few years to come. Characterized by widespread challenges across the board, growth has been sluggish, with few surpassing a 5% increase in revenue compared to the previous year. “The economic landscape, despite overall growth projections of 6%, is marred by sluggish rural consumption, particularly affecting FMCG companies. This downturn in rural spending has led to reduced advertising from FMCG players, impacting overall advertising rates. According to him, expectations are high for the upcoming budget announcements, with hopes that the government will prioritize initiatives to stimulate manufacturing and employment in rural areas, thus reigniting consumer spending. “Election period also has a considerable impact on market dynamics, with an expected decline in the months preceding elections as uncertainty rises. However, the period following election results usually sees a rise in market activity, fuelled by restored confidence and policy clarity. Forecasts indicate a steady recovery beginning in August, driven by both positive attitude and government programs aimed at rebuilding rural economies," he noted. As earlier reported by exchange4media, this year IPL also faced challenges in selling the inventory. Experts pegged that collective revenue will be around Rs 1,400 crore for each platform. Karan Taurani, Senior Vice President at Elara Capital, observed that the broadcast industry has experienced a subdued trajectory. He noted that while sports had been the main driver of growth in the past, with a robust 14-15% compound annual growth rate (CAGR), recent developments like the Indian Premier League (IPL) being available for free on Jio Cinema last year led to a decline in sports viewership. This year, he anticipates a more modest growth rate of 8-10% for sports, lower than the pre-IPL digital era. Taurani highlighted that broadcasters focusing on General Entertainment Channels (GEC) are facing challenges, with advertising revenue showing a 2-3% decline. “Broadcasters on the GEC side are still at about 90-95% of pre-COVID level in terms of ad revenue. So, there is a struggle and things are not easy as far as advertising spends are concerned.” Summing up, Taurani characterized the performance of the broadcast industry in the early part of CY24 as mixed, with muted growth in GEC and sports segments, and a minor boost from election-related spending on news channels. He projected a modest ad revenue growth of around 4% for CY24, attributing the muted forecast partly to the subdued performance of the sports segment. Despite the increasing popularity of CTV and the shift towards OTT, total TV advertising revenue stands at $468 billion, representing a remarkable growth of 49% compared to 2020.
Moreover, the absence of significant new advertisers entering the market further compounds the industry's challenges,” said a COO of a leading broadcaster.
Furthermore, it is projected that the total TV advertising spend will reach $617 billion by 2026. “These figures indicate that the big and mid-size networks are performing strongly in terms of revenue generation,” said Chavan.
Tags : Broadcast Industry Ipl Fct Lok Sabha Elections 2024 Adex Karan Taurani Fmcg