Ad inventory goes up, next challenge is doing away with discounts

Although viewership increased during the lockdown, advertisers continue demanding

deep discounts, thereby compounding the woes of already-beleaguered broadcasters.

While the COVID-19-related lockdown may not have flattened the curve, it has surely sent shockwaves across the economy. From MSMEs to large corporations, no industry has been immune to the coronavirus outbreak. One of the collateral casualties of this pandemic has been the broadcast industry, which is reeling under pressure.

Paradoxically, television ratings have never been better! TV viewership has been witnessing historic numbers, rising by 40% in the COVID-19 era. Indeed, the share of news in overall TV viewership has risen to 21% from 7%. These numbers clearly indicate strong growth in the overall TV universe. The important question, however, that arises – Is advertising following in equal measure?

That is a labyrinthine challenge the industry is struggling to navigate…

Rising inventory, falling ad rates

The spurt in viewership is definitely helping broadcasters gain incremental subscription revenue. Yet, this is hardly augmenting their advertising revenue. While ad volumes have seen an uptick, it still remains 23% lower than the pre-COVID period. Broadcasters are gradually witnessing a revival after confronting the worst-ever quarter in terms of ad revenue.

Advertisements on television grew 44% in week 30 (19 – 25 July 2020) compared to week 23 (31 May – 06 June 2020), according to the data released by AdEx India, a division of TAM Media Research. Subsequently, the number of categories, advertisers and brands also witnessed a rise in July vis-à-vis June 2020, as the tally of advertisers and brands rose by 10.6% and 3.1%, respectively.

With ‘Unlock’ coming into effect and production resuming, all channels have been updating their content library and airing fresh content. Thanks to this, Hindi GECs have witnessed 5% growth in average ad volumes per day in July 2020 compared to June 2020, garnering 23% of ad share volume.

Unfortunately, with ad inventory rising, ad rates have dropped significantly as advertisers continue to demand hefty discounts. What’s more, the rates have been slashed between 35% and 50% even for genres and channels that performed significantly well during the lockdown. Already beleaguered, broadcasters are obliging with deep discounts simply to stay afloat. 

The need for premiums

As the country unlocks, the wallet share of customers is expanding, viewership continues increasing and the festive season is visible on the horizon. Certainly, this marks a golden opportunity for advertisers to invest in TV commercials and remain on the top echelons of consumers’ mind-space. One way to promote brand awareness during this period would be by exploring higher ACDs (average commercial durations) backed by thoughtful storytelling.

But for both sectors to survive and thrive, advertisers must acknowledge the brand-building capabilities and captive audiences offered on television, and pay broadcasters full premiums. Viewership is the biggest currency on television and if that is overlooked with discounts and bonuses, various broadcasters will soon be on the brink of being phased out.

Although the overall mood is sombre, broadcasters expect to be paid premiums as the festive season arrives and consumers loosen their purse strings. Until then, as unreasonable as it may be, it’s discounts galore.

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