The TV industry, which has been going through a tough FY18, hopes for a rebound in growth in the upcoming financial year. The industry hopes the pick-up in economic growth will give a push to all sectors, leading to an increased advertising expenditure by companies. The economic survey released on Monday has predicted the GDP growth in the next fiscal to be between 7.1% and 7.5%.
Experts say that the advertising expenditure of the FMCG, auto, e-commerce and realty sectors, along with banking, is going to pick up in the next fiscal and would be even better than expected if there's a good monsoon. The other factors that would aid adex growth are big ticket events such as several state elections, government advertising and cricketing events.
MK Anand, MD and CEO, Times Network, said, “2018 will be a good year for adex overall. The economy has more or less come to terms with the earlier disruptions. We don’t expect any major new policy changes since it’s an election-eve year. And not to forget, the 2017 base is a depressed one. So growth will be decent.”
The predictions for the growth of adex in television range from 8% as per GroupM’s TYNY report to KPMG’s 14.4%. The Dentsu Aegis Network estimated this growth to sit around 12%. However, now that the industry has entered the calendar year, everyone is expecting the year to close at about 13%.
Ashish Sehgal, COO, Zee Unimedia, said, “The effects of GST faded away after August and demonetisation also has passed now. Things are coming back on track.”
Joy Chakraborty, President, Revenue, TV18, felt that the current quarter will be the deciding factor for growth in the next fiscal. “There will be healthy growth but this quarter – January-March –will decide how the next financial year is going to be. Everyone has suffered in the first nine months of the current fiscal. This quarter is important also from the point of view of having completed six months of GST. This will also set a benchmark for the next financial year," he said.
Debraj Tripathy, Managing Director, MediaCom, said, “The growth will depend on the macro-economic growth of the country. The advertising budgets will go up because of the growth in economy. Networks will have to increasingly focus on getting the right content and create right environment for advertisers.”
Sectors that will push growth
Other than the environmental drivers that are expected to push growth, some specific sectors of advertisers will also ensure that the television adex increases and will contribute heavily to this growth. FMCG, which has been depressed due to the policy changes, is likely to bounce back in a big way.
Sehgal pointed out, “With GST, the unorganised (FMCG) players will not be able to really do much on the expansion and pricing. The big giants will have to hence get to these markets and will need advertising for these corners, which is best reached through television.”
Tripathi pointed out that considering the results of the companies in the last quarter, the FMCG and services sector is going good. “If their business improves, so will their marketing spends and television will be the biggest gainer.”
Another important category that will see growth is BFSI and within this, the sub-categories like small banks and payments banks will give a huge push to television advertising.
The category is shifting focus towards the small and medium enterprises (SMEs), which will be a huge boost for the television segment.
The other categories looking to push TV adex include e-commerce and elections.
While the state elections will be a big push for the news genre, the 2019 General Elections will be especially a big driver for the channels across the genres. However, the government has still not finalised the pricing for DAVP.
Sehgal explained, “2019 is the election year but government spending will still be restricted I feel. Considering that the DAVP rates are yet to be finalised, the dilemma as to whether the government chooses to advertise on TV in a big way or not will still be there. Political parties, though, will advertise in the run-up to the elections and that will be a boost of sorts.”
On the other factors that will drive growth for TV, Anand mentioned, “Expansion of households and TV penetration will also push growth, specifically for the broadcast industry. Digital is also aiding in more media consumption. For the news genre, it’s a year with a number of state elections.”
Pointing out at the major events slated for the year, Chakraborty said it was also an important deciding factor, “The growth in a certain year is also dependent on the big ticket events in that year – elections and the world cup would be big events in the next fiscal.”
“IPL with Star is a new event for the industry. Need to watch out for that. I expect cricket with all players to be more active," Anand said.
Challenges for the industry in FY19
To achieve the projected growth targets, the industry will have to make its way through some really tough challenges.
A senior media observer, who did not want to be named, said, “The current fiscal has thrown all numbers out of the window. The entire TV space is getting redefined in terms of buying. If the rumoured changes in the Freedish offerings come out to be true, then measurement of channels will change and that will change a lot. It has been a very complex year that we have just completed because of policy matters, regulatory upheaval and the sudden eruption of FTA channels.”
He pointed out that the people have gone back to the drawing board to understand the value for the money they are spending.
The free-to-air channels surged new heights in 2017 and grew, albeit at the cost of their older siblings and the mainline channels of the broadcast networks. The FTA GECs and movie channels have now become a problem for the networks as they have started replacing the mainline counterparts in the media plans of the clients. Though the FTA segment has seen an increase in ad rates by about 70%, the loss that the mainline GECs will suffer because of this will be huge.
“There is a huge realignment in the way media plans are built. It is not done on 150-200 channels anymore, but is rather restricted to 60-70 channels. Channels are being compromised because of FTAs and the reach that they offer,” said Chakraborty.
There are a few other issues too that need to be resolved in 2018 and that is the returning of advertising dependency. “This country has moved from 20% subscription revenues to about 50%. If FTAs get heavy on the pay channels, it will be difficult for the broadcasters to balance their boat well between subscription and advertising revenues,” said a senior media observer.
Broadcasters too have realised the need of immediate correction in the way FTAs were being handled. Sehgal said, “One of our main focus areas would be to revive the growth of our mainline GECs. With the sudden surge in viewership of FTAs, the mainline GECs were falling short in both viewership and advertising. I think all the players will have to focus on this.”
Adding quickly to that, he said, “Another thing that needs to be done is correction in FTA pricing. The rates are so low that the mainline GECs are getting affected. We must bring the FTA rates in line with the mainline GECs because their reach is not any shorter.”
While Hindi and regional language channels have been hammering the English language channels for quite a few years now, the current fiscal is seeing an aggressive shift here.
Chakraborty, who heads revenues for a network that has a sizable share in English, Hindi and the regional space, pointed out, “The English market has shrunk and the money has moved to languages and Hindi. Digital has taken a lot of viewership while the regionals have claimed the monies. The way Hindi news has grown is much more than how English news has. Inventories on English news is at about 30-40%, against a full inventory that Hindi news is running on.”
Adding, he mentioned how his key focus area in FY19 is to change the imagery of his network. “For always, we have been perceived as a CNBC network, as an English network. But News18 India is also doing good and is No. 1 in primetime for a long time. In fact, it will be one of the major drivers of our network in the next fiscal. Hindi news is where the money is. We have a huge regional bouquet too and we would want to be known for all of these, English, Hindi and regional.”
Anand said 2017 was nothing less than a ‘landmark’ year. “I believe disruptions challenge everyone to look beyond. And when that happens, new opportunities and better processes come up. That mindset is a critical learning which I am sure everyone will carry into 2018.”
Focus areas in next financial year
Broadcasters have planned a few specific focus areas for their respective networks and digital sits calmly in all the plans. Whether it is ZEEL that has announced the launch of Zee5, or the Times Network that has been building its own army of digital experts in its Delhi office.
Sehgal specified, “Digital will be a major focus area for us, as the two screens are merging. We will strengthen our digital offering with the launch of Zee5. Ditto TV and OZee will both come together to form Zee5.”
The network also has plans to pump in significant investments towards boosting the mainline GECs and the regional channels, which have been on a growth trajectory.
Anand, on behalf of Times Network, shared his plans for 2018, “We are ready with our digital platform and will be announcing it shortly. The growth in 2017 has been fantastic. The plan is for timesnownews.com to break into the top five set nationally this year.”
Other than this, the network is intending to make some major corrections in its subscription sales. The expectation is to correct it in the next two quarters. The network also has few big projects rolling out on the events side in the first quarter and that will boost the events and branded content business.
Anand also mentioned, “In ad sales, the priority is to get our new launches – Mirror Now and MNX and our HD bouquet to full scale. This is going to be the second year for these brands and we expect these channels to come of age in 2018.”
The other things the industry is looking forward to are the most awaited tariff order that's expected soon and the implementation of the return path data (RPD) technology by BARC.