In-depth: Separate data for ad viewership undermining ad rates

The free-to-air channels have put India’s broadcasting industry in a fix. The broadcasters haven’t been able to increase ad slot rates for the last few years. And to ensure their margins remain intact, they have released more ad inventory, which has complicated the situation.

The FMCG and auto categories are getting much better reach through FTAs at the 1/10th price of the mainstream paid channels. Hence, the volume increase that was expected for mainstream channels has also moved to FTAs. What has worsened the situation is the muted economic growth in the last two years, forcing advertisers to go slow on their advertising and marketing plans.

Experts say the advertisers haven’t undervalued their inventory but the ad rates have more or less stabilised because of various factors.

NP Sathyamurthy

NP Sathyamurthy, President and Head, Media, DDB Mudramax, said, “There isn’t any undervaluation. In general, when fragmentation happens and there’s more supply available for demand, prices get stabilised. This is stability in costs. The rates are relative to a lot of things, not directly proportional to the viewership. FTAs are primarily used for the smaller towns where the cost of customer acquisition is much lower than the urban markets. You cannot compare the FTA ERs to GEC channels ERs.”

Joy Chakraborty

Joy Chakraborty, President, Revenue, Network18 and CEO, Forbes, said, “All was going well on the GEC front till FTA channels changed their model from slot sales and introduced reruns of shows aired on mainline GECs. In this genre, about 60-70% monies came from FMCG clients and for this category of advertisers, FTA audiences were as important; they started latching on to the newly popular FTA space for a price 1/10th-1/15th of the mainline GEC. Unfortunately in its earlier avatar of being a slot channel, FTAs had very low rates, but when BARC started giving rural data, the viewership of these channels rose big time, rates increased but not in proportion to the increase in the viewership. It's not a viewership issue, it is a problem of underestimating the strength of FTAs while pricing them.”

Broadcasters say BARC data on the FTA has made the growth in rural and media dark areas visible to the advertisers, which affected the pricing for mainstream channels.

Ashish Sehgal

Ashish Sehgal, COO, Zee Unimedia, said, “While there is overall growth coming from rural areas, the value of urban audience is high. But rural viewership is being realised now, while urban viewership was always known. FTAs covered a lot of TV dark homes which gave the marketers a choice to reach these audiences. FTAs went ahead of pay channels and hence the inventory ultimately increased. This has affected pay channels’ inventory pricing.”

Separate ad viewership data also undermining ad rates

India is among the few developed TV markets where the measurement agency also provides data for ad viewership. In a lot of advanced countries, the viewership is measured only for the programme and the advertisers are charged only for those ratings for the ad breaks.

Experts say that India has a high viewership attrition rate (around 20%) during ad breaks, which is harming the advertising inventory.

BARC India’s spokesperson said, “India as a country is obsessed with granular data. Hence, when we set up our measurement system, we invested heavily on creating a strong technology backbone. No other global measurement system offers as granular data as we do. As a measurement company, we provide all the data, but how advertisers choose to buy is their prerogative. Our software also allows for excluding ad viewership from programme viewership and the feature is available with all our subscribers.”

Chakraborty said 10 years ago India just had the programme viewership data, which worked well in the interest of broadcasters, “About 10 years ago we moved to break ratings from programme ratings and the advertisers/ agency post research factored in a drop of 15-20% from planned to delivered CPRPs in a campaign.”

Paritosh Joshi

Suggesting a solution to this issue, Paritosh Joshi, Principal at Provocateur Advisory, a media advisory practice, said, “Only broadcasters themselves will be able to solve the pricing issue. Fox has done it in the west, where they run only two ads — it is called A to Z, where there is ‘a’ ad and there is ‘z’ ad and nothing in between. This will reduce or remove the drop in ratings for the ad breaks as the number of ads would be much less. When the advertiser sees that all your programme viewership is intact even during the break, he/ she is happy to pay you extra money. This is a consistent problem in India within broadcasting that we have never reconciled with the idea of demanding price increase.”

“One professional sitting at the helm of a big network has to take the initiative and decide that for some time, I am going to take the impact on my revenues, but I am going to still increase the valuation of my slots,” Joshi added.

Experts said that reducing the ad inventory could work well in the west but in India it could create a catch-22 situation for broadcasters.

Sathyamurthy said that cutting the number of ads could increase the ad slots rates but then channels would have to invest additionally in programming to fill in for that time.

“Running ads less than 12 minutes will not be worth much. We won't be able to recover the cost of content and operations. The only visible solution is to increase ad rates,” added Sehgal.

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