In-depth: Adspend shrinks on TV — and recovery isn't going to be easy at all

The economic slowdown, a shorter festive season and the increasing trend of brands gradually moving their adspend to digital hit India's broadcasting industry hard in the third quarter of the current fiscal.

Two major players, Zee and TV18, have seen their revenues dropping. The others are likely to have the same trajectory.

Industry leaders and heads of media agencies say the shrinking of revenue isn't happening only because of the current macro-economic conditions. The way brands spend on TV is also changing.

"We are now seeing that brands are slowly moving their spends to digital, especially on videos. It was earlier thought that print would be hit the most when the adex spending structure changes. However, now even TV is having a slight impact," said the head of one of the largest media agencies in India.

Punit-Goenka

Punit Goenka, MD and CEO of ZEE Entertainment Enterprises Limited, blamed the drop in the revenue to the tough macro-economic environment.

The recovery, however, doesn't look in sight as multiple agencies have cut India's current growth outlook to 5% or less. FMCG sales have been on a slow growth trajectory and auto sales have plummeted to one of the lowest levels.

In August last year, the Madison Advertising Outlook Report 2019 had revised its forecast for adex 2019 downwards, mainly due to a drop in TV adex in the first quarter of 2019. According to the original report released in February 2019, adex was forecast to grow by 16.4, but the agency later revised it downwards to 13.4%.

TV adex in 2019 was earlier predicted to be Rs 27,649 crore which was later revised to Rs 26,050 crore.

"The slowdown is real and so are the other factors such as the falling consumer sentiment and a change in media mix of advertisers. TV should now brace for a long-term impact as the growth seen in the past would unlikely to be replicated now," said a media agency head, who did not wish to be named. He said brands were getting more comfortable spending on digital as they were experiencing a better ROI. The spends, however, are being made mostly on Google and Facebook.

“You can argue that this shift was short term due to cautious spending and things will be fine as the economy improves. However, it will depend on a category to category basis. A few categories that will not see digital working for them will embrace television again. But others who have tasted the success on digital will give television a miss. I would rather urge broadcasters to prepare for a larger battle than simply hoping that TV adex will fall in place automatically,” he said.

Zee Entertainment Enterprises' Q3FY20 (October-December) consolidated net profit fell sharply by 37.9% year-on-year due to lower revenue and operating income. Profit during the quarter fell to Rs 349.4 crore from Rs 562.4 crore in the same period last year. Revenue from operations in Q3 dropped 5.5% to Rs 2,048.7 crore YoY, dented by lower advertising revenue. Revenue from advertising segment fell 15.8% to Rs 1,230.8 crore during the December quarter due to tough macro-economic environment.

TV18, which recently declared the consolidated numbers for the last fiscal, also saw its revenue going down. When the Q3 numbers of other broadcasters are made available, most of them are likely to have a major drop in the overall revenues.

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