10+2 ad cap impact: Colors hikes ad rates by 30 pc

In the backdrop of the implementation of the regulation on advertising inventory, reducing it to 12 mintes in a clock hour of programming, Colors has decided to increase its advertising rates by almost 30 per cent.

Raj Nayak, CEO, Colors explained, “The rationale is that we as a broadcaster have still not seen the full impact of digitisation in the form of either a fair share of reduction in carriage fees or subscription revenues. Given that we are a responsible broadcaster and intend to follow the guidelines set by the regulator, we believe that to stay on course and in order to meet the revenue objectives, we are left with no option but to increase ad rates.”

Nayak also believes that in the current scenario there is already a shortage of ad inventory on GEC channels, with most of them having oversold. With the ad cap coming into play, the pipeline is only going to get narrower and change the supply-demand ratio.

When asked about the proposed ad hike, Kartik Sharma, Managing Partner, Maxus said, “It will be difficult to comment at this point since we haven’t received any official communication from the channel. Everything is speculative at this point. We would be able to take a stance post October 2013, since there are a lot of negotiations that are happening right now.”

Commenting on the same, a media planner on condition of anonymity stated that the proposed hike is quite steep and is a little premature at this stage, given the fact there is still time before it actually kicks in. Also, it is important to pay attention to the fact that with digitisation, the ad break viewership has also gone down. This would make advertisers look for alternate ways since they would want to wait and watch.

But though experts might feel the 30 per cent ad hike to be on a higher scale, Nayak brings to fore the fact that they share a tremendous relationship with their advertisers and hence, all existing deals will be honoured.

"We will take precautions to try and balance the price hike in a manner that works for all stakeholders,” Nayak added.

A majority of broadcasters have refused to comment on the same, citing the fact that it is too early to speak and one would have to wait and watch.

As reported earlier, it may be recalled that broadcasters felt that on an average 30-40 per cent revenue will be impacted if the 10+2 ad cap is implemented at this point in time. Though nothing can be concluded currently, Colors’ announcement is clearly indicative of the channel’s cautious approach.