After a collapsed AdEx in the first half of the year, the entire broadcast industry is now hoping for a better H2 in 2020 riding on the back of the festive season, fresh content back on GECs and above all the Indian Premier League.
Corroborating this is the Pitch Madison Advertising Outlook H1 2020, which says AdEx is expected to recover in H2 ’20 and grow at 60-72% of the collapsed H1 or at 6-13% as compared to H2 of 2019.
To share more on this, exchange4media engaged in a conversation with Ashish Sehgal, Chief Growth Officer, Advertisement Revenue, Zee Entertainment Enterprises Ltd (ZEEL). Sehgal spoke about the key drivers for growth in the second half of the year, ZEEL’s focus for the coming months, the pressure on ad rates and much more.
Edited excerpts:
How do you see the second half of the year rolling out for the TV industry?
With the relaxation in COVID-induced lockdown, India is already at par with China in the essentials (FMCG) segment, and green shoots of recovery are visible for sectors like automobile. The overall demand for power turned positive in the second week of August, indicating resumption of industrial activities. In fact, E-way bill generation seems to have normalized, indicating restoration of the supply chain. With the festive season setting in, positive sentiments are on the rise and since the second half has some of the big festivals across India spends are expected to revive and compensate for the losses.
The television industry is at a turning point – not only have FMCGs further consolidated with the medium but a host of newer categories have also emerged in this pandemic. It’s pertinent to note that in this phase, e-commerce sales surpassed their previous high with TV being the dominant medium partner, thereby indicating that the medium delivers Response-led Purchase as well.
We are expecting disproportionate growth in H2 as compared to H1 on the lines of higher single digit growth, with last quarter growing at a faster pace.
Despite the slowdown, brands have realised the merit of being a part of a consumer’s cluttered or fragmented mindscape, how it is critical for recall and hence advertising has returned after retraction in the first quarter. For some categories it’s at a faster pace whilst others have slowly started. Leaders across categories have paved way for the same and it soon is a SOV game. More competition means more advertising, which is the reason for surplus inventory demand on TV.
Which vertical do you predict will drive the growth?
Currently, I would say all genres are thriving. News and movies viewership on TV soar during the peak of COVID and continues to hold on to a higher viewership as compared to the pre-COVID period. On the other hand, General Entertainment Channels that have come back with originals are gaining both in reach and time spent. These are the three big pillars of TV viewing. During the festive season, with all genres re-looking at their content mix by investing heavily in properties, and with movies and IPL being around the corner, viewers will have a plethora of options.
From an advertiser’s point of view, it’s imperative that they encash this period after the slowdown and the best medium to look at currently is TV, which is not only impactful with a basketful of content but cheaper too since efficiency has increased multi-fold due to growth in viewership. Sectors such as Durables, Auto, Mobile, e-commerce will bloom during this period coupled with the small regional retail players. Our strong presence and leadership position across the length and breadth of India will help us yield and consolidate.
How do you see regional advertising growing? What is going to be the key growth driver for ZEEL in the upcoming quarter?
Hyperlocal understanding of the consumer and their culture of creating relevant content have helped us gain leadership in most of the regional GEC space and our ratings have not only bounced back but surpassed pre-Covid levels in certain markets. These regional markets being strong consumption areas have seen instant advertising pick-up. Each state has its own sector that will propel growth for them and our presence across states will see us grow in each of them.
However, the key growth drivers for ZEEL will be Kannada, Telugu, Marathi, Tamil and Bangla. Also, a major role will be played by Free-To-Air (FTA) channels, which weren't there last year.
How much has the re-launch of two channels on DD Free Dish helped in the network’s recovery?
The launch of FTA channels has helped us substantially in the recovery and it's the right market from the advertising point of view. It was contributing around 5-7 per cent to the overall revenue pie earlier and we will try to bring a similar kind of contribution back.
Besides, the rural sector is in a good shape with a strong growth in kharif crops and other indicators like vehicle demand (tractor) showing a healthy traction. Rural also continues to contribute significantly to the overall growth and to the topline across most companies. This has meant that we have seen an immediate interest from advertisers when the channels were launched. Now we need to establish the right price for this consumer as the next phase of growth will be from the rural audience set.
In December last year, ZEEL launched four new channels - Zee Punjabi, Zee Biskope, Zee Thirai and Zee Picchar. How have the channels performed in terms of both viewership and revenue?
As an organization, we have always believed in expanding our bouquet, more of more has been our mantra and that has yielded results for the viewer, advertiser and helped us as well in growing our viewership share and ad pie. Across all these markets, with our deep insights we were able to not only launch successfully but gain leadership through Zee Bioskope, secure the no. 2 position in case of Zee Picchar in the Karnataka market, achieve steady growth for Zee Thirai and even opened up new content in Punjab in their own language. Punjab is a rich market, currently under-indexed from the advertising point of view. Our Zee Punjabi presence will help us increase our pie. Since all of them were just launched prior to COVID, with gain in viewership across all 4 channels, now is the time to garner currency.
In the coming months, almost all broadcasters are launching their impact properties. For instance, Colors is betting on Bigg Boss and Star Plus on Nach Baliye. Which are the big ticket or impact properties that ZEEL is betting on?
During IPL, especially in the Hindi GEC space, we have realized that we need to be different and holding on to the flirtatious audience garnered through impact properties will be difficult. It’s advisable that we play the stickiness game and what better bet than fiction shows, which is our stronghold and where we have leader shows like Kundali and Kum Kum Bhagya. Hence, we are launching a series of fiction shows to captivate the audience. Across regionals, impact properties have stickiness as well and here across every state we are prepared with a barrage of shows for captive viewership.
During the lockdown English GECs and movie channels too observed an increase in viewership. Do you see the same growth translating into ad revenues?
The advertisers are not very friendly with the GEC piece but yes they are still investing into movie channels. Movies will be main in the English genre and so will be English News. The focus right now is to increase the advertising volumes and only then will we see an increase in ad rates.
Post COVID, the ad rates for most of the channels dropped 50-60%. Is there still a pressure on ad rates? By when do you see it return to pre-COVID levels?
Currently, Inventory Demand has surpassed Supply thus a clear warning for price correction, which we have undertaken. Across most genres, prices are reversing back to pre-COVID levels. In fact, during Q3 we are expecting price hikes will be essential.
Besides ad rates, which are the other potential areas for revenue generation?
Advertisers also had a setback in their businesses and now when they are coming back they are both conscious and cautious about the right ROI for the money they are spending.
With customer centricity at the core, we have always endeavored to go beyond the traditional sales approach and work closely with advertisers or brands to not only give relevant consumer insights - be it psychographic or behavior – but also help in co-create solution as relevancy in their communication is the key. We proactively identify the business issues of the brands and work closely with them for a holistic solution to influence their business KPIs and not just address their communication objectives as brands are seeking for such solutions. These behavioral patterns will help advertisers make learned decisions and spend cautiously.
We are also focusing on providing advertisers with innovative technology-led solutions. For example, our response-led advertising is through offline to online innovation using QR code-based technology to help advertisers drive sales and conversion.
What kind of recovery do you see on ZEE LIVE, an event-based vertical?
We have just concluded our big ticket event called Digital Supermoon House Party. We are also building a couple of more IPs like drive-in theatres, drive-in concerts and are creating more digital properties where singers, musicians and comedians can perform live so that the audience can enjoy the same kind of environment at home. Since, we are still in the pandemic and nobody wants to be part of a big group this has led to new ideas to create more IPs which are just not on-ground but digital.
What is going to be ZEEL’s focus for the rest of the year?
As a leader in the broadcast business, our core objective is to increase the ad pie for the industry.
From the overall business side, the focus is to build leadership across markets. With dominance in FTA, Kannada, Maharashtra and the Bengal markets both in terms of viewership and advertising, we are well poised to take over Tamil Nadu and AP markets as we are close on the heels of the leader. The focus will be to drive price point, be on MSMEs and retail business in regional markets because retail has taken a quite a big hit during this period. How we can help them and build back their businesses will also be our focus area.
Overall, we will continue to sharpen our focus on consumer centricity keeping customer’s business at the center to drive mutual business growth.