TV puts up a stronger fight in lockdown 2.0

Over the past few days, the country has seen a decline in positive cases. But state governments, preferring to err on the side of caution, have extended lockdown restrictions for another 10-15 days.

The extended lockdown has now raised concerns for several sectors, including the television industry, which has already seen a 25-30% drop in the overall AdEx. 

The industry leaders are optimistic that once the lockdown is lifted, they will recover losses in the next quarter. No one knows how long the lockdown will last and uncertainty about extensions still looms large. It's hard not to see the resulting slowdown in ad spends in such a situation. 

The 2020 lockdown differed entirely from the current lockdown situation. Exactly 1171 advertisers (as per the Pitch Madison advertising report 2020) stopped advertising completely in the AMJ (April- May-June) period in 2020. Not just the consumption, but the manufacturing and supply chain were also adversely hit.

Citing another difference between the two, a revenue head of the leading broadcaster said that last year's lockdown was more of an urban phenomenon since the bigger cities were more affected. This time around, it's the smaller cities -- tier-II towns, and the rest of India that impact the bigger audience and consumer base than the urban India -- which has been badly impacted. "Mass channels like Hindi GEC or Movies have been hit in a big way because they reach out to U+R audience," he shared on the condition of anonymity.

In 2020, many large advertisers who continued advertising cut down their advertising budgets. He added, "Even though the FMCGs, which were prominent in the last lockdown, haven't slowdown yet but have indicated that if this lockdown continues, they might."

He also mentioned that other industries, including Auto, Finance, and Consumer Durables, held back their spendings. However, FMCG is leading the chart this year, but if this lockdown gets extended for another month, that may not be the case for long. 

As per the TAM AdEx report, the ad volumes in TV medium grew by 97% in May '21 compared to May '20, whereas a 7% rise was registered during May '21 compared to May '19. 

According to BARC India data for April, the total ad volumes increased by 2X in April 2021 against April 2020 and is the highest compared to the same period in the previous years. "Revenues are down across the board, and it may not reflect in ad volumes because broadcasters have started bonusing. Some channels are giving around 30-35% discount," said another senior executive of a Hindi GEC channel.

Also, the number of clients has dropped and therefore the revenue has been down by 25-30%, he mentioned.  As per the TAM AdEx report, the tally of advertisers and brands witnessed a drop during May '20 and May '21 compared to May '19. However, in May '21, advertisers and brands increased by 24% and 37% compared to May '20, respectively.

However, Dinesh Singh Rathore, the CEO, Madison Omega, noted: "There is a decline in ad revenues. Brands have become cautious, and spending is not going to be as much this time. Also, the second wave began when the industry was on the road to recovery. Many plans are now put on hold; even IPL stopped mid-way, which has also affected the revenues."

As per the Pitch Madison report 2020, every category showed de-growth in H1'20. The highest drop was seen in Travel, Tourism, Telecom, Beverages, Auto & Durables, while the slightest decrease was observed in FMCG, Corporate advertisements, and e-commerce. Categories like Edu-tech, Gaming, Entertainment (OTT) continues to advertise on TV.

At the same time, the significant television advertisers- FMCG- have reduced their spending. "They are spending less than 50% of what they usually spend. The other categories haven't stopped advertising but have brought down their spending. Last year, everybody stopped advertising but not this time. It's doesn't seem as bad as the same quarter the previous year," said Rathore.

Some of the categories that have shrunk their budgets on advertising this year include Retail, Lifestyle, Hair Care, Beverages, Consumer Durables and Auto.  "Even the ad FCT (Free Commercial Time) for the last couple of weeks at an overall level is at five and half minutes which is far lower than the typical overall ad FCT. Moreover, the weekdays' FCT has reduced by about 1-2%," explained Vishal Shah joins as Managing Partner, MediaCom.

He shared: "We look at different state levels or regional levels; the Hindi genre is at about six and a half minutes of advertising, typically in the range of 9-10 minutes. English genre is down to about 2-3 minutes, a considerable drop from the normally available inventory to sell. Even if we look at the South, the average inventory is about 6- 6.5 minutes, depending on whether it's Malayalam or Kannada.

Across the region, we see dips and, more specifically, English niche genres are impacted much higher. The smaller niche channels are seeing a far higher hit in terms of ad revenues." Shah believes that from July onwards, the industry will witness some growth and better days.

However, Rathore differs. He believes that an increase in ad revenue will be seen from August 15 onwards, as July and August are anyway quite low for advertising.

Shah also mentioned that the advertisers are looking at a phased approach for their campaigns. He added, "We're already discussing with multiple clients and brands on restarting the activity. There might be a phased approach from now on. We probably start national campaigns based on strong markets and how those markets perform from a lockdown perspective or an unlock perspective. We want to start advertising in those specific regions."