MUMBAI: Advertisers will need to cough out more to place their ads on television as two leading Indian broadcasters have indicated that they would be upping their rates this fiscal.
After a gap of two years, Star India said Tuesday it would increase the advertising rates for its bouquet of channels by 20 per cent with immediate effect.
“We expect our revenues to grow by around 15-20 per cent this fiscal as compared to 12-13 per cent in the last year. Since advertisements are the major source of income for this industry, the increase in rates will help us achieve the target,” says Star India COO Sanjay Gupta.
The other leading broadcasting company, Zee Entertainment Enterprises Ltd (Zeel), has forecast a 12-14 per cent ad revenue growth in FY‘12.
Star‘s decision has come amid rising content costs, an increase in market share and a leadership position of its flagship Hindi general entertainment channel Star Plus.
Says Gupta, “We have achieved an unprecedented growth of 30 per cent in the last two years. Today we are leaders in 18 key states of India. This unstoppable growth is riding on the back bone of significant investments, innovative content and delivery of quality of experience through technologically advanced platforms.”
Broadcasters have been pressing for a fair rise in ad rates as the cable and satellite homes in India have increased from 90 million in 2009 to 116 million in 2011, while the digital homes have almost double (from 15 million in 2009 to 26 million in 2011).
Star claims that its market share and reach has gone up substantially. However, the advertising revenue growth has not kept the same pace.
Says Gupta, “The total viewership share of the network in 2009 was 12.4 per cent, which today stands at 16.1 per cent. Advertisers should accept our increase.”
Star justifies the increase in ad rates as it has come in the backdrop of spiraling cost of talent, increased investments in technology, advanced delivery and distribution platforms as well as increased production costs.
Says Star India ad sales president Kevin Vaz, “Our network reach has increased and at the same time for the advertiser, the cost of reaching 1000 people has reduced by 38 per cent in the last two years. This rate increase of 20 per cent is just a part correction in lieu of the phenomenal growth the network has shown in the past two years.”
Some senior industry executives do not find sense in Star making a public announcement. “Why do you need to announce the hike in ad rates when you don’t do business on rate cards? The deals are signed after negotiations and advertisers always try to beat down the price. This announcement is amusing,” says a senior ad sales executive from a rival network.
Media buyers feel the pricing will be determined by the demand-supply equation.
Says Madison Media Group COO Punitha Arumugam, “The television rates are decided by the TVR performance and not by rate cards. As Star is performing, it can charge premium. It all depends on the ratings and not on rate cards.”
On the point of CPT (cost per thousand) going down, RK Swamy Media Group president Chintamani Rao believes that in India deals are not signed on the basis of CPT. “Deals are done on CPRP (Cost Per Rating Point). If deals would have been signed on CPT basis, the rates would have been much higher,” he says.
