Mumbai: Despite the threat of inflation, which is already hurting the fast-moving consumer goods (FMCG) category, which accounts for around 40 per cent of the television advertising market, Zee Entertainment Enterprises (ZEEL) chief growth officer – ad sales, Ashish Sehgal expects the TV Adex (TV advertising exchange) to grow by 13 per cent in 2022.
He said that so far this year, due to the declining impact of Covid-19, the growth stood at 10 per cent. However, this was not the case last year due to the pandemic restrictions. He expects local brands, which were absent from the market for the last couple of years because of Covid-19, to make a strong comeback.
“In January due to Covid-19 the TV Adex went down a bit, but from February the Adex started to grow. Due to the IPL, things have been good since February. Entertainment, cinema and even news have enjoyed a good run. Elections benefit the news industry in the first quarter,” he added. “The TV Adex should have grown by 10 per cent over the previous year so far. By 2022, it should grow by 13 per cent.”
He proceeds further by adding that inflation is mainly hurting FMCGs. “Even in auto, the activity is growing now. New launches will happen. Telecom is advertising. BFSI has been quite active over the past six months. BFSI may slow down in July and August but in the upcoming festive season it should pick up. When the LIC IPO came, LIC advertised. I see other companies in insurance and banking following suit in terms of the same activity. The new D2C startups are bringing in a lot of money. E-commerce ad spends from the likes of Flipkart and Amazon will only grow in 2022.”
When asked about startups experiencing funding slowdown and potential impact on ad spending he said that they will shift money from cricket to less expensive avenues like entertainment. “Companies will pump in money into the entertainment category. Earlier, they were putting money into cricket but now they are diverting money into cheaper genres like entertainment. Of course by the time the funding slowdown hit startups the IPL ad deals had already been done. Also, the IPL ratings were down but the deals are signed now. IPL made more revenue than last year.”
Speaking about the same, he added, “but cricket might get impacted by startups shifting track going forward. These startups are also advertising in print. You have to remember that D2C startups cannot stop advertising otherwise their customer acquisition strategy will get affected. They are looking at cheaper options and are aiming to rationalise their ad spends better.”
Sehgal feels that the English genre is likely to benefit from the New Tariff Order (NTO) because the ad pie is small. The subscription revenues now are important for them. “As far as music is concerned the genre is benefiting from free-to-air (FTA) viewership. Infotainment is in the same boat as English but it is slightly better off because there is not much content on OTT. So their ad revenue situation is better.”
According to ZEEL, from his perspective, entertainment accounts for around 65 per cent of revenue, but cinema is also growing. “We have the largest cinema library as well as the largest number of cinema channels. Tentpole properties are very important for the topline. In cinemas, a lot of movie premieres are lined up, which was not the case last year. This will propel ad revenue.”
Talking about the importance of regional channels, Sehgal said that the major ad revenue growth for ZEEL is happening here, whether it is in the South, Punjabi, Oriya, Bangla or Marathi. “They all are contributing to the growth. They can tap into the local retail brands. Their contribution was subdued for the last two years due to Covid-19. Now, they are back in business and so they are advertising now.”
Simultaneously, he mentioned the OTT as an addition to TV not eating the TV’s pie. “Today advertisers use the TV for reach and OTT for re-targeting. The AVOD (advertising-based video on demand) consumers are similar viewers to TV. The kind of content being watched on OTT AVOD is the same that airs on TV first.
Explaining ZEEL’s strategy for ad solutions, he said that the company’s branded solution team has created an Ad funded program. “In some shows, brands get integrated which allows them to be present within the content. In addition, ZEEL helps brands through influencer marketing where characters from shows become influencers for brands. Commercials are created.”
Sehgal believes the number of pay television channels consolidation will stay the same, as the number of non-premium channels is not growing. The only new channels are in the FTA space. “Everybody has their space. In an unexplored market, a new pay channel might be launched which we did in Punjab two years back, but not otherwise, channels will sustain. FTA will also sustain as the viewership is different. Advertisers use FTA channels as there is no other medium to reach that consumer.”
He also noted that news will do well as it has a wide reach from pay to FTA. “In metros, event development led people to switch to news channels even on direct-to-home (DTH). News is a unique genre, from metros to rural the audience is available, for advertisers news has separate FTA space. Also, for the upcoming 2024 general elections, the government (in the next four to six months) will start pumping in money. The news genre will certainly fetch the majority of this fund. The state elections are an addition to this genre.”
“The four big networks including ZEEL adhere to the ad cap guidelines and they do not violate them. For ZEEL it tends to be 12+2,” he concluded.
