The Future Of Television Advertising: What Lies Ahead Of TRAI’s New Guidelines
Indian Television industry is one of the biggest in the world with a billion plus consumers, 872 channels (as per I&B latest data), countless hours of original programming and several big and small service providers such as Airtel, Dish, Tata Sky, Den, and Sun TV supported. It is also a huge marketplace for advertisers with nearly half of the country’s Adex diverted here annually.
The industry is monitored and regulated by Telecom Regulatory Authority of India, that recently announced a new tariff structure changing the rules of the game for broadcasting and cable services forever. The new regulatory framework provides the end customer, the channel subscribers, the possibility to pick and choose the channels they would like to watch and pay for. The new framework came into effect on 29th December 2018. However, keeping in view the consumer convenience and to provide sufficient time to the consumers for exercising the options the Authority provided time up to 31st January 2019. It also requires the TV broadcasters to fix a transparent MRP of individual channels and bouquets. These prices would be universal for all the DTH and Cable providers and no discounts would be provided to any operator.
There has been a mixed response to the new framework from different corners of the industry. Some experts see it as a great move towards increased transparency and freedom of choice for the end consumer, while others point that this would/could drive up the consumers’ monthly bills. While it is a win-win situation for the consumer, the new framework has shaken all the key stakeholders of the industry – advertiser and broadcaster.
Investment on Content
Broadcasters will now have to invest heavily and smartly on the content to ensure that a consumer continues to stay loyal with them. It means that the channels need to define/position themselves very clearly on what type of content they want to be known for, who they want to target and then decide or commission projects based on that. It will have to continuously research, and track consumers taste and even predict the trends. The days of being stale, not experimenting, and playing safe have definitely gone.
It will also demand an aggressive marketing strategy from broadcasters across different mediums. It will be interesting to see two or more national channels of same genre fighting for loyalty and viewership on-ground. However, the advertising battle will be even more interesting in hinterlands when local channels (in local language), which commands a strong loyalty will cross blades with the national players.
Rates, Reach & Viewership
Television is the place for any advertiser to go if it wants pan-India reach. There are no second thoughts to the fact that TV provides a bigger reach than any other medium in the country. Now, with the new framework, the brands will have their questions and even reservations. Some of the basic questions would be ‘How Many GEC’s/News/Sports/Music/Kids’ channels will an average household subscribe?’ In such a scenario (with not much clarity right now), the bigger channels will have a better consideration from the brands as compared to smaller channels owing to their reach and this would soon start reflecting on the ad rates commanded by them. An advertiser would want to be sure about his media plan more than ever. According to a recent BARC study, 90% of Indian households watch around 50 channels. This clearly suggests, the channels with a high recall will gain more advertisers revenue and some will lose.
The new framework also allows consumers to choose their desired 100 Standard Definition (SD) channels. This comes as a breather as it will help in generating a good reach for advertisers. However, with smart televisions becoming affordable, a good chunk of viewers has graduated to HD and others aspire to do so. So, going forward, there is an expected chance of reach of SD channels migrating to HD channels.
Big Property Impact
As the consumer is allowed to choose channels a-la-carte, many of them will subscribe channels based on the announcement of their favourite property. For example, I do not watch league football, but enjoy watching the Soccer World Cup and hence, will subscribe the sports broadcaster during the soccer world cup. In such a scenario, there will be a lot of viewership and subscriber base fluctuations resulting in ad-rates fluctuations. Some of the big properties popular in India include Bigg Boss, IPL, Cricket World Cup, PKL, General Elections (2019) and others.
Niche vs Mass
There is always a wide difference between the viewership of niche and mass channels and hence the ad rates. Now, whether a consumer opts for a network bouquet or a-la-carte channels, the subscribers for niche channels are expected to go down because any consumer would prefer to opt for major channels first and then allocate the remaining budget to niche ones. In such a scenario, a brand/service may be fit for being promoted on a niche channel but may not get the right size of the viewership going forward (pan India). This will reflect a lot on budget allocations towards niche channels in a media plan. Niche players will have to invest heavily
Real Challenge for Advertisers
From the Media planning and procurement perspective, advertisers that build a yearlong strategy may have to keep a close look to the changes every few weeks. FMCGs where the reach objective could be accomplished with FTA channels, frequency will have to be compromised, which is a larger chunk of sustenance plans due to their low cost. A blanket approach of planning cannot be the way forward for such brands. The constant instability in distribution may affect large scale procurement, forcing agencies to move from day part rates to programming rates.
Although Increased Transparency for Consumers
Earlier, in spite of their interest in a select few channels, the end consumer was forced to take channels he or she would not watch as it was part of a pre-set bouquet with no option to break that mould. Cable and DTH (Direct-to-Home) operators, were forcing them to choose and pay for more channels than they actually watched by smartly packaging popular channels with not so popular channels. With this latest TRAI regulation, the end consumer finally has the freedom and complete control on his monthly TV bill. He or she can pick and choose the channels they would like to watch and create a unique package for themselves.
We at DCMN are speculating on the positive side of the tariff plan and hoping that the response to ad ratio should increase as the consumer is further funneling his TV viewing experience.
This not only pressurizes broadcasters to create better and differential content but will also increase the relevance of attribution and performance models for the future.
All these changes and assumptions are only speculations till such time that BARC ratings reflect the results of the TRAI order. The impact on pricing will only be observed with the reflection of viewership on BARC ratings.