TV ad revenues are yet lower than the pre COVID levels

A report by TAM AdEx, an advertising monitoring agency states that the advertising volumes on television rebounded between January – June 2021, with solid growth of around 21 percent over January – June 2019. 

Even after the advertising volumes have breached pre-COVID levels on television, revenues are yet lower due to the impact of the second wave of COVID 19.

A report by TAM AdEx, an advertising monitoring agency states that the advertising volumes on television rebounded between January – June 2021, with solid growth of around 21 percent over January – June 2019.

However, on the other hand, the ad revenue on television is still lower compared to the pre- COVID levels.

Analyst Karun Taurani, senior VP, Elara Capital told ‘Moneycontrol’, “Volumes would have gone up because newer channels got launched and many others increased their inventory in tough times. So, inventory has gone up. But ad revenue, while it was largely back at pre-COVID levels in January-February-March quarter this year, as far as April-May-June period is concerned we are still 10-15 percent lower versus pre-COVID. So the first half of 2021 has seen a decline versus H1 2019.”

Reportedly, various smaller channels are lagging behind in ranking because their pricing is much lower versus pre-COVID, which is the major reason they focused to increase their ad inventory.

Taurani commented that while the ad rates are increasing for certain financial properties, as far as fiction is concerned there has been a price correction which resulted in a decline in ad revenues.

As far as the reports are concerned, TV ad revenues had declined to Rs 251 billion in the past year from Rs 320 billion in 2019.

Some of the major broadcaster namely Zee Entertainment and Sun TV has also witnessed a decline in its ad revenue during the festive season in the past year.

“The channels (Zee Entertainment and Sun TV) had come back to the growth trajectory in October-November-December quarter in the last year during the festive season but that was because of pent-up demand. In January-February-March Quarter, they were flattish towards pre-COVID. Now again there is a decline”, Taurani added.

It is assumed that Zee Entertainment will experience a 20 percent decline in ad revenues in Q1 FY22 against Q1 FY20. SUN TV too is likely to see a 25 percent drop in the same period.

The fall in advertising revenue is mainly concerned on the ground of the negative impact created by the second wave of COVID 19. Further, there was a two-week halt in the shooting of the general entertainment channel content in April 2021 in view of the pandemic.

On the other hand, experts suggest that the negative impact of the second wave was much lower when compared to the first COVID 19 wave. This is mainly because, in the second wave, broadcasters were able to continue their shoots in alternative locations outside Mumbai where there were no restrictions.

The state-wise lockdown in the present year enabled the functioning of business verticals through the delivery and e-commerce mode.

Taurani added, “FMCG continues to drive the ad spends. Last year, many brands were no prepared for ad spends. Some of the internet brands have made money. They have reaped the benefits of this entire change. Auto, jewelry was impacted but other categories like OEMs, telecom, internet, and e-commerce companies were better prepared for this time. That’s why the spending from them would have supported the overall adex.”

Another important factor that is to be noted is the 14th edition of IPL  which added both ad revenues and volumes this year.

The IPL Factor

This year, Star India charged around Rs 14 lakh for ten seconds, which is nearly 10 percent higher than the previous edition.

While Big Boss or The Kapil Sharma Show charges Rs 3-5 lakh for the same slot.

Moreover, Star India that sells 3000 seconds of ad inventory every IPL, was able to sell the maximum by the mid of March this year.

Taurani assumes that the advertising revenue on TV will be around 95 percent of Pre COVID  level by the end of 2021. Furthermore, he predicted, “FY ad revenue will be equaling to FY20.”

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