‘There is room for broadcasters to dramatically grow ad rates over the next 3 to 5 years’
Sony Pictures Networks India (SPNI) chief revenue officer – ad sales and international business Rohit Gupta believes that the TV industry will put up a strong show in 2019 as far as Ad Ex is concerned. In the January-March quarter, the TV broadcasters saw a de-growth in ad revenue due to the implementation of the new tariff order (NTO).
According to Gupta, the TV industry will register 10% growth in AdEx despite NTO implementation, which was the biggest reform in the Indian TV broadcasting industry’s history.
Gupta also stated that the broadcasters have a huge opportunity to grow ad rates in the next three to five years. Most big channels have an inventory fill rate of 95% and above, he said, which rules out the possibility of achieving growth by increasing inventory.
SPNI, he believes, is in a strong position as a network despite the loss of Indian Premier League (IPL). TelevisionPost.com’s Ashwin Pinto caught up with Gupta to get his take on the AdEx growth for the TV broadcast sector and how he sees SPNI faring.
How do you see the TV AdEx faring this year?
The TV AdEx will continue to do well. We are now seeing advertisers coming back. Hopefully, with the election results and government stability, the AdEx will do better. If you look at any report and forecast, television is still expected to account for 40% of the ad pie. No other category can deliver the kind of reach that TV does at the cheapest ROI.
With the TRAI tariff order did some amount of money move out of TV?
No, it did not move out of TV. What happened was that clients became cautious during the transition period which was the last quarter of the previous fiscal and spent only what was necessary. The January-March quarter was affected. As a result, the growth in ad spends which should have been 12-14% for the year will now end at around 10%.
The first half is top heavy with the IPL, World Cup and Elections. In this scenario is there a careful calibration going on among advertisers who also need money for the second half of the year?
Not really. For cricket, there are a certain set of advertisers who are always there. So it does not impact the regular business. Despite the IPL not being with us, our business has grown at the pace that we had expected it to grow. I think that very clearly the people who advertise on cricket will continue to do so and it does not impact other businesses. On the elections front not much spends happened this year on the mainline channels and were much less than 2014.
As the number of media choices exploded, has the task of client relationship management become more complex?
In any environment, our focus has always rested on client relationships and will continue to be so, since, for us, client relationships are of paramount importance.
Are the smaller networks at a disadvantage under the new regime?
Let me explain this. In any paid environment where people can select which channels to pay for, you cannot have such a long list of 600 channels. If a channel is not in the top three or four, consumers are not likely to pick it. Then there is not much distribution revenue and if the reach drops then there is no ad revenue.
Is filling inventory the big challenge that Sony and the industry face this year or is increasing rates the big challenge?
In the industry, the larger, mainline channels have had an inventory fill of 95%+ over the last five years. If you want to grow the business, you have to increase the rates. There is a huge opportunity for growth as television is still under indexed by a big margin. In terms of CPMs television is still low. There is room for broadcasters to dramatically grow television ad rates over the next three to five years and come up to levels of other mediums whether it is print, outdoor, digital, etc.
While the IPL has moved out of Sony, how has buying Ten Sports helped cover the departure from an ad revenue perspective?
Sports has always been an integral part of our business irrespective of the property on board. With sporting properties other than cricket gaining momentum in India, we see a huge opportunity for growth. Sports viewership is just not about the ratings, it is about engaging with the viewers. The proof of the pudding lies in the fact that for a huge sporting property like FIFA last year we got rates either equivalent to or higher than India cricket. That is the kind of commitment which advertises have. Sports will be the big driver for any broadcast business in the next three to five years.
The rights value for India cricket has jumped exponentially. Is this being driven by ad potential or more by subscription?
It is being driven by both. Sports is both a subscription and an ad sales driver. Although the overall contribution of sports to TV is still relatively low, ad rates will continue to grow in sports.
Sony recently bought the rights for the Olympic Games. Are the clients for this generally talking about national pride?
Sports, whether it is the Asian Games or the Olympics, is gaining a lot of momentum. India is doing well in a lot of sports now and the expectation is that next year in the Tokyo Olympics, India will win medals. The Olympics is a prestigious sporting property and is a good driver to attract young audiences.
The IPL and World Cup will take out close to Rs. 3000 crore from the market. Is it, therefore, going to be a challenge for Sony to get good rates for India- West Indies series?
There is no challenge since there is always an appetite for India cricket. During the India-West Indies series companies that are launching campaigns will be present on this series.
Are you satisfied with the progress made by BARC India?
It has its challenges. I am sure that they are doing everything to sort it out but it is the currency on which trading is done in the broadcast industry.
How has the OOH TV viewing measurement helped?
It is relatively new but will evolve over time.
While they are costly, are tentpoles growing in importance for Hindi GECs?
For us, the impact properties have always been important. Sony is known to deliver the best of impact properties. It is a focus area, but the backbone of any GEC is fiction. As a network in the Hindi entertainment space between channels like SET, SAB, MAX, MAX2 we aggregate the highest GRPs. We are the leading network as far as Hindi entertainment is concerned.
Sony entered the kids genre two years back. What growth has been seen post that in the genre?
The performance has been phenomenal in a category that is extremely competitive and aggressive with many players. What is most innovative about Sony YAY! is that it has only home-grown content. We own the IPs to all the content on the channel.
Broadcasters have moved away from DD Free Dish. Has that impacted ad revenue being generated?
Ad revenues have been impacted but will most likely be compensated from distribution.
What is Sony’s strategy to leverage OTT when it comes to ad monies?
SonyLIV’s marquee properties are doing very well. Dedicated sales teams ensure that whether digital or broadcast, we are able to provide solutions that drive revenues.
What role is interactivity playing in giving advertisers an extra window?
As broadcasters, we need to be able to provide brands with the biggest opportunities and solutions whether it is interactivity or second screen initiatives. We go all out to provide innovative solutions to clients. A lot of experimentation will take place over the next two to three years and we will see best practices emerge.
Are you looking at branded content as an alternative to the 30-second spot?
We have a team for brand solutions. They work very closely with clients to arrive at the best visibility solutions for our clients.
Are there learnings from other markets in this area?
Yes, there are. Earlier brands would just look at it from a sponsorship or logo point of view but now they are moving beyond that. Branded content is important, and brands are willing to put in a lot of money. This will become even more significant in the future.
Are AI and IoT playing a bigger role in making decisions?
They will be important and play a bigger role.