The advertising industry in India has been estimated worth INR 28,013 crores. The growth rate has continued to be the same since 2011 at 8-9%. The FICCI-KPMG report indicates that the advertising revenues will account for over 75% of the total revenues by 2015. The different mediums of advertisement are- television media, radio, print media, digital and direct Media.
The Internet is expected to grow at the highest rate, but the growth that digital advertising will see is on a small base of 5% in terms of the total ad spends in the country. In contrast, TV advertising is nearly 42% of the total spend, while print advertising makes up for 43%, radio at 4% and direct marketing at 0.5%.
The report discusses the different advertising option available to the marketers today. The aim is to understand the different markets, the advertising spends, and the conversion ratios.
According to the FICCI -KPMG Report (2011), India has almost 138 million TV households. The cable connections/ direct-to-home (DTH) penetration is close to 80%. Television Audience Measurement (TAM) ratings state that the television and broadcasting industry has seen an upsurge of almost 100 million viewers in 2010 to reach a total of 600 million viewers.
This is very much self-explanatory. India is watching, and thus, TV advertisement has become the easiest medium to target a larger population surpassing all age, gender, geographical location and other demographics.
TV Advertisement comes with a value. Here is an estimation of the cost associated with television advertising in India:
The cost of filmmaking:
The average cost of making a mediocre TV advertisement can be understood with the help of following figures:
Equipment – Around INR 20,000
Crew – INR 60,000
Production – INR 1,00,000
Miscellaneous(Travel,etc) – INR 50,000
The cost of developing commercials should be around 10-20% of the total cost of advertising.
The cost of Advertising:
The cost of running an ad on TV is calculated on the basis of the number of 10 seconds slots during which the ad us telecasted. The following factors influence the Cost of Advertising:
• Time – The airtime on Weekdays are more affordable than weekends, while, the prime time slots are more expensive than late night slots. For that matter, the airtime becomes more expensive during festive seasons like Christmas, Holi, Diwali, New Year, etc.
• Channel and Shows– A particular target audience can be reached with the help of the specific digital channels. The advertisers book their slots based on the popularity of channels, TV shows, target audience and their overall marketing budget.
Type of commercials
There are two types of commercials – Branding and Immediate Response.
Branding ads are more expensive to produce and need to be frequently broadcasted, while, an immediate response commercial encourages quick action from its viewers in terms of calling a number which is generally slotted for late nights or SMS responses.
This can be explained further with the help of some statistics. The regular advertisers on TV such as HUL or P&G pay Rs. 75,000-80,000 on primetime for a general entertainment channel, while an occasional or seasonal advertisers shell out almost around Rs.1.2 Lakh for the same spot.
According to a report of 2012, the rates of most popular shows are as below:
Big Boss: Ad Rates – Rs. Three crore per 10 seconds, Title Sponsorship – 35-40crores
KBC: Ad Rates – Rs. 3.75 crore per 10 seconds, Title Sponsorship – 20-25crores.
According to a KPMG Report, in 2010, the advertisers spent more than Rs. 10,300 crore on television media and are expected to grow at a compounded rate of 16% up to Rs. 21,400 crore.
Top 10 TV Advertisers
TRAI’s Regulation On TV Advertisement
The Telecom Regulatory Authority of India in 2012, capped the duration of advertisements on television at 12 minutes per hour and this has sparked off a huge debate. The ad cap means the broadcasters needed to reduce their dependence on advertising revenues. Also, they may have to increase per second advertising rate to generate revenue. STAR has already increased its ad rates by 20% and the other main TV broadcasters like Zee, and Color are looking forward to a raise in the ad rates by 10-20%.(Report of 2012). In fact, the cap could eventually lead to a compromise on the quality of the content.
But, some are of the view that the increase in ad rates would not deter advertisers to pull down from the TV media. It has been reported that some of the top Indian TV channels demand up to Rs. 3.5 lakh for a 10-second spot during primetime. Since a massive number of people watch top television shows, the cost of ads comes to roughly Rs. 2 per 1000 viewers which is incredibly cheap. The rate is quite cheaper than other channels of advertisements.
Television is here to stay, and the number of ads will also continue to increase as it’s the medium which reaches the masses. Even an increase in ad rates is not going to deter the advertisers to invest more in television advertising and it will continue to be profitable for years to come.