Sun TV hikes its ad rates; Can other channels get the benefit...?

Leading South Indian broadcaster, Sun TV with 32 channels and a presence spanning across four languages of Tamil, Telugu, Kannada and Malayalam has increased advertising rates effective from July 15 to beat the negative impact on revenues due to the Telecom Regulatory Authority’s (TRAI) 12 minute cap on advertising, due from October 1, 2013.

TRAI has ruled that from October 1, broadcasters will have to limit their ad time to 12 minutes per hour of which 10 minutes will be for ads and the balance two minutes for promotion of in-house programmes. This deadline  is likely to adversely affect all the broadcasters in terms of revenues and to offset the loss they have little option but to increase the TVC rates. It would not be surprising if other broadcasters to follow suit and they will have to.

As for Sun TV it has increased its flagship channel, Sun TV’s rates by almost 50 per cent and for other channels by an average 30 per cent. And according to media planners, whom Adgully spoke to, the rates for the main channel is not negotiable whereas for other channels it’s not that much of a hard bargain.

Despite call to Sun TV, a confirmation and comment on the hike could not be obtained due to the weekend. However a media planner said that rates have indeed been hiked from around Rs 30,000-35,000 per 10-second slot to Rs 65,000-80,000 for Sun TV, for other channels the hike is around 30 per cent.

So what does this mean for marketers with a lower ad budget? It would mean not using Sun TV at all but using other channels with a smaller reach or other mediums like print, cinema, outdoor and digital, to build reach. Averred a source, “in the absence of budget for any advertiser, SUN TV is diverting the ads to their other channels or mediums like print.  For fast moving consumer goods (FMCG) looking for strong south India market presence, SUN TV is an imperative but given the lower ad spends by them at a time when demand is not picking up, advertising in other channels or mediums may make sense. So for instance if a client had RS 100 ad budget, he would spend RS 70 earlier for advertising on Sun TV and rest on others. Now he will spend RS 50 on Sun TV and balance on others. Post rate hike, media planners are re-thinking their strategies.”

On the TRAI’s ad cap issue currently there are two speculations going around in the  stakeholder’s domain. The first one is which many believe is that the cap from October 1. May be deferred since many state elections are due n November –December and general elections in April 2014. The beleaguered UPA government’s which is already very low in confidence and popularity may not risk damaging its prospects further. The second view is that this may not have too much of an impact on election prospects of the ruling coalition as it is not a top matter of concern for the people at large.

Whatever happens on October 1, for now it is certain that broadcasters are already thinking in terms of off-setting the negative impact on revenues and media planners are re-thinking their strategies to deploy ad budgets on smaller channels & other mediums to maintain their effective reach. Wait and watch this space for more on this.