The new cap on television advertising is set to change the dynamics of film marketing
The recent ruling restraining the amount of advertising on television has sent a nervous ripple across the film and media industry. Since the primary advertising medium used by filmmakers is television, thanks to its read and visibility, they face the prospect of ballooning marketing budgets. Or is it as simple as that?
Before we discuss the issue in detail, let us recap the recent development.
The Telecom Regulatory Authority of India (TRAI) has mandated a cap on the quantum of advertising on television. The Standards of Quality of Service (Duration of Advertisements in Television Channels) (Amendment) Regulations, 2013 were notified by TRAI on March 22 for publication in the Gazette Of India. The crucial section in this direction reads: “Duration of advertisements in a clock hour – No broadcaster shall, in its broadcast of a programme, carry advertisements exceeding 12 minutes in a clock hour.” The new rule will take effect from October 1.
The 12-minute cap includes two minutes for the channel/network’s self-promotion, leaving only 10 minutes per hour for commercial advertising. And it’s 12 minutes per hour, period! This means, broadcasters cannot allot more time for advertising during prime-time by proportionately reducing commercials during other parts of the day.
This ruling is likely to impact the industry in two ways. First, with the supply of advertising time reduced, advertising rates will increase to make up for the loss. In fact, some media planners hint that a few general entertainment channels (GECs) like Star have already hiked their ad rates. This, in turn, will burn a larger hole in the pocket of film marketers since TV advertising already takes away a large chunk of their budget. While the mandate is now on its way to becoming a reality, the heat is already being felt by the film industry, which is already working out innovative solutions to the problem. So, for instance, celebrity film promotions on fiction and non-fiction shows will soar to counter the advertising rate hike.
Second, the film and music industry has thus far enjoyed concessional rates on many channels under the entertainment category so the impact to these industries will be even more severe. And this comes at a time where burgeoning film promotion costs are skyrocketing with marketing costs that are often in excess of the cost of film production!
Mandatory digitisation across the country will bring in better revenue through subscription, so advertising might not be the sole window for revenue generation. But, again, predictions are also rife about satellite rights being impacted by the mandate. Since channels are likely to lose out on a bulk of ad revenues, they will obviously spend less on purchasing content. This might lead to a decline in satellite rights valuations for future films.
This week, we ask industry experts for their take on this issue.
The new ruling will bring about the possibility of an AFP (advertiser-funded programming) model emerging for film marketing, with more brands associating with the film at the project level. There will also be increased talent presence in popular soaps/shows. Digital and social media, which anyway is increasing its share in the pie, will stand to gain the highest, followed by print.
As far as the impact on satellite pricing is concerned, while broadcasters may be more selective in films they are buying, price would still largely be a factor of the talent attached to the film and its success. Broadcasters in any case will price up good content and recover the cost for such a movie. Thus the impact in such a case will be neutral.
Post the TRAI ruling, a film marketer’s budget for spending on TV advertising will most likely reduce as ad rates will go up. Some channels have already increased their ad rates and so film marketers will surely become more conscious of how much they spend. To maintain the ad pie, the costs will go up, but film marketing will find other methods of promotion.
Currently, plenty of celebrities make appearances on TV shows and now thanks to the ad rate hike, promotions on non-fiction and fiction shows will increase. But news channels will be more impacted by this ruling, not so much the GECs. Also, due to the implementation of digitisation across the country, subscription revenues will go up. In such a case, ad rates will not be the major source of revenue for channels and subscription revenue will balance revenue earned by advertising.
Currently, it’s not taking away a large chunk because there is inventory available and people are not dependent so much on 10+2. Inventory will be less; therefore the cost to the cinema marketer will go up. And that’s why they will know when and where to use it. At present, I believe marketers use RODP (Run of Day Part) and no one uses fixed spot. Even if they do, they use a very small percentage of it.
TRAI’s new ad cap ruling, which will be implemented from October 1, will affect film marketing in a big way. But I am sure channels will come up with something to counter that. After all, whoever pays more will get a better slot. But there will be huge competition even among advertisers to get to fix the ad and rates will increase.
Post the hike in rates I don’t foresee film marketing lesser on channels. Yes they will be rationalised for more or less in the long run, as this will become a more expensive medium. Bigger producers will always go for the kill as they will have deep pockets. All this to get maximum audience traction.
No, I don’t think that the broadcasters will spend less on purchasing content as they will be hiking the rates to cover up the loss of ad time. In fact film content procurement might become more precious and expensive because of this - as film content gets maximum ratings and eyeballs always.
The impact of the 12 min cap has still to be evaluated - the immediate understanding is that since the inventory will get limited the rates are likely to go up and hence most film marketing plans will see a change in the media mix. Hence it will become imperative to look at other mediums for a stronger support for creating ambience noise around the campaigns. At the same time, the marketers will have to take sharper decision making on choice of channels/ programs to advertise per film. It also means the TV spends will see a lot of focus on garnering reach rather than frequency - this seems to be the likely scenario considering there is already pressure on keeping the film costs low.
An increase in ad spot rates will definitely impact the television marketing of films. Television already corners a large chunk of our marketing budget. If that rises any further, it will probably throw P&A completely out of the window. I think it is a wake-up call for marketers and media planners. Not only do we need to focus on spends and channelise those spends effectively, we also need to start looking for alternatives to movie marketing. These platforms do not need to be purely commercial platforms. I don’t think the new regulation will impact acquisition costs since channels will become more selective about the content they choose. Television channels will now focus more on content rather than the quantity of films.
As a result of the TRAI ruling, we will have to make our creative team work harder. Post the mandate, instead of an intensity-led impact in terms of film marketing, where we would ideally carpet-bomb promotional activities across channels, we will now use a creatively driven method to ensure optimum utilisation of resources. This move is not at all being viewed as a huge negative by us since it will give us an impetus to drive ourselves to work in a more sensible manner.
I don’t believe the post-hike scenario will result in film studios using TV channels to advertise any less. Television is a crucial medium to reach out to the masses. Depending on the genre of the film, a studio will always use it for maximum effect. I also don’t think that with the tightening of ad revenues on TV channels, broadcasters will spend less on purchasing content (films), thereby impacting a film’s satellite rights. As long as the content of a film is good and it is broadcast worthy, the sum spent on purchasing will not matter.
As a studio, we certainly see a change in advertising on TV channels. Though studios will continue to advertise on TV, media plans will be better optimised to target and reach the right TG (target group). Studios will seek newer and innovative ways of promotion on TV. For example, TV content integration will see an upswing across non-fiction and fiction shows. Digital platforms will be exploited to its best as it is the next-best audiovisual medium. Hence, the online and mobile platforms will be used more than just as support mediums.