Unlike the first quarter of FY21, when ad spends dropped by over 60 percent as compared to FY20 due to the Coronavirus-led lockdown, TV advertising will see a lower decline in FY22 during the same period.
According to Karan Taurani, VP, Elara Capital, the first quarter of FY22 will see a 25 percent decline in terms of TV advertising.
He pointed out that many TV shoots are shifting to alternate locations with less COVID impact, and it is one of the factors minimising the fall in ad spends.
From Zee to Sony to Star Plus, all major broadcasters shifted location after Maharashtra halted shooting from April 13. In fact, Maharashtra halted shooting for TV shows, films and web series. Shooting for Hindi and Marathi GECs continue to happen outside Maharashtra and this is why channels have enough original content to air.
In an earlier interview with Moneycontrol, Kailash Adhikari, Managing Director, Governance Now, a Sri Adhikari Brothers enterprise, had said that people moved to Goa and Hyderabad, down south, and interiors. While Zee has a facility in Rajasthan, Star has one in the south, he had said.
This is why Taurani said that state-level restrictions versus pan-India lock-down in 2020 is resulting in lesser drop in TV advertising in Q1 FY22.
In addition, “the ramped-up vaccination pace should trigger a sharp ebb in new cases, which could uncork a faster unlock versus 2020 levels,” he added.
N. Chandramouli, CEO, TRA, a brand intelligence and data insights company, thinks that while there is inertia in TV content, in the second wave, advertisers are braving out a little and using their budgets as consumers have started to come back to buy.
“The vaccine is giving consumers and advertisers more confidence, and that is an added factor," he said.
While announcing the fourth quarter FY21 results, Punit Goenka, CEO of Zee Entertainment, had said that the market was tracking well to reach double-digit growth for FY22 vs FY20 as an industry.
“Had it not been for the second wave (of Coronavirus), that would certainly have been achieved. If the wave doesn't continue beyond the first quarter (FY22), I believe the prospects of the market hitting double-digit numbers are higher and we will endeavour to be at the top-end, if not higher (than industry), in our growth trajectory," he had said.
In FY21, while Zee Entertainment's domestic ad revenue declined by 19.7 percent due to the pandemic, in Q4FY21, ad revenue grew by 8.9 percent YoY, driven by the continued recovery in the macro advertising environment.
TV advertising to grow in FY22
For this financial year, overall TV advertising is expected to grow 18.6 percent as verticals such as FMCG, ecommerce, auto and telecom enjoy a larger share on TV, said Taurani.
After a muted Q1 due to the second wave of COVID-19, FY22 is expected to witness a 10 percent decline versus the pre-COVID levels in the second quarter.
In Q3, growth is expected at 10 percent year-on-year (YoY), led by the festive season uptick, coupled with the vaccination drive, and pent-up demand for cyclical advertising verticals.
“In Q4, we expect a strong retail comeback for selective categories, with the regional festive season, and thus factor in an 11 percent growth YoY," said Taurani.
With ad spends scripting a strong return, post the festive season led by FMCG, which contributes over 50 percent to TV ad spends, education, e-commerce, among others, TV ad spends should likely be resilient despite the second wave.
Last year, the top 50 advertisers spent 86 percent of their budget on TV-digital versus 78 percent in 2019.
In addition, an over 18 percent growth in TV ad spends in FY22 is without factoring in the 14th edition of the Indian Premier League (IPL), which has been suspended.
While the exact dates are not announced, the Board of Control for Cricket in India (BCCI) confirmed that the remaining matches of IPL 14 will be held in the UAE between the September-October window.
Challenges remain for broadcasters
While there is an expectation of a strong ad revenue growth in the second half of FY22, there could be some challenges the broadcasters would have to face.
“Non-fiction general entertainment channel (GEC) shooting, which attracts premium ad rates, may be disallowed in the near term. Plus, binge-watching may spike for digital over-the-top (OTT), which already enjoys a large selection of web series. Then, there is the NTO (New Tariff Order) 2.0 implementation, which may affect subscriber revenue growth (shift towards a la carte and lower cap on MRP pricing)," noted Taurani.