COVID-19 and TV: Big advertisers cut back on spends; broadcasters concerned

The advertisers have asked their agencies to discontinue ongoing TV campaigns. The broadcasters, meanwhile, have urged the advertisers to honour their contracts

India and the world is dealing with a pandemic, and at stake is the life of millions. So far, the Coronavirus (COVID-19) has claimed nine lives in India and more than 450 individuals have tested positive. As a precautionary measure, many state governments across the country have ordered a complete lockdown, urging the residents to stay indoors. Many businesses have been affected by the lockdown and experts believe it could take more than a quarter to normalise. Maharashtra is the most affected state so far, and on the request of the government, production houses have been asked to stop all kinds of filming at least till March 31. This means the general entertainment channels (GECs) could soon start telecasting repeats as they are likely to exhaust their bank of daily soaps. Viacom18's Colors is already airing repeat telecast of Bigg Boss at 10 p.m., and if sources are to be believed then more channels are likely to follow suit.

"I can relate to something that happened a few years ago, when the producers went on strike, and because of that, the broadcasters started telecasting repeat content," says Rajiv Dubey, head of media, Dabur India. He adds, "What we observed is that when they started airing repeat content, the ratings dropped drastically by almost 80 per cent."

In FY20, which ends on March 31, the advertisers have spent Rs 27,700 crore (estimated by KPMG) on television, of which, close to 70 per cent is earmarked for GECs. "Similar to China, wherein 70 per cent of the consumer samples, viewed more of TV, a similar surge is seen in India and will continue to do so with people being quarantined and TV being the largest media platform in the country. Since both reach and stickiness quotient have observed a bump up, large section of the advertisers continue (with their campaigns) as eyeballs are key for them to garner higher share of voice. It is with this confidence that I believe whatever ratings have been committed to the advertisers, we will be able to live up to our commitment," says Ashish Sehgal, chief growth officer, Zee Entertainment Enterprises.

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While the broadcasters are adamant that the advertisers must honour their contracts, the latter, on the other hand, feels there should be a "postponement". "The TV channels don't want to reduce, or compromise, on pricing, whereas the value deduction is massive. It becomes a very tricky situation for us. Our businesses are affected because of the outbreak and the overall economic scenario. We are under huge pressure and the broadcasters want the same amount of money. The best solution in the current scenario is that the broadcasters renegotiate their pricing, otherwise the advertisers will stay away from television," says Dubey.

Sehgal of Zee makes a point, which counters Dubey's argument, "Considering the current scenario, we have discontinued campaigns for those categories which had to shut their shop because of the ongoing lockdown in several states of the country. However, for categories like FMCG, Personal Care, and Hygiene, E-commerce which is being consumed, more importantly seeing higher demand than usual, we believe that they will continue advertising and supporting the industry."

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It is not an issue that concerns only Dabur and Zee. According to highly placed sources in the broadcast fraternity, the Indian Broadcasting Foundation (IBF) has written to the Advertisers Agencies Association of India (AAAI), shedding light on the fact that several advertisers are pulling out from advertising before their contracts run through. The IBF, according to the sources, has asked the AAAI to advise its members to continue with their advertisements and only opt out after following the procedure in place. The procedure for an advertiser to opt out of an advertising contract inked with a channel includes sending an intimation 15 days prior, and replacing it with a fresh release order. If the sources are to be believed then large advertisers like the Cola companies, juices, beverages, and e-commerce giants like Amazon have already sent a request to cancel their ongoing campaigns.

"Going forward, several categories like Auto, which has shut down production, Retail establishments, etc, will cut down on ad spends. However, if essential categories such as FMCG, Pharma etc. also reduce their advertising spends then the entire TV industry would get into a turmoil, impacting manpower as advertising continues to be largest source of revenue for broadcasters," opines Sehgal.

The marketing head of a large FMCG advertiser says, on condition of anonymity, that all businesses are hit, and they are prioritising their resources. "This is the worst we have suffered since Independence, and this is the time when all the stakeholders should respect the relationship we had. If agencies are asked to stop media spends by clients and they go to the broadcasters, keeping the current scenario in mind, the cancellation requests should be accepted," the marketer asserts.

Planners Speak

Himanka Das, CEO, Vizeum, believes that as we are in a situation of social distancing and self-isolation, the consumers are consuming more video content at home, on multi-screens. He says that it can be seen as an opportunity... "The consumers have options today, as in cable, DTH, OTT. So, viewer shift from one platform to another is evident in such a scenario… those who do not have the option will still watch television within the confinement of their home, even it’s a repeat of a reality show, or any such format. Having said that, the pricing of repeat shows/ programming will be within the same norm, be it prime time or non-prime time," opines Das.

Vanita Keswani, CEO, Madison Media Sigma, feels in such challenging times, knowing the background of why reruns are happening, or likely to happen in GECs, it's a time for the advertisers and the broadcasters to support each other with mutual understanding on viewership delivery, which she is confident of. Keswani adds, "The advertising scenario would depend on the type of communication and task at hand - call to action won't stay relevant. But, television being a medium that has a long effect on the consumer’s mind, this could be a good time to build brand salience. And if the brand communication can be made relevant to the scenario at hand, it could work brilliantly.”

The Way Ahead

As industry bodies have started exchanging dialogue, it is certain that it would take some time for the dust to settle. While the advertisers continue to send intimation to cancel ongoing campaigns to channels, it is also true that the time spent on television is witnessing a surge. News, movies and music are the genres on television that people are consuming more, as a large part of the country's population is locked indoors.

So, can the advertisers move their spends towards those genres, if GECs suffer content-crunch? "The entertainment viewers are different from news. While in such a scenario, it is very difficult to say if we would at all like to advertise or restrategise, but even if we do, we would like to exhaust it on movies, free-to-air channels and OTT platforms that offer entertainment content," concludes Dabur's Rajiv Dubey.