TRAI-ing time for TV with ad curbs

23 Mar,2012

 

By Rishi Vora

 

The Indian television scene as we know it is set for a sea change, and not in a good way for everyone. While viewers may heave a sigh of relief, advertisers and agencies are already counting the declining shekels as the authorities’ latest move is likely to cause a major setback to the Rs 21,000 crore television industry.

 

Keeping in mind consumer grievances about too many ads, too little content, the Telecom Regulatory Authority of India (TRAI) has proposed to limit ad duration on pay television channels and also a few other suggestions on sporting events and news coverage.

 

The story of Indian TV’s growth is also the story of increased advertising – which is good for brands, broadcasters and media agencies. The consumer, however, tends to feel inundated with advertisements especially at prime time and during the most popular shows.

 

Not that there are no existing norms, but with the recent proposal, TRAI has stepped up the pressure for a better viewer experience.

 

The Proposal

  • No free-to-air channel shall carry advertisements that exceed 12 minutes. For pay channels, the limit shall be six minutes. Furthermore, the prescribed limits shall be enforced on a clock-hour basis as against being averaged for 24 hours.

Also it is proposed that the 12-minutes of advertisement are not to be aired in more than four sessions in one hour which means continuous ad-free broadcast for at least 12 minutes.

  • No more than three ad breaks during a movie, with a minimum 30 minutes between ad breaks will be permitted.
  • During live sporting events, advertisements can only be carried during interruptions in the sporting action. TRAI has also put up a proposal to ban on part-screen & drop-down advertising, which means only full-screen ads are permitted.
  • TRAI has proposed that audio level of the advertisement should not be higher than the audio level of the programme.
  • News and current affairs channels shall not run more than two scrolls at the bottom of the screen carrying non-commercial content. These scrolls should not occupy over 10 per cent of the screen space.

 

 

The general sense among key stakeholders of the industry is that it’s a drastic move to slice ad duration to such an extent – almost half of the current norm – for pay channels. It’s going to be tough for the pay channels as anyway they lose out on substantial monies on account of leakages in the subscription model. Added to this are other worries such as increase in ad rates, inventory issues which may crop up, impact on quality content etc.

MxM India finds out what key stakeholders have to say.

 

Mr Sunil Lulla, CEO, Times Global Broadcasting Co. Pvt Ltd said, “The industry standard today is 10 minutes plus 2. Most of us are around that on an average hour basis but given the pressure and high cost of this business, very often the industry has had to go beyond the earlier stipulation and I think this should be left to the forces of the industry to regulate, like we’ve done for content.”

 

He further added, “Regulation must be industry-created and cannot be ministry or government-thrusted. We believe that self-regulation has worked for content; we believe that self-regulation will work for advertising and many other aspects, and that’s the best way to develop this industry.”

 

According to Mr Ajay Kakar, Chief Marketing Officer – Financial Services, Aditya Birla Group, these guidelines, though framed keeping viewer experience in mind, are more likely to impact the industry negatively as they may lead to increase in ad rates. He explains that the lower ad revenue would put pressure on broadcasters to reduce costs, which will subsequently impact the quality of content. Mr Kakar feels that these guidelines if accepted by the industry could lead to a paradigm shift for broadcasters and advertisers.

 

Mr Ashish Pherwani, Senior Manager, Media and Entertainment – Ernst & Young has a similar view. He says that 70-80 per cent of a pay TV channel’s revenue comes from advertising and if the current regime of 12 minutes per hour is to become six minutes per hour, rates are ‘unlikely’ to double to make up for the revenue dip, so cost of content will go down and therefore shows like Bigg Boss and KBC won’t be viable.

 

“The TRAI note stresses that digitisation will get more subscription revenues for broadcasters but that’s not going to happen soon. It’s going to take some years! Given that most GECs and sports channels’ inventory is 100 per cent and sold out currently, ad rates will go through the roof if inventory is halved. Advertisers will reduce TV spends and go to other media or less expensive TV channels. Hence, overall a negative impact on the TV industry.”

 

Mr Jehil Thakkar, Partner and head of Media and Entertainment, KPMG noted that the guidelines have been in existence, but it is the market that determines the volume. He further added that it is in the broadcasters’ interests that they keep a limit on advertising, noting that they are well aware of the perils of excessive advertising as consumers tend to move between channels to avoid long commercial breaks.

 

Mr T Gangadhar, Managing Director – MEC India is all for a good viewer experience. “I’m not a big fan of regulations, but there needs to be a way to protect the consumer’s interest,” he maintains. “Pay channels are making money through subscription. But yes, that is not much, as a lot of that is lost in leakages that are so prevalent in the broadcast industry.”

 

He further added, “Typically, in many countries, subscription and ad sales go hand in hand – so what they’re trying to achieve is that if you’re a pay channel, quite clearly you have a revenue model in subscription and therefore while you are entitled to advertising revenue as well, it can’t come at the expense of spoiling the viewer experience especially when the viewer is paying for that particular channel.”

 

Mr Neelkamal Sharma, COO – Buying Madison Group advised, “I woul suggest that it should be done in two stages, maybe from 12 minutes to 10 and then to 8 minutes. The move to have a limit is good and is in the overall long-term interest of the TV industry, since it will reduce viewer irritation. But a decision like this should be taken in consultation with industry bodies like IBF, ISA and AAAI.”

 

It will be interesting to see if these guidelines are passed as the industry clearly is not on the same page as the TRAI. Broadcasters and advertisers are expected to send their suggestions to the TRAI before March 27.

 

Watch this space for updates, views and more analysis.

 

Imaging: Rafiq, File photograph of Budget on a television set: Fotocorp

Post a Comment 

3 responses to “TRAI-ing time for TV with ad curbs”

  1. Pmukerjea says:

    This TRAI guideline is excellent news and implementation must happen sooner rather than later. Self regulation in this will simply not work as the self regulating bodies will never be able to reach an agreement amongst themselves and valuable time will be lost in the process.
    The price of the commercial time may rise which is good for those channels that deliver good content and capture audiences thereby enabling the channels to continue to invest in programming without compromising on quality. For those channels that deliver poor content it is time for them to up their game or continue to innovate with new formats. Simply increasing the ad inventory will no longer be an option for them.
    I hope the TRAI go through with this and don’t get taken in by the commercially biased comments of the various stakeholders.
    There can never be agreement between horse and grass!
    The consumer will thank the industry for taking this bold step as it will enhance viewer experience and result in a higher level of overall consumer satisfaction, which is surely what is the core objective of everyone in the business.

    • PM says:

      It’s sad to see Pmukerjea advocating a closed-market environment.
      Let viewers decide on what works for them. Let channels think innovatively on how many ads to air. Remember, they can reduce their time for ads and charge a premium even now.
      That’s the way it works in print, and it’s been working very well there.
      Why let the government regulate viewer experience? Next they will want to regulate how restaurants should cook their idli-sambar! Or hilsa, for Pmukerjea’s benefit. As long as it’s hygienic and not unhealthy, must restaurant licensing authorities bother whether the food is tasty or not? They shouldn’t (and thankfully they don’t!).
      So the TRAI must take a backseat and only get in to the picture if things are really bad… which they aren’t.

      • peterm says:

        ask consumers if things are really bad ! they’ll tell us.

        In a restaurant, consumers have a choice to have their hilsa ( yumm!) at oh calcutta or anywhere if they don’t like what’s being served up, but they cannot do that with TV.

        all channels are playing the game of extending commerciaal time as and when they feel like- big events, big movies and so on.

        This despite the fact that there is regulation in place already – 12 mins of commercial time per hour – i believe and virtually none of the broadcasters are keeping within that – are they? there are drop ins, pop ups and banners, swooshes etc etc etc and none of those are being counted within the 12 mins. quite apart from the regular spots within the breaks!

        how would you expect the broadcasters to agree a sensible code of conduct if they’re not doing it now.

        sadly but truly , of course the TRAI or some other regulator like that ( with teeth) should take charge and get it enforced.

        pricing can then become open to market forces and performance. it’s better than having a regulator mandate a pricing on tv spots !

        peter

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