Tuesday, February 12, 2013

Cost of Advertisement on T.V. in India

Here is another interesting blog article which I have come across on the Internet. This article matches the type of information I want to share with my readers.


According to the FICCI -KPMG Report (2011), India has almost 138 million TV households and cable connections/ direct-to-home (DTH) penetration has reached close to 80%. Television Audience Measurement (TAM) ratings state that, the television and broadcasting industry has seen an upsurge of almost 100 million viewers in 2010 to reach a total of 600 million viewers. This is very much Self-Explanatory. India is watching and thus, TV advertisement has become the easiest medium to reach a larger population surpassing all age, gender, geographical location and other demographics. Here we have given a brief overview of television advertising in India and its cost implications.

There are two main components of cost associated with advertising through television: Cost of film making and cost of advertising. Here we have taken a real example of a television commercial. The cost may vary depending upon products or services, leading actors involved and type of commercials.
Cost of Film Making:-
The cost of making a TV advertisement is explained in the following figures:
  • Equipment – Around INR 20,000
  • Crew – INR 60,000
  • Production – INR 1,00,000
  • Miscellaneous(Travel,etc) – INR 50,000
Generally, the cost of making a commercial should be around 10-20% of the total cost of advertising. So many brands tend to spend more on the frequency of ad impressions than on commercial creation.
Cost of Advertising:-
There’s another cost that the advertisers have to incur. That is, the cost values of per 10 second advertisement show on TV. The Cost of Advertising is influenced by the following factors:
  • Time – The airtime on Weekdays are more affordable than weekends, while, the prime time slots are more expensive than late night slots. For that matter, the airtime becomes more expensive during seasonal periods like Christmas, Holi, Diwali, New Year, etc.
  • Channel – The highly selective target audience can be reached with the help of the selective digital channels. A little bit of research based on the channel figures helps the advertisers to book their slots and the difference in cost exists on the basis of popularity of the channel and the TV shows.
There are basically two types of commercials – Branding and Immediate Response. Branding commercials are more expensive to produce and needs to be broadcasted frequently, while, an immediate response commercial encourages quick action from its viewers in terms of calling on a number which is generally slotted for late nights.
This can be explained further with some statistics. The regular advertisers on TV such as HUL or P&G pay Rs. 75,000-80,000 on primetime for a general entertainment channel, while an occasional or seasonal advertisers shell out almost around Rs.1.2 Lakhfor the same spot.
According to a Latest report(2012):-
Big Boss: Ad Rates – Rs. 3 crore per 10 second, Title Sponsorship – 35-40crores
KBC: Ad Rates – Rs. 3.75 crore per 10 second, Title Sponsorship – 20-25crores.
According to a KPMG Report, in 2010 advertisers have spent more than Rs. 10,300 crore on television media and are expected to grow at a compounded rate of 16% up to Rs. 21,400 crore.
Top 10 TV Advertisers
%Share in 2010
Hindustan Unilever Ltd.
Reckitt Benckiser (India Ltd.)
Cadburys India Ltd.
ITC Ltd.
Coca Cola India Ltd.
Proctor & Gamble
Colgate Palmolive
Smithkline Beecham
Source: TAM AdEx
TRAI’s Regulation On TV Advertisement:-
The Telecom Regulatory Authority of India in 2012, capped the duration of advertisements on television at 12 minutes per hour and this has sparked off a huge debate. As this would mean, broadcasters could not basically depend much on advertising revenues and would have to increase per second advertising rate to earn enough income. Marketers are already squeezing channels to compensate for the same. Television advertising is already considered to be overpriced and there should be some rationale in pricing as this might drive away the advertisers. Infact, this could eventually lead to a compromise on the quality of the content.
STAR has already increased its ad rates by 20% and other major TV broadcasters like Zee and Color are looking forward to a raise in ad rates by 10-20%.(Report of 2012)
But, some are of the view that the increase in ad rates would not deter advertisers to pull down from the TV media. It has been reported that, some of the top Indian TV channels demand up to Rs. 3.5 lakh for a 10 second spot during primetime. When calculated, it comes to roughly Rs. 2 per 1000 viewers which is extremely cheap.
Television is here to stay and the advertisements will continue to increase as it’s the medium which reaches the larger mass. Even an increase in ad rates is not going to deter the advertisers to invest more in television advertising as it will continue to be profitable for years to come.


1 comment:

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