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Media: Key trends in television advertising

Sep 17, 2007

In the previous article we had explained the robust outlook for the growth in television ad spends in the years to come. In this article we analyse the key trends witnessed in television advertising in the first half of 2007.

  • 31% rise in volumes: The buoyant growth of the Indian economy, desire for greater visibility among corporates and increased competition in the fast growing sectors of the economy led to an increase in television advertisements. The increase in the number of channels launched also contributed to this. About 82 channels across various languages, genres are slated to be launched by FY09. The existing channels benefited, as it led to increased utilization of their ad inventory.

  • Higher frequency: There was a 30% growth in average frequency of ads per day in 1HCY07 over the first half of previous year. The increase in the ad volumes explains the increase in the frequency of ads. The ad volumes increase due to the increase in frequency of ads by existing channels and due to the launch of new channels. The existing channels got more viewership due to an increase in the penetration of television and the quality of their content. Since the increase in ad volumes is more or less equal to the increase in the frequency of ads it clearly shows that the volumes have increased due to the increase in the frequency of ads on existing channels. Thus the existing channels have been able to utilise their ad inventory in a better manner by sustaining the quality of their content.

  • F&B leads the way: The food and beverages sector led the pack of advertisers with 15% share on television. The increase in disposable income has led to a corresponding increase in the aspirations of the people leading to higher offtake from the foods and beverages sector. Competition in the sector is very intense and MNC's such as Pepsi, Coke have very deep advertising pockets. The per capita consumption of many products is also very low compared to developing and developed countries.

    Top 10 sectors % Share
    Food and Beverages15
    Personal Care/ Hygeine10
    Services7
    Banking/Finance/Investment5
    Hair care5
    Auto5
    Personal Accessories4
    Telecom/ ISP's3
    Consumer Durables3
    Household Products2

  • HUL grabs the king's share: Hindustan Unilever (HUL) is the largest FMCG company in India having many popular brands. However it is facing increased competition from companies such as Dabur, P&G. Some of its key brands have been losing market share. Thus to increase the recall of its key brands HUL continues to be the largest advertiser (average advertisement expenses to sales ratio has been around 9% over the last 5 years).

     FY04FY05FY06FY07
    HUL *7.50%8.4%9.1%10.5%
    Dabur13.60%13.60%11.90%11.60%
    Colgate15.7%14.2%17.6%16.0%
    Britannia8.00%6.70%6.30%6.30%
    Godrej Consumers12.3%12.4%8.20%8.1%
    * Calendar Year ending

The major FMCG and personal care companies are spending a high percentage of their sales revenue on advertisement. The sales of the FMCG companies are expected to grow at a steady rate in the future and thus these companies would increase their television ad spends. This augurs well for the prospects of the major television broadcasters such as Zee Entertainment, NDTV, TV 18, SUN TV. However, only the broadcasters who will deliver quality content to their viewers and are also able to increase their subscription revenues along with advertisement revenues would stand to gain from the same.

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