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TV Media: Importance of TR's - Views on News from Equitymaster
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  • Dec 6, 2007

    TV Media: Importance of TR's

    TRP's (Television rating points) measure the viewership of programmes. They are of prime importance to all the stakeholders in the television entertainment industry namely the advertisers, broadcasters, and content producers.

    Measurement methodology:
    TRP's are measured by TAM Media, which is a joint venture between AC Nielsen and IMRB. There is a viewership panel comprising of around thirty thousand individuals representing all the Class 1 towns (towns with a population of more than one lakh) who are polled every week for their viewership habits. The viewership for more than three hundred channels currently on air is measured.

    Importance for the advertisers:
    TRP's enable the advertisers to know the viewership of their advertisements. They also provide information to the advertisers on whether their desired target audience is viewing their ads or not. The ratings aid the advertisers in determining the correctness of the rates quoted by the broadcasters of the ad spots of various television shows. Thus, the efficacy of advertisement spends can be determined.

    Importance for the broadcasters:
    The advertisement revenues of the broadcasters are determined by the overall economic environment and the viewership enjoyed by the programmes of the broadcasters. The advertisers are willing to pay higher ad rates for the programmes, which enjoy higher TRP's. E.g: Zee Entertainment's advertisement revenues increased 28% YoY in Q2FY08 mainly due to the sharp improvement in the market share of its flagship channel 'Zee TV'.

    It has been observed that a decline in viewership ratings leads to a slower growth in advertisement revenues of the broadcasters and sometimes even a decline in their revenues. Additional credit has to be provided to the advertisers leading to an increase in debtor days. This adversely affects the ability of the broadcasters to spend on content and to retain talent. Channels enjoying high TRP's are able to garner higher subscription revenues whereas channels having lower TRP's are often offered as FTA (Free to air) channels.

    Importance for the content providers:
    The payment that the content providers like Balaji Telefilms receive from the broadcasters often have a fixed component as well as a variable component linked o the TRP's. Thus higher TRP's enable the content providers to enjoy higher realizations. Balaji's programmes enjoy high viewership ratings, thus enabling the company to garner higher realizations per hour. The content providers also customize their content on the basis of the TRP's.

    Limited coverage:
    At present, the sample of homes from where viewership data is collected cover only a population of 35 m homes whereas there are over 70 m cable and satellite homes in India. Thus, TRP's are not a foolproof method of measuring viewership.

    Inspite of their drawbacks, TRP's are very useful to the broadcasters, content producers and advertisers. They determine the success of the broadcasters and the content producers and help the advertisers to measure their return on ad spends.



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