The 12 Minute per-hour ad cap and its implications.

What is the Ad cap?

In May, the Telecom Regulatory Authority of India (TRAI) had said Commercial advertising limits for T.V. channels should be capped at 10 minutes an hour. A 2 minute an hour cap was allowed for ads promoting the channels or their shows, putting the over all ad cap at 12 minutes an hour.

The Pre-ad cap Scenario Almost 25 to 30 minutes

of advertisements per hour

Post-ad cap Scenario

12 minutes of advertisements.

The regulation will have its implications on all three.

Consumers

Ads

TV Conte

nt

Implications on the Channel

Digitization of TV networks is in its 1st phase so the subscription revenue is meager, ad revenue contributes to 75% of the channel’s revenue, because of this ad cap the media and television industry is expected to suffer a loss of 500 to 700 crores.

Only the big TV networks in the GEC segment are expected to benefit, creating a negative impact on the news channels and smaller channels. The big networks are expected to jack up ad rates by at least 10-15%, since they have many channels in different genres so they can move over the surplus advertising to secondary channels.

The channels will need to come up with more content for the additional air-time and hence there will be a constant pressure on the production team.

Implications on the Channel

There will be several impacts on the existing small and medium broadcasters face extreme difficulty because they do not have the clout of the big networks. Only the top one or two in every genre appear to benefit. Unlike them, there is no question of smaller broadcasters commanding a price for advertisements.

It will be an extremely draconian step. It ignores the reality on the ground. News channels don’t have any alternate source of revenue. Markets are depressed and the carriage cost is still high it might lead to the collapse of news channels.

has handed out pink slips to 325 employees!!

Implications on Advertisers

Slowdown in the economy has forced advertisers to cut their advertising expenditure. The ad cap has caused a rise in the rates and thus the smaller companies will not be able to afford to advertise on TV.

Since there will be limited ad space on TV, agencies would need to create ads which will be more effective to grab the mind-space.

Bombarding on the consumer’s mind will stop and thus, the limited number of ads will register better on the consumer’s mind.

Implications on Advertisers

The number of advertisements is going up. And the need for commercials is also going up. Over time, when the slots are limited, the rates will also go up.

In value terms, experts say around R500-700 crore worth of advertising revenue would need to be re-worked into the 10-minute ad slots, as opposed to 15-20 minutes at present.

It will hurt the small advertiser who has been able to afford TV advertising because of the low rates. But it is also not good for the bigger advertisers who will have to pay higher rates because of the reduced inventory.

Implications on the Consumers

This Regulation will put adequate power in the hands of the consumers.

The consumers will get ‘Less-interrupted Viewing’.

Better Content to hold on to.

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