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Impact Of India’s TV Advertising Limits On Digital & TV; Digital First

A short-sighted Telecom Regulatory Authority of India, on the 22nd of March, notified significant limits on advertisements on television on duration of advertisement in TV channels_Final:

– Only 12 minutes of advertising on a broadcast channel television in an hour, including house ads. Any shortfall in advertisements may not be carried over.
– Time gap between ad breaks and programming should be at least 15 minutes, except if it is a live sporting event. In case it’s a film being broadcasted, the break will be 30 minutes
– During the live broadcast of a sporting event, ads only in breaks
– Only full screen advertising allowed. No popups, part screen ads or drop down advertisements
– Audio level of TV ads shall not be higher than that on the Channel

Implications for TV:
– The end of house ads. Given that there isn’t enough money to be made from advertising house ads, channels will look to use every second of those 12 minutes for advertising.
– Increase in TV advertising rates: fewer ad slots, and with supply of advertising air-time reduced, the rates will increase.
– Shorter commercials: we just might see the 30 second commercial end, and more advertisers looking to 15 second commercials
– In case of live not-sporting events, a possibility of increase in on screen advertising and branding for advertisers, perhaps with instructions to broadcasters to focus on ads at the venue more frequently. The backdrops will have more advertising, to compensate for the lack of “innovations” (drop-down ads, part screen ads)
– Possibly a decrease in carriage rates for cable and DTH companies, if broadcasting revenues decline.
– Equitable distribution of advertising revenues across channels, because prime time is prime time, and the supply of advertising minutes at prime time has been limited by this regulation.

Impact on digital

– We will see more ads that say “Watch the rest of the ad on YouTube”
– A decrease in supply of advertising time on TV might lead to an increase in digital budgets: a situation where more and more FMCG advertisers look at the Internet, Mobile, OOH and Radio.
– Increase in focus from Channels on the Internet as a mode of delivery, live, since these limits will not apply there, especially using overlay ads to monetize. For this, however, broadband speeds and reach will have to improve, and become more reliable. And Airtel will have to dispense with their stupid Fair Usage Policy.
– More business for tools like Shazam, which integrate TV and the web. Airtel has already experimented with Shazam.
– Growth of “second screen” apps, and with programming being used to shift users to online platforms which will integrate advertising better.
– Can a digital solution, wherein the broadcaster is not delivering part ads via broadcast, be used to deliver innovations on Television? The Internet could eventually serve as a medium for delivering advertising. Remember Lukup, which was being used to make DTH interactive? Modified a little, this might be a workaround.
– More and more broadcasters will look to create digital properties and apps for their TV shows, and this could trigger the availability of more made-for-digital content, as well as (finally, finally, finally) for behind-the-scenes content for digital. Maybe a digital first approach.  (P.s.: That could be a good slogan: Digital First)

Anything else? Leave a comment with your points, and we’ll update and attribute.

Why this is a terrible regulation

For a country that is dependent almost entirely on advertising revenue for monetizing media, this is a terrible regulation. It will mean that broadcasters will have to increase subscription rates to compensate for a potential fall in advertising revenue. It’s questionable, whether this actually benefits the consumer, since you are actually making a consumer pay to compensate for a fall in advertising revenue. This actually benefits the distributors more – the cable and DTH companies.

Secondly, advertising on Television is day-parted: viewership differs according to time of day, and television channels monetize better during what is called prime time, and barely monetize the rest of the day. Many channels – especially news channels – are barely able to monetize their programming. Setting a single limit (of 12 minutes per hour) for the entire day doesn’t make sense in our opinion. Frankly, setting any limit doesn’t make sense – why not let the market and the consumer decide? They have the remote, they can choose where to go.

Thirdly, we don’t quite understand why the TRAI is limiting innovations on Television: we hope a situation doesn’t arise, wherein broadcasters look at digital modes of delivery for TV, and the TRAI considers limiting advertising on the Internet. Frankly, the focus should be on increasing competition among broadcasters, not limiting their revenues.

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