STAR increases ad rates by 20%

Advertisers may have to brace for an across-the-board rate increase in television advertising, as major TV broadcasters like Zee and Colors are looking to raise ad rates by 10-20 per cent. This decision was taken due to the increased investment in technology and growth in satellite TV audiences, adding to production and distribution costs.

STAR India has already increased its ad rates with immediate effect by 20 per cent across all its 33 channels, “STAR has achieved an unprecedented growth of 30 per cent in the last two years. The increase in ad rates was necessitated by spiralling cost of talent, increased investments in technology, advanced delivery and distribution platforms as well as increased production costs,” said STAR India Ad Sales President Kevin Vaz. The network recently announced the launch of five of its popular entertainment channels in high-definition format, among other such initiatives.

Advertisers on an average will now shell out Rs 1.8 lakh to Rs 2.05 lakh for a 10-seconds spot, for a top-rated show on STAR Plus, as compared to Rs 1.5 lakh to Rs 1.75 lakh charged previously.

According to a Zee official, a 10-15 per cent rate rise has already been effected from April 1 on all deals, depending on client spending patterns. “In the general entertainment (GEC) space, we have to juggle around the package provided. Increasing ad rates is a continuous process in our company, and this year also we have done it,” he added.

Media buyers say television channels’ ad rates differ on parameters of various deals. “The advertisers will have to understand the new rate card before striking new deals,” said a senior official from Group M, a media investment management operation .

Typically, the ad rates are bought by the advertisers, on the basis of cost per rating point (CPRP), which indicates the percentage of viewers watching the programme. “Every new deal with the advertisers has a higher CPRP than the earlier year,” a media buyer added. The number of cable and satellite (C&S) homes have increased from 90 million in 2009 to 116 million in 2011.

Broadcasters, having reckoned with the fact that this growth in the C&S market effectively translates into an increase in reach, have begun reworking rates for all contracts that are up for renewal with advertisers.

“Our network reach has increased and at the same time the cost of reaching 1,000 people for the advertiser has reduced by 38 per cent in the last two years. This rate increase is just a part correction in lieu of the growth the network has shown in the past two years,” said STAR India Chief Operating Officer Sanjay Gupta.

According to a KPMG report, most broadcasters see 80 per cent of their revenue coming from advertising. In 2010, advertising spends across television was Rs 10,300 crore and is expected to grow at compound annual growth rate (CAGR) of 16 per cent to Rs 21,400 crore, said the report.