Love for cinema runs in my family. My mother was and is a big fan of Bollywood. My father during his early days would travel from Kharagpur to Calcutta to watch a new Bruce Lee movie. And when I was inside my mother, one of her cravings was watching Bollywood movies on the big screen.
TV came into our house very late. It was a black and white Weston TV which had only one channel - The Doordarshan. My first serial was Ramayan which we binged watched weekly. For most of my family, it was a religious show, for me it was a wild dream. Ramayan was a sci-fi entertainment for me. When the ghosts would take different forms, or when the bows would multiply or when the bows would create rain or fire. It was a new world for me. First, it was Ramanand Sagar with Ramayan and later BR Chopra raised the bar with Mahabharata.
TV viewership spikes but ads take a dip
With India under lockdown due to COVID-19, both these two epics are being showcased again on DD. Guess what DD has now emerged as the most-watched channel. Obviously the love for god increases when our lives are in trouble.
“Overall, TV viewership has grown by 43% in the third week of the COVID-19 lockdown, a 4% rise over the previous week. In fact, the segment of the population watching TV for more than three hours a day has risen from 61% to 63% in the past week. The number of channels watched has gone up from 16 to 23 in the overall pre-to-post-COVID period.”
These findings are part of the third report by television viewership monitoring agency BARC (Broadcast Audience Research Council) and data measurement firm Nielsen on TV viewership and smartphone usage. BARC and Nielsen have looked at January as the pre-COVID period and compared it with data in mid-March.
With India staying at home and working from home. Time spent on smartphones and social media networking apps has drastically gone up. “Time spent on chat and social networking apps has stabilised at 5 hours 17 minutes and 4 hours 39 minutes, respectively, both per user per week. Smartphone usage is inching towards 4 hours per day and about 26 hours 36 minutes per week.”
Is it a good sign? Well not so for the media business. Advertising on TV has seen a dip. Other than toiletries brands most of the brands are staying from spending on media.
“FCT (free commercial time) has fallen from 15% last week (as compared to the pre-COVID period), to 9% this week versus the older period. Categories like toiletries, social and cultural organisations have seen the highest growth at 190 and 66 times, respectively.”
The latest KPMG report - COVID-19: The many shades of a crisis reflect that the current lockdown in India has resulted in consumption growth particularly in TV, gaming, digital and OTT. On the other hand, outdoor consumption models - films, events, theme parks, etc. - are witnessing a dramatic fall with social distancing norms in place.
However, the report also highlights that monetisation in the media and entertainment (M&E) sector is predominantly reliant on advertising, which has seen a major contraction. Overall ad-spend is determined by the performance of sectors such as FMCG, e-commerce, automotive, financial services, real estate, etc., all of which currently face their own challenges and could, therefore, take time to recover.
News channels are popular as viewers follow COVID-19 updates in real-time. But monetisation has taken a dip and the forecast is that the revival of IPL can bring some good news. But it looks unlikely.
This is a piece of ongoing bad news for TV which has seen stagnant growth in the last few years while competing directly with digital in India.
Box office disaster, OTT finds a silver lining
Angrezi Medium, the Bollywood comedy-drama featuring Irrfan Khan and Saba Qamar couldn’t complete its box office week due to the government lockdown. With India staying inside their home, producers had no choice but to premiere the movie on the new streaming platform Disney+ Hotstar. The Hotstar app is now known as Disney+Hotstar that went live earlier this month.
With theaters closed for more than a month, the sector has been a disaster so far. Recovery processes may be different across demographics based on COVID-19 experiences and perceived risk from social gatherings. Even if lockdown gets over next month, footfalls could take a while to return to normalcy.
Meanwhile, OTT’s have seen a rise in consumption, and across demographics and devices. To milk the growing behaviour and acquire new users, OTT players are offering extended free subscriptions. Amazon Prime Video has brought out a special catalog of children and family content, available for free. Eros Now is offering a free two-month subscription.
However, ad-spends are currently down but greater digital allocations by brands are likely to post recovery which is being projected quicker than TV.
Post Second World War, mankind is witnessing such mayhem and the effects have been felt everywhere. Barrons said that across the media landscape, advertising is disappearing.
“The reason is simple: Even the most prominent ad buyers lack reasons, and often the means, to buy ads. Global travel is on hold; auto factories are shut, movie theaters closed and there are no film trailers. Apart from grocery stores, pharmacies and large box-store chains, most retailers are shuttered.”
According to a recent story by The New York Times, almost all the biggest mighty spenders are going mute or pulling out their media budgets. Facebook has described its advertising business as “weakening.” Amazon has reduced its Google Shopping ads. Coca-Cola, Kohl’s and Zillow Group have stopped or limited their marketing. Marriott’s advertising, in the words of the company’s chief executive, has “gone dark.”
IAB surveyed nearly 400 ad buyers about the state of the industry, and the results are grim. Nearly three-quarters of those surveyed say the current ad downturn will be worse than the financial crisis in 2008.
“Overall spending on digital ads for March and April is down 38% from what companies had expected to layout, and ad spending has fallen 41% on TV, 45% on radio, 43% in print publications, and 51% on billboards and other outdoor platforms, according to the trade group IAB.”
Facebook and Google ad rates drop
Earlier last month, Variety reported Facebook and Google could see more than $44 billion in worldwide ad revenue evaporate in 2020, Cowen & Co. analysts estimate. Cowen cut its full-year revenue forecast for Twitter by 18% (too expected revenue of $3.2 billion) while Snap ad sales are expected to be $1.66 billion, 30% lower than Cowen’s previous forecast.
And while both Facebook and Google are expected to see double-digit declines in profitability, they’re projected to continue to rake in billions on the bottom line: For full-year 2020, Google will generate $54.3 billion in operating income (43% adjusted EBITDA margin) and Facebook will pull in $33.7 billion (49% margin), per Cowen’s forecast.
For the first time, Facebook’s ad business is feeling the impact of the new coronavirus. Even though people stuck in homes are spending more time on social media, advertisers are pulling back due to the economic slowdown and also to stay away from any unwanted attention during the pandemic.
According to the Wall Street Journal, prices in Facebook’s ad auctions have plunged between February and March. The cost to put an ad in front of Facebook users 1000 times in March dropped 15% to 20% from February. The decline was 20% at 4C Insights Inc - a marketing technology company that helped brands manage $350 million in ad spending across major tech platforms including Facebook, Instagram, and Twitter from January to March.
The story is more or less the same on other platforms such as Google and Instagram. The cost of 1000 impressions fell 22% on Instagram from February to March. YouTube also saw a 15%-20% drop in prices in the same period.
The drop in ad rates is posing an interesting question before Facebook advertisers - whether to take advantage of reaching potential customers or save the money.
“We have clients asking us if they should be spending to budget or spending to the goal: They might have $100,000 to reach 1,000 people, but because media is cheaper right now, if they spend $100,000, they might reach 2,000 people,” said Doug Rozen, chief media officer of Dentsu Inc. - owned ad agency 360i. “Our view is to spend on goals right now. Marketers might need money later in the year if the economy improves ad prices leap.”
Low single-digit growth
In a recent interaction with the media, Ashish Bhasin, CEO, APAC, and chairman, India, Dentsu Aegis Network, said the industry which was hoping to register 11-12% growth in 2020 might just witness a single-digit growth. “We would be lucky if we register zero or low single-digit growth. A lot will depend on how long the current situation lasts and the recovery period too. Therefore, 2020 may not be a great year for the advertising industry.”
The majority of publications are running positive stories and stressing the beauty of working from home. It looks good for a week but after that when you have to do your house chores, cook, attend zoom calls and get deliveries on time, life is no more fancy to be posted on Instagram. Inside our hearts, we all know that it is nature's time to give our shit back. A creative industry fellow told me most of the brands have no clue what requires to be done and the rest have gone mute.
A network agency might just survive the heat but medium and small agencies who normally don’t have too many retainer clients will struggle. Besides all big offline events where the media money flows like booze are canceled or on hold. From IPL to IIFA2020 to India Gaming Expo, etc are either canceled or postponed indefinitely.
In 2019 IPL edition fetched Star India more than Rs. 2000 crore from advertising, slightly more than the revenues of Rs 1800-2,000 crore earned in 2018. This year it is being predicted that the industry losses would be around INR 30 billion by the Event and Entertainment Management Association.
The road to recovery would be a long one and won’t be easy. But we will have to adapt and keep working. Do we have any other options?