Come festive season and the ad rush begins on most media. Digital streaming platforms too are witnessing a festive spike as brands have started booking ad slots but this year rates are reportedly lower.
An analysis by Brand Finance has found that while ad volumes of OTT platforms such as JioCinema, Netflix and Disney Hotstar are expected to grow by 20 per cent year on year, their revenues will not grow in a commensurate fashion. Ajimon Francis, Managing Director India at Brand Finance told businessline. “Due to the competitive nature between OTTs, the revenue from ad spends will only increase between 10-12 per cent.”
Francis believes that brands are asking for lower ad rates from digital streaming platforms as the number of OTT platforms balloon in India.
According to sources, ad rates measured as CPM (cost per thousand impressions) could range from anywhere between ₹70 - ₹120 per 10 seconds for regular shows depending on the platform. For high impact shows, they are higher. Rates also vary for the non-skippable ads calculated at a per six seconds rate, and on targeting parameters. Prices for banner ads are lower.
As poor monsoon slowed down growth of ad revenues on digital streaming platforms, streaming giants were looking at the festive season to be a saving grace to redeem their growth story. This seems tough going by the discounting in rates, spelling a challenge for the platforms which are betting heavily on ad dollars.
The subscription model of digital streaming continues to see limited adoption in the Indian market and large streaming giants including Netflix and Disney, continue to rely on ad dollars to supplement their revenues. JioCinema, which is the latest major streaming player in the block, has also bet completely on ad revenues to recoup major investments into premium streaming content such as the IPL or the BCCI cricket rights.
According to Karan Taurani of Elara Capital, new-age firms such as ed-tech or digital finance are also going to be more circumspect about their ad spends as they prioritise a path to profitability at present. “New-age companies are the biggest spenders when it comes to ads on digital platforms, however as they look to reduce their ad spends, they could be asking streaming platforms for lower rates.”
Sandeep Goyal, Managing Director at Rediffusion, also added that the lack of differentiation between OTT platforms is also prompting pricing down of ad rates, “OTT space is crowded, but it is also highly undifferentiated. Brands are usually buying programmatic advertising as it spreads the net wider. There is no competitive advantage of choosing one OTT over the other.”
The festive season will also spell trouble for ad spends on television. Brand finance estimates that ad spends on tv will go down significantly, but as broadcasters introduce ads on the TV programmes’ YouTube channels, the overall rate of erosion will only be 10 per cent year on year.