Festive season sans Covid curbs to spur ad growth at the movies and on TV

Broadcasters, multiplex operators counting on September-December period that is marked by regional and national fests

For the first time in two years, the festive season, which will begin end-August with Onam and Ganesh Chathurthi, will be without Covid restrictions.

This is set to spur advertising growth for multiplex operators and broadcasters, who are counting on a festive boost after a dull April-June quarter (Q1).

While advertising recovery rates for cinema chains, such as PVR and Inox, was around 62-65 per cent in Q1, the July-August period — which is part of Q2 — has remained largely challenging. This is because of weak occupancy levels due to high-profile movie flops.

On the other hand, broadcasters, such as Zee TV, continue to feel the pinch of inflationary pressures on their advertising budgets.

During the April-June quarter, the broadcaster reported advertising revenue of Rs 925.7 crore, a year-on-year (YoY) growth of 5.8 per cent. Sequentially, however, ad revenue was down 14 per cent in Q1 compared to the January-March quarter (Q4 of FY22).

But the trend could reverse in Q3, top executives at the three companies said, as advertisers get aggressive during the period. It would be more prominent this year as restrictions are off.

Traditional advertisers, in particular, in categories such as fast-moving consumer goods (FMCG), auto, retail, durables and electronics are expected to capitalise on the momentum this year.

Shopping for festivals such as Durga Puja in West Bengal, Onam in Kerala and Ganesh Chathurthi in Maharashtra, for instance, is in full swing, sector experts said. And, the optimism in the marketplace is back.

“We remain hopeful of a quick recovery. As the tide turns, we will reap the benefits of higher market-wide advertising and promotional spends. We remain optimistic of high-growth levels returning to the industry,” Punit Goenka, managing director (MD) and chief executive officer (CEO), Zee Entertainment, had said in an earnings’ call last week.

“Q2 is going to be a little under pressure, but the average will get better than what we have achieved in Q1. However, Q3, which is the festive period, is really where I believe that we will be largely in the hitting range of pre-Covid numbers,” Gautam Dutta, CEO of PVR, said in an investor call.

The festive period between September and December accounts for a third of advertising spends in India, thanks to the regional and national festivals. The last two years saw restrained overall spending due to Covid-19 norms.

Out-of-home categories, such as retail and cinema chains, bore the brunt of this trend, even as FMCG and auto remained largely subdued from an advertising point of view.

The resurgence in traditional advertising has been indicated by media agencies such as GroupM, Zenith and Dentsu in their mid-year forecasts. They said advertising growth in 2022 would be in the region of 16-22 per cent, led by the festive season in the second half of the calendar year.     

This point was reiterated by Nitin Sood, chief financial officer (CFO), PVR, in a call with Business Standard recently.

He said that the second half would be better than the first half of the year for cinema chains. It would be led by big films lined up during the period as well as out-of-home movement of people, thanks to no restrictions.

“Advertisers were in the wait-and-watch mode during Q1. With the festive season, we should be back to normal from an advertising perspective,” Alok Tandon, CEO, Inox Leisure, said.

Tandon said that traction from new-age clients, such as fintech advertisers, was high in view of the growing digital transactions and the need for players to advertise. Both PVR and Inox are counting on interactive ads to drive engagement and spends in cinemas, going forward. 

September will see Brahmastra, featuring Ranbir Kapoor and Alia Bhatt, and Vikram Vedha, starring Hrithik Roshan, hit theatres. The October-December period also has big Hindi movies slated for release. This includes Ram Setu, starring Akshay Kumar, and Tejas, starring Kangana Ranaut, lined up for October. Drishyam 2, featuring Ajay Devgn, will be out in November, and Kabhi Eid Kabhi Diwali, starring Salman Khan, will release in December.