Are India's television advertising rates undervalued?

India's TV ad rates should be more in keeping with other markets - or maybe they are already? Industry experts weigh in on this touchy talking point

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Are India's television advertising rates undervalued?


Shubha George Managing director MEC India	Raj Nayak Chief executive NDTV Media	Meenakshi Madhvani Managing partner Spatial Access	Sandip Tarkas President of customer strategy Future Group
MAYBE	YES	YES	NO
“At first glance, comparing absolute rates and CPM may suggest that television ad rates in India are undervalued. But simplistic comparisons are not the correct benchmark to use in order to arrive at the right price or value. The basics of economics decides price in any open market. With intra-genre channel proliferation, supply has grown multi-fold. Demand has not grown at the same pace this year. If the somewhat cautious outlook for 2009 hardens further, this divide will widen. And with few cases of really differentiated content, TV networks will be watching 2009 developments.”	“India’s TV media is one of the fastest growing in the world. The number of people TV reaches in India is higher than the population of some developed countries. Yet, the advertising revenues generated account for only one per cent of global TV sales. Cable and satellite penetration in India has grown by more than 50 per cent over the past four years, yet the advertising rates have not increased proportionately. Superbowl 2008 reached out to 90 million viewers at a rate of US$2.7 million for a 30-second spot, while the IPL, reached more than 100 million viewers at an equivalent rate of only $70,000.”	“Over the past decade there has been phenomenal growth in the reach of TV in the Indian market. Unfortunately for the TV industry, this growth has not resulted in a commensurate increase in advertising rates. That is because of fragmentation. Thanks to the explosion in the number of channels in each genre, audiences have been fragmenting across regions, age, sex, socio-economic strata and even delivery mechanisms. Therefore, CPMs have been increasing even though 10-second rates have not kept pace. We are looking at 300-plus channels today. Audiences have never been this elusive.”	“If one looks at the overall CPMs in dollar terms, it might appear that Indian TV CPMs are half of China’s. However, when indexed to per capita GDP, the TV CPMs are high compared to some of the conventionally more expensive markets. India is almost as expensive a market on indexed CPMs as the UK and even more expensive than China or Malaysia. There are significant factors which will lead to valuations going up for the TV industry. The penetration of TV is way below China. The consumer will end up paying more to the channel owners with the middlemen being forced to shell out more.”