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The 12-minute cap by sectoral regulator TRAI on advertisements on television channels could lead to hike in ad rates this festive season although it would increase the effectiveness of campaigns, according to a report by media planning and buying agency Madison Media.
"As per the new TRAI regulation, broadcasters will be constrained to carry 10 minutes of commercials + 2 minutes of channel promotions per clock hour. In the medium to short term this could lead to increase in ad rates, exacerbated by the festive season," said Madison Media in its white paper titled "Managing Media in a 10+2 Regime".
TRAI's direction will be implemented from October 1 this year.
Madison said once TRAI regulation comes into effect in October, advertising clutter was expected to reduce by as much as 20 per cent.
"Various studies have shown that reduced clutter increases Ad effectiveness. Analysing various published findings, we recommend advertisers could safely reduce TV GRPs by at least 20 per cent," it added.
ZenithOptimedia Managing Partner Navin Khemka said: "There will be less inventory available to advertise. As a result demand and supply forces will take over. This will be inflationary and the extent of TV inflation will depend on the genre channel."
Sapphire Professional Services Managing Director and former Executive Director PwC India Timmy Kandhari also said ad rates would rise and "especially in the prime time".
On the effectiveness of campaigns, Kandhari said:"It will definitely help the brands as lesser ads will result in brand messages to be more effective in less crowded environments."
Yet, it will throw a creative challenge to advertisers as they would have less time to convey their message.
Khemka said that TRAI's order would also benefit agencies as their revenues are dependent on media rates.
The report has further said that non TV media will play a critical role. Advertisers should start investing in other media beyond TV saturation levels and moreover.
"Youtube and other video display options will become more attractive. Advertisers should treat these as channels and start driving spends to these options," the report added.