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The government has recently announced that no permission would
be required to be taken from the Reserve Bank of India, the Central
bank of the country, by Indian companies to book ad space on foreign
TV channels like the Star bouquet and Sony channels. What's more,
it also relaxed the cumbersome rule relating to repatriation of
profit and revenues by foreign companies to parent companies and
for payment towards trademarks, etc. In simple terms, it means that
government (or any other) permission is not required, apart from
just informing the government about the developments.
What does this mean? According to government officials, it means
that any Indian company, which does not have any export earnings,
as was required earlier, can advertise on foreign TV channels either
through rupee payment or buy buying dollars. This could result in
a significant increase in ad revenue for the foreign channels which
could not get ads from comparatively smaller companies not having
any export earnings.
This is where the likes of Aaj Tak and other channels like those
of Zee Telefilms, uplinking from India, had an edge over their foreign
counterparts. With the removal of the hurdles, now even foreign
channels can tap the vast rural and semi-urban advertising market.
How does it work? For example, a small Ludhiana-based hosiery manufacturer
wants to advertise on a popular soap on Star or Sony as it has the
money to do so. The hitch earlier was that it could not do so as
it did not have export earnings. To advertise on foreign channels,
the company had to show export earnings (mostly in dollars) of Rs
1 million in each of the previous two years for the Reserve Bank
to give it the go ahead to buy dollars. But now this Ludhiana firm
can advertise either by buying dollars (if that is channel policy)
or paying in rupees.
Says Star India CEO Peter Mukerjea, "This is definitely an
interesting development. We will of course have to evaluate how
best to leverage this opportunity for the network."
"We welcome the move as it clearly opens up two more categories
of advertisers who could hitherto not take advantage of reaching
out to our young target demographic," says Abraham Thomas,
V-P, ad sales, MTV Networks India. "First, the retail advertisers
and second small advertisers with no export earnings. Many of them
have been or were very keen to partner with MTV in the past but
have been unable to do so. Now these advertisers like the larger
ones will be able to take advantage of MTV's brand credibility,
the relationship that MTV enjoys with the youth of this country
and get a progressive, trendy and fashionable image transference
on to their brands," says Abraham.
Rohit Gupta, executive V-P sales and revenue management, SET India
sees the move as immediately opening up advertising opportunities
in the Indian financial and insurance sectors, among other things.
The directive would nullify the clear advantage the likes of Aaj
Tak had as regards tapping into advertising from the smaller players
were concerned, says Gupta.
Speaking for the smaller channels, a senior ad sales executive
earlier with one of the Big Three networks was however, sceptical
over whether there would be any significant difference to the business.
The executive did admit though that it could make a 15 to 20 per
cent difference as far as opening up inventory in the non-prime
time in particular was concerned.
One reason being cited by the government for its decision to simplify
the rules is to create a demand for dollars and other foreign currencies
as the foreign exchange reserves of the country are at an all-time
high. A suitable enough reason. But it would also mean that political
parties would now find it easy to advertise on TV channels, foreign
and domestic, in the run up to the elections. The electronic media
would get opened up for political parties too, which are now getting
image savvy and hire image and PR consultants, apart from tom-tomming
their achievements like any other product through advertisements.
Had the rules of showing export earnings been there, most political
parties, except a few, would not have been able to advertise easily
on foreign channels beaming into India. The government, in one liberal
stroke, has also done the politicians a huge favour.
Also Read:
RBI
allows foreign broadcasters to tap local advertising
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