IPL 2023 sees a 30-35% decline in ad revenue: Elara Capital

Elara Capital releases Adex report that highlights a steep decline in the ad revenue in H1CY23. With inflationary pressures cooling off, expectations are high from the festive season and H2CY23.

India Adex is seeing pressure in H1CY23, given inflationary headwinds and macroeconomic uncertainty, says a report by Elara Capital. Even a property like Indian Premier League (IPL), the most compelling sports tournament, is observing a steep decline in overall ad revenue ~30%-35%. The report says that this is due to advertising dollars being split between TV and digital, and new age/e-commerce companies cutting ad spends to focus on profitability. 

India Adex growth could be revised downwards to ~10-12% (including the positive impact of the Cricket World Cup - ~2%) in CY23, from an estimate of ~16% YoY growth projected by larger ad agencies. 

However, H2CY23 is expected to showcase respite as larger verticals like FMCG, auto and telecom (44% contribution to total TV, Print & Radio Adex) are expected to drive ad spends momentum on the back of multiple new launches. These launches were on hold for now. But with inflationary pressures cooling off and a better festive season; Elara Capital expects TV medium to be a big beneficiary of this, as these verticals advertise heavily on TV (54% of TV adex is from these verticals). 

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New age companies are expected to report a decline of 20%-25% on their ad budgets, which will have a negative impact on overall India’s adex (~10% YoY growth); alcobev/beverages (0.7% of TV adex) could be one vertical that may see strong growth in ad spends in H2CY23. 

General election will be a driver for ad spends in CY24 and TV, especially the news genre will continue to be a major beneficiary of the same. In terms of TV adex, regional markets (specifically south states and Marathi) are key drivers due to record GRP ratings, which will propel better pricing growth vs TV industry average growth; broadcasters may need to focus on SVOD (Subscription Video on Demand) as a major revenue stream, as AVOD (Advertising Video on Demand) in India remains highly competitive with global giants (search and social) and sports driven OTT platforms commanding a lions share. 

Sharing his positive outlook for TV, Karan Taurani, Senior Vice President - Research Analyst, Elara Capital, said in the report, “We continue to remain positive on TV adex in India, as the latter drives a bigger reach and is favourable for large traditional brands which look for mass campaigning; TV adex will see convergence towards growth rates of ~5-6% over medium term, which is already factored into our estimates for Z and SUNTV; however, our current estimates for ad revenue in FY23 may see a downward revision, as TV adex is estimated to move back towards 90% recovery vs pre COVID levels, as compared to a 96% recovery in FY22. We maintain our positive stance on Z driven by potential merger synergies, SUNTV on the back of compelling valuations (4.4x one year fwd. PER - core TV business) as strength in regional is here to stay. TVT remains to be a big beneficiary of the general elections in FY24 and growth rates therein will magnify in FY24 (towards 10-12% YoY growth)”