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Ad rates for TV, digital to see 10-30% uptick in 2023

The ad rates during IPL 2022 ranged between Rs 15-18 lakh for a 10-second slot and for digital, advertisers paid between Rs 199-277 per CPM (cost per mille/thousand impressions) for 10-second ads.

The Indian Premier League (IPL) is likely to see ad rates going up by 10 and 30 percent on TV and digital respectively. The ad rates will see a hike after the league’s media rights value touched Rs 44,075 crore, up from Rs 16,347 crore paid by Star India (now Disney Star) for the 2018-2022 cycle.

During the media rights auctions that were held on June 12 and 13, TV rights fetched Rs 23,575 crore for broadcast rights and Rs 20,500 crore for digital, said people tracking the media rights auction.

TV rights value was expected to touch Rs 24,400 crore, while digital was estimated to move up to Rs 21,900 crore.

“Ad rates will be about 10% upwards on TV and digital will be around 30% higher,” said Karan Taurani, senior vice-president, Elara Capital.

The ad rates during IPL 2022 ranged between Rs 15-18 lakh for a 10-second slot and for digital, advertisers paid between Rs 199-277 per CPM (cost per mille/thousand impressions) for 10-second ads.

He added that TV is likely to see mid to high single-digit ad growth and then there are concerns regarding TV subscription revenue which will keep average revenue per user (APRU) under check due to regulatory headwinds (NTO 2.0).

When it comes to advertising expenditure, digital is growing faster than TV. TV is expected to grow by 7-8 percent while digital is estimated to grow by 25-20 percent, say experts.

Prashant Puri, Co-Founder & CEO, AdLift also noted that the ad rates will increase by 25-30 percent from last year, till 2025. “FMCG, consumer durables, electronics, and automobiles will continue to keep betting on IPL despite high premiums on digital.”

If we go by analysts’ estimates, ad rates on TV are likely to touch Rs 19.8 lakh for a 10-second ad slot and digital ad rates will be in the range of Rs 258.7-360 for a 10-second spot.

Digital has seen a 70 percent premium over the floor price of Rs 12,210 crore.

In the 2018-2022 media rights cycle, digital media rights value stood at Rs 4,040 crore, and TV rights at Rs 11,410 crore.

“On TV and digital, we expect the break even to happen only in the third year. As far as profitability is concerned, TV gross profit margin will peak at 12 percent in the fifth year whereas digital gross margin will breach 35 percent in the fifth year,” said Taurani.

In 2022, it is estimated that 54.5 percent of IPL revenue came from TV advertising, 10.9 percent from TV subscriptions, 21.8 percent from over-the-top (OTT) subscriptions, and 12.7 percent from OTT advertising. This is expected to change to 50.8 percent from TV advertising, 9.6 percent from TV subscriptions, 24.3 percent from OTT subscriptions, and 15.3 percent from ads on OTT.

The bidders in the media rights auction race reportedly were Viacom18, Disney Star, Sony Pictures Networks India (SPNI) for broadcast rights, and Viacom18 which operates streaming platform Voot, Disney Star which has OTT platform Hotstar, Zee which operates Zee5 were the contenders.

On the first two days of the auction, bidding for TV and digital rights took place with bidding concluding at Rs 57.5 crore per game for TV and Rs 50 crore per match for digital.

Bidding for package C which includes non-exclusive digital rights for 18 matches and rights for the rest of the world for TV and digital will take place on June 14.

The rights for the 18 matches which are likely to attract 40 percent of IPL’s viewership on digital concluded at Rs 18.5 crore per game, up from the base price of Rs 16 crore per game. The third bundle saw rights value touching Rs 1,700 crore, up from the base price of Rs 1,440 crore.

“On an overall basis, the valuation of the rights is at Rs 44,000 (Rs 44,075 crore) as of now. We estimate the addition of another Rs 4,000 crore backed by cluster rights (rights for 18 matches) and overseas package, which will take the total value closer to Rs 50,000 crore,” said Taurani. Moneycontrol

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