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Government considering hike in DAVP ad rates

The rates offered by DAVP for running government ads are much lower than commercial charges on the respective platforms. While the government is considering a revision for print, several broadcasters have boycotted DAVP ads

In a move that could come as a huge relief for India's embattling print industry, the government is considering a revision of Directorate of Advertising and Visual Publicity (DAVP) rates.

In a conversation with BestMediaInfo.com, DAVP DG Ghanshyam Goyal said that the DAVP rates for print were low and the contention of the industry was right.

"The representatives of newspapers have taken up the issue of DAVP rates not being revised for a long time and the government is looking into it," Goyal said.

The representatives of the print industry had raised the issue with the government as the low DAVP rates were bringing their margins down. The ad rates offered by DAVP are as low as one tenth of the commercial ad rates on print but these ads contribute around 12-15% of the total adex of papers.

Earlier this year, around February-March, the Indian Newspaper Society (INS) held a meeting wherein this was discussed. INS has been discussing the matter with the DAVP and the ministry, requesting them to relook at the rates.

For the last few years, DAVP, the advertising and publicity arm of government of India, has been under constant pressure to revise and improve ad rates that it offers to the publishers and broadcasters – both TV and radio, against publishing/ telecasting government ads.

As a process, DAVP calculates ad rates for print at the beginning of every year, depending on the circulation numbers of the Audit Bureau of Circulation (ABC) or RNI. The charges are calculated at the rate of Rs 31.86 per sq cm per lakh copies of a newspaper. The DAVP across platforms has blanket charges for all the players in any industry. So, this Rs 31.89 is a fixed cost for all the publications.

“This rate of Rs 31.86 was finalised about 6-7 years ago and has not been revised despite a couple of major changes in the eco-system. The rupee-dollar ratio was to the tune of Rs 49-50 per dollar at that time, which has now moved down to Rs 65-66 per dollar. Newsprint is another story, which has gone up from USD 350 last year to USD 700 this year. As an industry, it was hitting everyone hard,” said Karun Gera, President, Sales, Lokmat Media Group.

Gera said that the industry is expecting the government to understand the issue and to ease out these problems.

He explained that the low rates don’t hurt all the publications equally. Since DAVP ad rates are blanket rates for all players, irrespective of the size of publication, the regional and smaller publications aren’t much affected.

Speaking positively on the DAVP pricing, Rajeev Beotra, CEO (print), HT Media, said, “DAVP prices are revised every year, depending on the ABC certified figures. There have, however, been instances of DAVP rate increases outside of these reasons as well.”

Explaining the various segments of advertising on print, Beotra said, “There are three broad segments – political advertising, DAVP, and commercial, of which political and commercial rates are comparable, while DAVP enjoys the lowest rates.”

Beotra added, “DAVP rates are usually page and position agnostic. On the other hand, the commercial rates vary depending on page, position, and the degree of disruption. Overall, DAVP rate advertising contributes to about 12-15% of the total print adex.”

DAVP contributes to close to Rs 900-1000 crore, annually, despite the lowest ad rates. But then why does the industry accept these low rates?

Gera said, “The industry accepts because somewhere down the line, we feel the responsibility of communicating the government policies and welfare schemes to the common man. There is also a certain kind of readership value to these ads, unlike political advertising.”

The industry has also asked the DAVP to decide their ad rates based on the Indian Readership Survey and not on the basis of circulation as readership was a better metric.

Gera said, “There has been a discussion about using IRS numbers for finalising rates. As far as I know, DAVP has subscribed to this edition of IRS, but no decision has been taken on this. As an industry, we would like to look at readership governing the rates.”

However, DAVP’s Goyal said that the issue of moving to IRS was under consideration.

Broadcasters too await a hike in DAVP ad rates

The ad rates for broadcasters was hiked by DAVP last year but the TV channels claimed the ad rates were so low that some channels even refused to telecast government advertising on DAVP rates.

Out of the total 233 channels empanelled by DAVP, close to 70-80 channels from the leading broadcast networks have boycotted the DAVP ads and are not running any government ads for the last 8-10 months. The reason is that the ad rates, which were revised in July 2017, were still way below the acceptable standards.

Goyal said, “The rates offered to the 233 TV channels on our panel are accepted by most of them. There are certain channels that have not accepted the rates and the negotiations with those channels are still going on. These rates are not very low.”

He said that there was no definite timeline as to when the rates will be revised.

Television adex gets about Rs 1000 crore as ad revenue from DAVP. But in almost last one year, there has been negligible spends on this platform. Since there are blanket rates across all channels, some adjust with the rates while most big ones have revolted and asked for a revision. The ad rates are as low as 40% of the commercial rates, at least for the big channels.

One of the senior officials from a leading broadcast network said, “It is important that the government resolves its issues with TV broadcasters first and that is what their first priority will be, I assume. Since elections are just a year away, the government needs to intimate and promote the works it has done in last four years. TV’s reach is crucial for them, in this case.”

“We are expecting the government to take a note of our efforts and continuous representations and revise the ad rates that it had proposed in July 2017. For the regional and smaller channels, the difference in commercial and DAVP rates is not much and hence they are continuing to telecast the ads at whatever rates are being offered. But after a point, even regional channels will feel the heat, because regional channels are also increasing rates gradually,” said Ashish Sehgal, COO, Zee Unimedia.

It is expected that the monies DAVP saved by not using TV much last year, might come back as soon as the rates are satisfactorily revised and the channels start accepting ads. However, Sehgal feels, “Whether they increase overall monies or not, if they don’t increase inventory too, this will devalue our ad slots.”

DAVP needs those 70-80 channels, because these channels have about 80% of the total reach of the medium. “They want their policies and welfare schemes to reach every Indian and hence depending only on the regional and smaller channels will not solve their purpose,” said a broadcaster.

Radio players too are dissatisfied with the hike in ad rates that was offered to them recently.

Giving a perspective on the radio industry, Vineet Singh Hukmani, MD and CEO, said, “DAVP recently hiked ad rates when the radio stations were re-empaneled for phase three, based on IRS audience results. Having said that, the rates need to go up as political parties definitely pay higher rates. Radio is the primary local medium for elections. DAVP needs to allocate 10% of its total budget to radio to realise the true power of the medium.”

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