Star endorsements may just get dearerTelevision channels have recently hiked their ad rates to counter the effect of the 12-minute rule enforced by TRAI (Telecom Regulatory Authority Of India). Now the grapevine is that Bollywood A-listers, are all set to raise their endorsement remunerations, which had already hit the roof in the past one year. A few days back, both news and general entertainment channels (GECs) had accepted that the amount of free commercial time that will be allowed per hour will be reduced to 12 minutes from October 1st. This will be done in a phased manner. From July 1st, news channels will reduce advertising to 20 minutes per hour, while the GECs would limit it to 16 minutes. This will be in force until September 30th, following which the 12-minute rule will be enforced and from October 1, all channels will abide by the TRAI rule which states that channels would not show more than 12 minutes of advertisements each hour.

A source told TOI, " The stars are likely to demand more money now. The companies are ready to shell out a fortune to ensure visibility—proof of their spending power-- the stars will also want to milk them. " Bipin Pandit, COO, The Ad Club also considers this a distinct possibility. But Paulomi Dhawan, who works as a strategic advisor, hopes that there is no step-up in the Bollywood ad rate chart as the scenario amidst the staunch stand taken by the TRAI is rather fluid. "Channels and advertisers are busy devising strategies how to keep the demand-supply equation of ads on national television flowing smoothly. Stars shouldn't hike their ad money in such a situation," she said. However, ad guru Prahlad Kakkar is pretty sure that the new TRAI rule "would amount to playing into the hands of not just the Bollywood stars but the foreign companies as well". Explaining the repercussions of the hike in ad rates, Kakkar said, "One needs to understand that big stars endorse more for the multi-national companies. We will soon end up increasing the revenue of the foreign companies who, unlike the smaller homegrown ones, would be able to easily shell out the hiked rates as they have big pockets. These companies have been looking at a long-term perspective. They were hoping that in the next 10 years, the country's economy would improve and then they will wipe out Indian companies. But our government just decided to make things happen in their favour much sooner.

" Many are of the view that the new rule will make many advertisers happy and Colors CEO, Raj Nayak explained, " With so many ads crowding the television space, most get lost. The 12-minute rule will reduce the clutter and give the ads more visibility." However, Kakkar focussed on the larger issue: "What is being seen as clutter are the home-grown 'desi' companies, which will soon perish as a result of this new regulation." But, this might not necessarily translate into good news for the Bollywood stars. Ad man turned lyricist and screenwriter, Prasoon Joshi, fears that the hike in rates may compel even the bigger companies to reduce their ad inventory. "If the hike in ad rates by channels is not realistic, several companies, big and small both, will opt for other forms of advertising. Visibility on TV channels is important, but if pushed beyond a certain point, many would prefer to go ahead with content branding and display their goods on social networking sites," he explained.

A senior official (on request of anonymity) from a leading GEC told TOI, "Some calculations made last week by experts from leading channels have revealed that TV channels would collectively stand to lose at least Rs 2000 crore per year owing to the new TRAI rule even if they increase the ad rates." However, Nayak says he is optimistic that the dust would settle down in around a year. "In the short-term, there will be some chaos, but I believe that in around 15-months, the advertising rates will settle down and it will become viable for broadcasters to run their business profitably."