These advertisers account for over 35 per cent of Rs 7,000 crore (Rs 70 billion) spent on television channels annually.
Today's decision comes after differences arose between broadcasters and advertisers over paying a 25 per cent surcharge on spot advertisements - that is, advertisements that come in as last-minute bookings to fill in unused slots. Advertising agencies have described this as an "irrational demand".
Sources said the broadcasters had also instructed their advertising-sales team against allowing spot ads on their channels from any company.
Companies normally book ad space either through bulk deals or spot bookings. "This will affect news channels in a big way as they sell more spot advertising than entertainment channels," a senior media planner said. A news channel typically carries 72 ten-second spots per hour and 30 to 40 per cent of their bookings are accounted for by spot advertisements, according to media buyers.
Meanwhile, in a last-ditch effort at a compromise, the Advertising Agencies Association of India (AAAI) is slated to meet in Mumbai on Tuesday. The ban of ads on channels will only be applicable to the ads represented by advertising agencies that are part of AAAI. This covers most leading agencies.
AAAI Member and Indian Media Exchange President Shyam Shankar said the body was waiting for communication from the Indian Broadcasting Foundation (IBF), the nodal body of all broadcasters. "Our stand has not changed. The main problem is that the surcharge issue was decided unilaterally."
Star India President (Ad Sales) Paritosh Joshi, however, said that the IBF had been discussing the issue with AAAI for one and a half years. "It is AAAI that walked away from the joint working committee arrangement that was made," he said.
The controversy began when the IBF decided to drop all spot advertisements if the advertisers and their media agencies did not agree to pay the surcharge.
IBF members and leading entertainment and news networks expect to lose advertising worth Rs 12 crore (Rs 120 million) a day by dropping spot advertisements from today. Nevertheless, they are firm about the black-out.
"We have to take a stand. For six years we have not increased our rates even when the input costs have escalated," said a television channel's sales executive.
Additional reporting by Ashish Sinha, Shuchi Bansal
