Friday, May 18, 2012



So how do you buy Desh Ka Namak? Well, the loose salt (a commodity) is converted into a quasi brand (purity factor), later a full fledged brand (Tata Iodized Salt), and finally a super brand (Desh Ka Namak). While a commodity has 100% functional value and zero percent emotional pull ( for instance, a toothpick), a quasi brand offers some distinctive feature and appeal at least (e.g. Suguna eggs without odour). To become a brand by itself it should have an unparalleled advantage (Amul Milk with no milk powder added). Finally, a super brand is typically 100% emotions and zero percent unique functional value (a Harley-Davidson). The aim of every marketer is to morph his offer gradually from an undifferentiated (at least in the perception of the buyer) product into a superbrand, when he suspends his critical mental faculties for comparing alternatives on functional grounds. TV advertising helps in this since it takes a brand through a six – as process wherein the brand seeks (initial & sustained) attention, awareness (recognition and recall), assimilation (comprehension of claim of the advertiser), acceptance (liking and preference towards the offer), action (purchase), and adsorption (voluntary recall in future).

For records, the overall advertising pie is growing at a rather modest pace in India. During 2011 as against expected 17% growth in media ad revenues, the industry could manage only 8% taking the size to only Rs.25,594 crore. The outlook for 2012 is also modest, and is expected to hit only Rs.28,013 crore.

Pit this fact against another one. Running a Hindi GEC costs approximately Rs.2 crore a day or nearly Rs.750 crore a year. News channels and regional channels can be run with average spending of Rs.250 crore per year. But then they have so much less viewership too. By 2011 India had 623 operational channels, as against 552 in 2010. 50% of viewership, however, rests with Hindi channels while another 10% viewers patronise English channels. Out of these 163 are pay channels accounting for a lion’s share of Rs.11,600 crore worth of commercials revenue. At 146 million households the Indian TV distribution market is already the third largest in the world, with pay TV penetration at 80%. This last mile of distributors belongs to a very fragmented industry with nearly 6,000 players who, ironically, however, enjoy local monopoly clout. They are very cash rich since they pocket 80% of Rs.21,630 crore subscription fee paid by the viewers.

So the TV channels’ revenue model has come apart as these cable operators and distributors create an artificial bandwidth shortage so that they can carry channels as per their own whims, demanding usurious monopoly rent (carriage fee) from the broadcasters. Resultantly, between 2007 and 2011, dependence on advertising by pay TV channels reduced merely from 76% to 72%. In an attempt to balance the books thus the channels are resorting to more and more advertising, volumewise. In 2007 itself TV ads exceeded 60,000. These are growing at a CAGR of nearly 50-60%. But the subscription rate has been capped at Rs.5.30 p.m. for DTH digital TV. The cable TV Network Rules, 1994 say that maximum 12 minutes (20%) of every 1 hour of airtime should be used for commercials. But during 2008-2011, on some channels during prime time (7PM to 11PM), advertising even exceeded (60% of total time) the programming content. Five of the six news channels under scrutiny had used 18 minutes (30%) for commercials. The viewers naturally suffered in terms of duration, frequency, cluttered screen, and even deafening audio levels.

In a controversial proposal recently TRAI has suggested that duration be restricted to only 6 minutes per hour, more so because the proposed digitisation of television broadcast will certainly mean higher subscription revenue for the channels.

Obviously, the industry thinks it has a very strong case against the proposed move. It says that, first, restriction on ad air time will create acute shortage of inventory; ad rates consequently will go up considerably. This will also mean that only the big boys will be able to afford them. Second, if ad rates cannot be raised to make good the revenue dip for TV channels, low cost programming will have to be produced; this in turn will tell upon quality (no KBCs). The cost of producing some of the most watched shows is as high as Rs.1.5 crore per episode. But this ironically will reduce TVRs and therefore advertising revenue further. Third, these ads may shift to other media (online/ print/cinema) which may not be perfect replacement for TV; in any case, then those media will be accused of carrying excessive advertising. Besides, TV is perhaps more suited for rural audience than online or print media. Fourth, according to TV channels, self regulations are the best. Also, it is suggested, let the audience decide whether a channel carries excessive advertising.

On the flip side supporters of such code have an iron cast case too. They point out that firstly many developed nations have such hourly caps, viz. Australia, Canada, Denmark, New Zealand, Philippines, UK etc. Besides, in actual practice the TRAI regulations might not become suffocating anytime soon. Except for the leading broadcasters in each genre (GEC, Sports, News, etc) the rest are nowhere close to the 20% cap. In India 66% of the revenue for TV channels is from subscription while 34% comes from ads. But for major broadcasters this gets reversed to 35:65. TRAI wants that for these channels 70% revenue should come from commercials against current 36%. Secondly, in other countries, UK for example where such regulations are already in place, TV commercials have not extinguished. Third, as regards self regulation it has seldom worked in India. Any self regulation requires high degree of accountability, responsibility, and discipline. But, for example, in print media where such regulations are in place they are observed only in their breach. Besides, while in the print media you can ignore an ad, on TV you can only switch channels and there you face ‘road-blocking’ tactic by the advertiser; escape is virtually impossible. So is there no way out of the impasse?

Well, one way is to decrease above the line (ATL) advertising and increase activations (BTL – below the line). Unlike mainstream intrusive advertising content branding requires either buying of the content or creation of the content by the advertiser himself. It is less intrusive and therefore less offending too. In film placement, social media, Internet, activities on the ground (Coke Studio) all can be deployed for these purposes. This kind of advertising ‘message’ will enhance mass media ad recall. Besides, creating an independent property gets lot more respect as against sponsorships. Airtel realised this by releasing short films on YouTube (for Har Friend campaign).

Ingenuity is what is required to increase effectiveness of promotional messages, and not making more noise and irritate the audience.