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"Post CAS, we shall be looking at exit clauses in our deals with broadcasters!" : Carat CEO Sulina Menon

The recent past has surely been a testing one for Carat India but its newly appointed chief executive officer, Sulina Menon, seems to be unfazed.

With the exit of one of Carat’s success chief architect and erstwhile CEO, Meenakshi Madhvani, two of the prestigious clients (Asian Paints and Cadbury's) deciding to review their accounts and criticism from some quarters of advertising fraternity, the country’s leading media specialist, seems to be going through a stern test.

Considering all this, Menon could have easily avoided answering any tricky questions. But the affable media professional chose a straight-forward stance and confidently clarified any speculation or indifferent reports in the media.

The fact that media specialists’ long association with Asian Paints has come to an end is surely a hiccup but Menon feels Carat’s stature and strong intrinsic values will surely result in brighter consequences.

“We have in the past few days won new clients and are confident that the wins will continue. We have the passion and the commitment to the business of communication and are here for the long term,” said Menon.

Menon, who has been associated with Carat since its launch in 1997, stresses on the fact that news of Madhvani and news of Asian Paints and Cadbury (which decided to review its media account recently) is just coincidental. Carat, which has openly welcomed the entry of other media specialists in the past, is surprised by the fact that the role of media independents is being criticised.

Despite the recent developments, Menon is confident of not only sustaining Carat’s sound stature in the marketplace but also successfully progressing towards expansion of Carat’s operations.

Menon, who has also worked with O&M, McCann Erickson, Contract Advertising and Zee Telefilms, spoke to Indiantelevision.com’s Ritesh Gupta in an exclusive interview. Excerpts:

 

   

How were the early stages of Carat’s operations in India?

We started from the scratch. It was difficult because the concept of unbundling was very new and there were no media independents. Though we had a lot of faith in Carat's business model and proposition, we weren’t sure how market would react to a start-up operation as those were the buying days!

We worked on shaping the operations step by step. For six months, we thought about our value proposition to the clients. Then, we went out in the market and started pitching aggressively.

We worked very hard in changing the whole paradigm of buying and planning. We went to clients and said that volume is important but more important is to decide what you get in terms of buying. But we also stressed on what value clients would get out of the entire buying. Then, we went to clients with the concept of `value buying’ versus `volume buying’.

And then, we started winning and that, too, against all the big agencies. Like our first client, Bacardi, globally aligned with McCann Erickson. The client (Bacardi) team loved our presentation and we were able to deliver more for the same money through our recommendations.

The other client we had was Cadbury’s, which used to be with Initiative Media, before we started working on the account. Again, in this case, too, we were able to convince the client that it’s not just volume, but importantly how one approached the whole buying as well as the planning, which made a huge difference in the final analysis.

 

 

So is it right to say that Carat is a trendsetter?

I would say so. There are lots of firsts that we believe we have to our credit. To start off, we were the only media independent in the country. Then we changed the whole paradigm by focusing on value buying rather than volume buying.

We are the media independent company that actually brought in tools. Everybody talked about their tools which were mainly sitting on the shelves. We worked on tools and customised these to the Indian market. To that extent, I think it has been a pretty pioneering effort.

 

 

Is interaction in your case lesser with creative agencies?

Even though the creative department is in the other office, there is a fair amount of interaction which takes place. I think it's also important (interaction between creative and the media specialist), otherwise we will lose a track of where the brand is going and they (creative) will lose track of where media is going and overall what is happening in the environment which is affecting the brand.

It is always tough and there are some teething problems. It's like new members coming on board. I think there is a sense of loss, which the creative agencies feel as media or rather one service goes out of their basket.

We make a living out of being an AOR and have systems and processes to make this transition very smooth, without creating any problems with either the creative or media agencies.

If a client segregates his media business, all knowledge is vested at one place. Isn’t this unbundling advantageous?

That definitely helps. It gives better portfolio management, therefore better efficiencies. So there are lots of pluses if you centralise media with one agency or buying with one agency. It can create a lot of synergy within your portfolio and can remove a lot of bias, which may happen if each (creative agency) is looking at the media.

 

 

Carat makes regular investments such as database management and in tools and techniques. Is the 2.5 per cent commission enough?

We work on wafer thin margins (from the industry perspective). But this investment, as we call it, in tools and processes is very important. Ultimately as a specialist, what sets you apart or how you raise the bar everytime you go to a client is the tools and processes. We have have the requisite tools and the systems in place.

And Carat worldwide is very committed to tools and processes. We see tools and processes as an important investment in our business and not necessarily linked to the profits we make.

 

 

"We work with our clients on healthy margins. We work with them on incentives; if we deliver, we get incentives"

 

 

Earlier this year, Carat decided not to continue working on an account as a competitor offered lower commission. Where is the media industry heading?

I think what you are referring to is a specific pricing strategy, by which a company manages to increase its volume share in the market, to have larger bulk of buying.

Despite examining various revenue streams, Carat has never adopted such pricing. We work with our client on healthy margins. We work with them on incentives; if we deliver, we get incentives. We are very fair and transparent with our clients. We have never had problems with our clients on protecting our margin.

 

 

How does sudden media fragmentation such as launch of news channels affects the operations of media?

The current proliferation of channels is an opportunity as well as a threat. An opportunity in a sense that eventually, there will be a shake-out and one will go for a clean winner. A threat in terms of a media planner or buyer getting onto the channels just because he/she wants to be there. It's important to look at who is behind the channel; which target audience the channel is catering to; and whether channel can reach out to your target audience.

Ultimately, I think it’s the function of the budget - how many channels can you afford. Another problem relates to the fact several channels are also offering attractive introductory pricing. If you forget your planning and become buying-led then it might result in some inefficiency.

 

 

How do you cope with uncertainty in sources of data? For instance, distribution problem of new news channels or the controversy over peoplemeters in the past?

There are lots of problems. But look at it this way, the media agencies do not only take into consideration the reach or figures from the peoplemeters. This is not only the way to look at channels. On our own, we conduct checks on how the market is shaping up. Say, we call up 20 people who live in different areas and it gives you some idea.

We also have our sources in the industry to know about the channels. And through survey studies as well, we do make regular checks and remain updated.

 

 

What’s your view on the conditional access system (CAS)?

In CAS, the process of "how the implementation will be done" is critical. But right now, nothing seems to be smooth and there is a lot of chaos. Lots of broadcasters are still trying to fight the implementation process - saying why it should be delayed. But, I don’t think delaying it by three months or so will help as this was known for a long time.

 

   

"Increasingly, Carat is doing a lot of upstream consultancy with its clients. So even before the client goes in for a creative brief, we give our inputs for the communication strategy - which involves lots of analysis and research"

 

 

How will CAS affect media planning? Will you concentrate more on free-to-air channels in metropolitan cities?

We would (consider free-to-air). Again it would depend upon the implementation of the CAS and I think broadcasters have to take steps to ensure a smooth transition.

Some channels are saying they will remain free-to-air or even revert to free-to-air once CAS comes on. We will not take statistics for granted or even accept the claims made by channels without questioning them. Even if they manage to reach specific numbers, we shall look for options. Post CAS, we shall be looking at exit clauses in our deals with broadcasters! We are in touch with agencies such as TAM and will try to find out what is going to happen after CAS. But at the moment it's wait and watch for all of us.

In the longer run, CAS is very good as there will be rationalisation of what you pay and why you pay for any channel. Niche channels will be able to get more accurate ratings as the current peoplemeter readings don't give a holistic picture. These figures seem to be very small in comparison to mass channels. Post CAS, we shall able to segment audiences as we will get to know how many people are watching HBO or Star World. So, it will be a good opportunity to fragment audiences.

Media Buying is still in place. It's just that we are not committing for a longer period and if the deals are made to last for a longer period, we shall always look at the exit clause.

 

 

What’s the future agenda for Carat?

The agenda is very clear. We have got a great product and a great business going. We need to build on this and take Carat to newer heights. In the past few days, we have won new clients and are confident that the wins will continue. We have the passion and the commitment to the business of communication and are here for the long term. You will see lots more from Carat in the days to come so wait and watch…

 

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