Access Solutions managing partner Meenakshi Madhvani gives
a low down on what the critical drivers will be in the television
and media space over the next 12 months. In a tête-à-tête
with Indiantelevision.com, Madhvani zeros in on the problems
that the industry faces and the possible solutions around
is not going to be the driver in the Indian market over
the next 12 months. Even if 3G technology for mobile comes
into India, the question is how many mobile handsets will
have the capability to support it? If you look at the 3G
penetration in the developed markets, it has not really
changed the face of communication.
India, there will be a 0.001 per cent of the population
that will adopt to 3G but again, it's not going to make
a change to the masses at large or even to the consuming
the impact of technology in the way communication is controlled
and managed today will happen 12 months down the line. What
is primarily going to create a disruption in communications
is not so much the service providers as much as the recipients
of the services because consumers are changing the way we
are interacting with communications and media. Consumers
are actually going to drive those changes.
today are getting increasingly upset and annoyed with
intrusion in their space. There is a large amount of negative
press that consumers have given. In-programme placements
or immersive technologies and communication in that sense
is going to trigger off a whole series of reactions and
responses where consumers start feeling that they don't
want a particular thing.
if you look at SMS marketing, there is a huge move today
to try and prevent companies from intruding into their space
with their SMS messages.
three critical factors in the coming 12 months:
owners are going to look at sampling the product first
and then worry about revenue. In the next 12 months
media owners will drive sampling and get people to experience
their products and what it has to offer without really
being able to focus on revenues. So the gestation period
for breaking even in terms of media offerings is going
to get longer and because of this fewer and fewer players
will enter the space on a whim. The players who are going
to come in are going to be serious and with deep pockets
with a lot of money.
is a fabulous example; they have deep pockets and have a
commitment to the market. They are going to wrest control
in this market. It's going to take them a while and millions
of dollars before they do it but they will do it. Someone
like a Hungama is going to feel an incredible amount of
pressure. So a lot of players are going to build up some
amount of critical mass and then try and leverage on it.
internet, which for long has been talked about
as the new medium of communication, is actually going
to come into its own. What's happening is net penetration,
usage and time spent are increasing dramatically. There
is a whole class of consumers particularly the young (sub
25 group) who see the internet as the primary medium and
not the secondary one. Anyone who is looking at targeting
this group is going to have to necessarily start talking
to them in a space that they are familiar with.
changes are going to impact the players in the industry
and media owners are going to find that they need to get
far more aggressive when it comes to driving trial and sampling.
This will also force media owners to start looking at differentiating
products. Today, when you have a cluster of products which
do not have a unique identity, it's fine when there is a
limited cluster. But when the size of that cluster increases
and multiplies, then product differentiation starts becoming
crucial and fundamental.
will become more and more focused as now you have to
invite the consumer to sample your product.
will become very elastic because when channels try to
build up the numbers and get in advertisers, they will not
be in a position to hold on to their prices. The price elasticity
of the newer players will drive down the realisation of
the more established players. Overall, cost reduction will
the coming in of new players like Disney in the market has
not led to a bunging down of prices, it has definitely led
to a softening of prices. Every new entrant has had an impact
on the existing players. If the new entrant is a clone of
the established player, then obviously there is a limit
to how much softening the established player will experience.
But if there is the new entrant who is fundamentally and
textually different, then there will be an impact.
I don't think any new player is dramatically different.
You look at Aaj Tak and then you look at all the other news
channels that have launched after it and they are like clones.
Not one of them has anything that sets it apart. Because
of this, they are all just expanding the market and the
market expansion has taken place at a slower rate than warranted
by the number of new entrants that have come in.
you look at the news genre, from a Rs 250 crore genre it
has become a Rs 350 crore genre (at discounted prices).
So Rs 100 crore has been added on to it through the introduction
of six - seven new entrants. Even if these new channels
would not have been added on, the Rs 250 crore would have
become Rs 300 crore in any case. There may be a debate on
the numbers, but one can't deny the principle that every
additional channel that is coming in is expanding the market
but the rate of expansion is getting slower and slower.
some point in time in the near future there will be a certain
amount of stability when it comes to these genres. So any
new channel that comes in is not going to expand the pie
but is going to survive if it has a differentiating product.
I am particularly keen on seeing what happens with the launch
of Times Now because I feel the channel has potential.
other aspect of this is that the industry does follow ratings
to a very large extent but when it comes to the focused
channels for instance a lot of buyers don't really look
at the numbers and the news genre has become part of the
focused channels genre. A channel like Aaj Tak is seen as
delivering reach in the North, but when it comes to channel
decisions it is driven by personal choices. Because of which
there is a lot of dichotomy. I have seen so many instances
of people putting fairly large sums of ad money on CNBC,
which doesn't deliver anything in terms of numbers but is
seen as a channel which decision makers watch and the channel
that delivers corporate India to you. There are these popular
perceptions that some channels have very smartly exploited.
NDTV for instance, which has a fantastic marketing and sales
team, is able to leverage these perceptions to get more
than their fair share of advertising. That's marketing!
far as radio is concerned, it's not 2006 but 2007
that we have to watch out for because by the time the licensing
gets cleared it will be end of 2006 and beginning 2007.
In 2006, none of the new stations and new licensees are
going to be out. So the impact will be felt only in 2007.
Radio is currently following that creeping strategy. Decent
money is spent in radio. The problem with radio is that
there is no research available except for the MRUC listenership
study, which is done in Mumbai and Delhi. Unfortunately,
the myopic industry that we are in tends to use the excuse
of not having data when they don't want to explore new options
or new vehicles. The Internet is one of them and radio is
single advertiser who uses radio has found that it delivers
tremendously. I see a 15 - 20 per cent growth in radio in
the next year till the new players come in. Then it will
explode and the medium will also become far more relevant.
are also getting into some very thin ice over the next 12
months. On the one hand, you have media agencies who have
discounted on their fees over successive years until they
have reached a stage now where they are working at such
incredibly low fees that there is no way that they can actually
sustain their business model.
order to do that they have to find alternate avenues
of compensation, which are in the form of agency volume
rebates and discounts that are given to agencies by media
owners. If the media owners are willing to incentivise the
agencies to recommend its vehicle or publication, then the
agency actually supports that vehicle or publication.
a result of this, a lot of media decisions that are recommended
by agencies are not taken because of the inherent strengths
or weaknesses of the media but are more quid pro quo. There
are divergent requirements at the agency's end. On the one
hand, there is a need to do a good job for the client and
recommend a right kind of media mix for them. On the other
hand, there is a need to ensure a decent bottomline. So
there are these opposing forces that are pulling agencies
in different directions. As a result of this, advertisers
don't get the kind of media mix that they actually need.
It's an industry issue that needs to be addressed.
to that, the agencies also have the problem of man power
as the attrition rate is very high. Too much of outflow
of talent and not enough willingness to invest in their
people. The business model has stopped making sense.
total of 377 accounts have shifted hands in the last 11
months. The money that changed hands in the last 12 months
was Rs 3600 crores (Rs 36 billion) - more than 25 per cent
of the Indian ad industry.
that kind of impermanence and churn, agencies are not
willing to invest in their clients' business. This problem
is just escalating. I think what an advertiser needs to
do is hire an agency on a three year contract and evaluate
its performance on certain parameters. At the end of the
three year period, if the agency has performed then they
should be rewarded with a fantastic bonus.
exchange for which, the advertiser can demand transparency
and accountability because unless we can set the advertiser-agency
relationship right, the media is just going to be a football
being kicked from one end of the stadium to the other. That
is really going to be the most significant problem that
the industry will have to cope with over the next 12 months.
media is looking at advertising today as 80 per cent of
revenues that media owners are surviving on are coming out
of advertising. If 80 per cent of the revenues are under
pressure because of the issues between the two key players
in that space
how are they going to survive and develop
market needs to realise that the days of cost evaluation
are over. Stop looking at cost and start focusing on
value as the consumer is no longer cost centric whether
it is FMCG, white goods, two wheelers etc. They are value
focused. If advertisers and agencies just took a leaf out
of the consumers' book and followed in their footsteps,
then there is resolution inside.
conclusion, I will say it is a fabulous time of opportunity
and I'm extremely optimistic about the next 12 months. I
also think that it is a time of introspection because if
that doesn't happen and if the industry either as pockets
of excellence or collectively are not willing to address
these issues, then going into 2007 is going to be a nightmare.
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