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e4m Conclave 2009: ‘In trying times, it is wise to re-look at the business models’

04-June-2009
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e4m Conclave 2009: ‘In trying times, it is wise to re-look at the business models’

The ballroom at the ITC Grand Central in Mumbai on June 3, venue for the exchange4media Conclave 2009, was packed to capacity when heavyweights such as Vikram Sakhuja, CEO, GroupM South Asia; Sam Balsara, Chairman and MD, Madison Communication; Ambika Srivastava, CEO, ZenithOptimedia; Rajesh Kamat, CEO, Colors; Chinatamani Rao, CEO, Times Global Broadcast Ltd; Aashish Bagga, CEO, India Today Group; and Neeraj Chandra, COO, Britannia Industries, took the dais to present their views on the opportunities in times of slowdown.

Vikram Sakhuja started off the discussions by stating that consumers were spoilt for choice with the on-going media proliferation. Noting that the current economic situation had affected all stakeholders of the industry, Chinatamani Rao said, “If you think you’re unaffected, then you’ve missed something. Competitive pressures have intensified. As a strategy, do not take tactical decisions that might hurt you in the long run.”

Presenting a paradox, Neeraj Chandra said, “Media is one such industry which has grown the maximum, but it is far more expensive.” According to him, there was a tendency to relate media growth to the growth of television. “But there are many other mediums that have not really developed. We need to look at such mediums and try and monetise every opportunity,” he added.

Ashish Bagga recalled the days when the media industry was growing at the rate of 20-25 per cent. Explaining India Today’s situation then and how it is tackling slowdown now, he said, “When the going was good, we fortified our existing brands. Then came August-September, and we saw a slowdown. Revenues started dipping, people started holding back, advertising rates went down, but for magazines, I must say, it’s not as bad as the newspapers. At India Today, we continued to focus on the subscription model, we looked at cost, we looked at collapsing, synergising, and liquidising. And we saw a lot of positives.”

He further said, “Magazines had an ad-edit ratio of 70:30 a decade ago. Today, we (India Today magazines) are at 58:42. But when it comes to newspapers, you can say it is 90 per cent advertising and 10 per cent subscription. So, they are the ones that are taking the hardest hit. We have hiked the cover rates of some of our magazines.”

On the scope for magazines, Bagga explained, “Magazines will continue to grow because there is tremendous scope for them to offer specialisation. Fragmentation in the magazines is a boon to the advertiser as well as the publisher.”

Colors has been a success story in these trying times. Sharing his views on the opportunities that exist, Rajesh Kamat said, “There is a fair bit of opportunity in the media landscape. The factors that matter the most in television are reach, frequency, visibility and impact.”

He added, “These are times to collaborate. These are the times when enemies will become friends, and you would see a lot of that happening.”

Sam Balsara challenged the media model that the industry was riding on. He called on media owners to re-look at the days when revenues were earned through subscriptions. He said, “There is a simple solution for the crises. It existed in the 70’s. But somewhere in the boom time you forget the past. Let the viewer pay for the channel he wants to see. That will automatically cut out waste and it will make advertising rates reasonable. And then we can see rapid growth again.”

Balsara further said, “People say if you increase the rates, the market will grow. I say, in situations like these, the market will de-grow. The way forward is to collectively decide and move towards a 50:50 advertising-subscription model.”

Rao noted that the broadcasters had been pushing and lobbying the Government for rollout of CAS, to which Balsara did not agree. He said, “If I remember right, it was the broadcasters who had opposed the rollout of CAS…” To this, Rao replied, “All broadcasters wish that they were not heavily dependent on advertising revenues. We have been pushing and lobbying the Government for rollout of CAS. And CAS is the answer.”

Speaking on an ideal metrics for effectiveness, Ambika Srivastava said, “It’s about measuring brand experience. We used to have inflated programmes. Today, we have IPL and the rest of the shows. There is a deflation that is taking place.”

The panel discussion concluded with the panelists agreeing on the opportunities that existed for all stakeholders to look at. It will be interesting to see how these opportunities are taken up by the industry to recover from the slowdown and record an over-20 per cent growth once again.

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