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Guest Column: Should BARC cut the NCCS finer for better TG Definition? Malli CR

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Guest Column: Should BARC cut the NCCS finer for better TG Definition? Malli CR

If everyone is special, then no one is – The Incredibles

In the BARC TV rating system, viewership will no longer be reported on the old Socio Economic Classification system (SEC). Rather, it is going to be on the New Consumer Classification System (NCCS). TV reporting would be in 4 cuts on this dimension – NCCS A, B, C & D+E

The gist of this article is that the NCCS does not discriminate consumption for low penetration categories at the AB definition level versus SEC AB. This includes categories such 4 wheelers, Air Conditioners & Internet Consumption.

However, the NCCS shines versus the SEC and completely outperforms it when one compares NCCS A1+A2 with SEC A. BARC should consider reporting at a granular level by breaking down NCCS A into its two constituents - NCCS A1 + NCCS A2 and A3. This is critical for television planning in low penetration, upscale products. If TV measurement does not discriminate for these categories, the flight of spends from TV to digital could accelerate.

The NCCS has been constituted to replace the erstwhile SEC and help define target audiences that can discriminate consumption of their categories better. Surprisingly, there is very little literature available in the public domain regarding the New Classification System. The NCCS is supposed to overcome the limitations of the old SEC.

We chose AB as a first-level filter of analysis. Often, even upscale brands end up using AB as the target audience to overcome sample size limitations in the current TV measurement system

If the NCCS is a better discriminator than SEC, it should discriminate better the lower penetrated categories in AB Households.

To examine this, I have used IRS 2013 data that provides HH classification on both the SEC as well as the NCCS dimension. As a measure of discrimination ability, I have compared how different the penetration of various product categories in the Top 2 segments (A & B) is vs. the Universe. In other words, this index is nothing but the old workhorse index of media planning – the skew. The larger the Index, more is the discriminating ability.

                                               PENETRATION IN UNIVERSE.

Say, the penetration of air conditioners in SEC AB is 16% and that in NCCS AB is 13%. The overall penetration of air conditioners in urban India is 6%. Then the Discriminant Index for SEC AB = 16/6 = 2.68 as against that for NCCS AB = 13/6 = 2.15. In this case, SEC is a better discriminator of Air Conditioners than NCCS

We computed the Discriminating Indices for a host of FMCGs, durables and media consumption variables, and the results were stark. The old, plain Jane SEC outperforms the NCCS in discriminating ability across low penetrated categories when the audience is AB! These results are unerringly consistent, as the category penetration level gets smaller.

The table below shows the comparison between NCCS AB and SEC AB in descending order of urban penetration. From the almost ubiquitous edible oils (89% urban penetration) to two wheelers (36% urban penetration), the NCCS discriminates better than SEC. However, starting with coffee (24% penetration) and up to processed cheese (at 4% penetration), the NCCS outperforms the SEC. Cells shaded in green imply that index is higher than its adjacent counterpart.

Category Urban Penetration SEC AB Discrimination Index NCCS AB Discrimination Index
Edible Oil 89% 1.00 1.03
Toothpaste 89% 1.02 1.04
Sugar 88% 1.00 1.02
Ceiling Fan 87% 1.08 1.13
Mobile phone 86% 1.07 1.09
Tea 85% 1.02 1.04
Television 78% 1.16 1.23
Fabric Washing (Powders/Liquids) 77% 13.7 14.2
Fabric Washing (Cakes/Bars) 76% 12.9 13.6
LPG Stove 72% 1.23 1.32
Agarbatti 66% 1.06 1.07
Biscuits 66% 1.15 1.16
Television [Everyday] 63% 1.17 1.24
Utensil Cleaners (Powder/Liquids/Bars/Pastes) 53% 1.24 1.29
Fridge-Refrigerator 43% 1.65 1.86
Toilet Cleaners 42% 1.51 1.53
Two Wheeler 36% 1.65 1.86
Coffee 24% 1.58 1.52
Washing Machine 21% 2.08 2.07
Floor Cleaners 21% 1.84 1.79
Personal Computer / Laptop 17% 2.15 2.05
Ketchup / Sauces 13% 2.09 1.90
DVD Player 10% 1.75 1.76
Milk Powder / Dairy Whitener 10% 1.27 1.19
Car/Jeep/Van 9% 2.46 2.12
Air-Conditioner 6% 2.68 2.15
Landline telephone connection 6% 2.40 2.03
Internet / Broadband connection / Data card 6% 2.63 2.13
Radio 5% 1.66 1.56
Audio System (Any device connected to external speakers) 4% 2.19 1.93
Radio [Everyday] 4% 1.40 1.37
English Daily 4% 2.64 2.07
Microwave Oven 4% 2.80 2.14
Internet [Everyday] 4% 2.28 1.95
Processed Cheese / Cheese Products 4% 2.12 1.84

The NCCS therefore skews better to mass-penetrated categories – which is akin to preaching to the converted. Highly penetrated categories are likely to have more broad-based audiences than just AB.

It is the lower penetrated, niche categories that often target upscale audiences and need sharper discrimination. The older, maligned SEC actually does a better job at the AB audience level! The problem in hand is apparent when one compares the Household dispersion across A, and B in both SEC and NCCS. SEC A & B together account for 43% of urban Households. NCCS A and NCCS B jointly have a share of 67% of urban Households!

How does the picture look in terms of a comparison between NCCS A1 + A2 versus SEC A? In fact, the urban HH dispersion in both these buckets is almost the same. SEC A accounts for 13% of urban HHs and NCCS A1+A2 accounts for 14%. Given the size parity, what does this face-off show?

As the table below shows, NCCS trumps SEC across every single variable when one compares NCCS A1+A2 versus SEC A! It’s a clean sweep. In fact, this in fact raises the hope that if Television Audience reporting were to be done at the NCCS A1+A2 it can truly lead to discriminated plans for lower penetration categories! Cells shaded in green imply that index is higher than its adjacent counterpart.

Category Urban Penetration SEC A Discrimination Index NCCS A1+A2 Discrimination Index
Edible Oil 89% 14.7 14.9
Toothpaste 89% 14.9 15.2
Sugar 88% 14.4 14.6
Ceiling Fan 87% 15.7 16.2
Mobile phone 86% 15.4 15.8
Tea 85% 14.3 14.7
Television 78% 15.3 16.2
Fabric Washing (Powders/Liquids) 77% 13.7 14.2
Fabric Washing (Cakes/Bars) 76% 12.9 13.6
LPG Stove 72% 15.1 16.1
Agarbatti 66% 11.4 11.8
Biscuits 66% 12.9 13.6
Television [Everyday] 63% 15.3 16.2
Utensil Cleaners (Powder/Liquids/Bars/Pastes) 53% 11.8 12.8
Fridge-Refrigerator 43% 13.3 16.0
Toilet Cleaners 42% 11.9 13.1
Two Wheeler 36% 10.7 13.5
Coffee 24% 7.6 8.6
Washing Machine 21% 9.5 13.4
Floor Cleaners 21% 8.2 9.6
Personal Computer / Laptop 17% 8.4 11.5
Ketchup / Sauces 13% 6.0 7.3
DVD Player 10% 3.9 4.7
Milk Powder / Dairy Whitener 10% 2.2 2.3
Car/Jeep/Van 9% 5.7 8.0
Air-Conditioner 6% 4.5 6.1
Landline telephone connection 6% 3.7 4.4
Internet / Broadband connection / Data card 6% 4.0 5.0
Radio 5% 1.7 2.0
Audio System (Any device connected to external speakers) 4% 2.4 3.0
Radio [Everyday] 4% 1.7 2.0
Microwave Oven 4% 3.1 3.8
Processed Cheese / Cheese Products 4% 1.8 2.2

BARC comes with a larger sample. If some of this additional sample can be used to slice the HH definition further into NCCS A1+A2, it can significantly help in improving plans for low penetrated categories targeting upscale audiences.

Also, BARC is missing an opportunity here. An NCCS A1+A2 reporting with adequate sample size, rather than just NCCS A, would give special interest & niche channels weaponry to take on the digital transition threat that they face. In the current TV planning paradigm, decisions on niche channels are being taken largely on the basis of gut. That is a risk for the future of these channels as several digital vehicles directly compete with them and are cheaper. Without robust measurement, the flight of advertising spending from the niche channel pie, that accounts for close to 15% of advertising expenditure, to digital could accelerate.

The author is CEO of SMG India.



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