While fragmentation is not new to the broadcast space in India, the end of 2007 marked an increase in the number of players in the mass entertainment genre. With the biggest consumer of the advertising revenue set to see more competition, big moves will be the order of the day, and one of the first ones that are already being seen is that of clients and channels engaging in long term relations.
Whether it is the three-year deal between HUL and new player INX Media, or leader in the space STAR India’s two-year deal with Airtel, or NDTV entering into a five-year deal with Kingfisher for its lifestyle channel NDTV Good Times – channels and clients are trying to secure longer relations. Industry heads are of the opinion that for new players as well as established players, certainty and other long-term benefits are the need of the hour with increased competition.
While such deals benefit all involved, the only cases that could be seen as drawbacks are when channels guarantee category-exclusivity for any client while closing a multi-year deal. Another school of thought is that long-term relations also mean a challenge for media agencies. Some believe that such deals reduce the role of the agency per se, but many also believe that long-term deals bring bigger risks and agencies need to be more watchful.
Commenting on the new trend, Rahul Welde, VP, Media Service, Asia AMET, HUL, said, “Such deals benefit all concerned, and perhaps the two obvious ones are certainty for the buyer and the seller, and various other advantages that come from longer term relationships. The fact that more such examples are coming forward now is a sign of the maturing industry.” When asked on the impact on the relationship with an agency, he said, “The agencies are a part of a deal like this, and they will always be dealing with the channel for the day-to-day activities. A long-term relationship of this kind doesn’t minimise the role of an agency in any way.”
STAR India CEO Uday Shankar gave the bigger picture here. He said, “Our industry has been a victim of only transactional relations with very little business building perspective for clients. We are speaking to clients season to season or campaign to campaign, which is quite bizarre when we are speaking to them every year. Even when you buy vegetables with the same vendor, you get special treatment. The value of money can be manifested in many ways, whether it is cheaper value or a larger objective to promote business needs. If you don’t have long-term relationships, it is difficult to work closely with the clients.”
“If you look at it, there are no drawbacks for either, simply because both sides are moving away from immediacy and lack of results to a relationship that has much deeper roots. Selling and buying in this country largely has been like transactions at traffic lights. You try and beat rates before the lights change. The idea of long-term deals is to try and change from there to something that is far more stable and has more organic roots,” Shankar added.
Lodestar Universal’s CEO, Shashi Sinha, explained here, “The increase in competition will force people to see beyond what they otherwise have been doing. Long-term deals will bring benefits to both advertisers and channels. The clients would be able to enjoy certain rates and benefits and in the case of new channels, if the channels take off, then the risk has paid off. For new channels, it also means getting names of big advertisers to show.” Speaking on the roles of agencies, he said, “A longer relation is far more challenging for an agency, because it means a longer risk. The agency has to ensure that throughout the advertiser is being able to make the most of the deal.”
INX Media’s Group Director, Sales, Probal Gaanguly, said, “In the course of fragmentation, channels and clients would be looking at long-term partnerships where they can bank on each other. Channels would be able to choose only a certain number of clients who they can do these partnerships with and likewise for clients as well.” Is offering exclusivity a drawback? Gaanguly replied, “The channel and the client both would want dominance on the other, and that is really what exclusivity does.” He further said that the meetings between agencies and channels, especially negotiations, would be decreased in the case of long-term deals. “Not that discussions reduce, but they can be at a different level, once you are out of the negotiation process, and that is another advantage that multi-year partnerships like this bring,” he added.
Mass channels are going to do a lot more than just long-term deals to protect themselves with the increasing competition, and advertisers, too, would be looking at making the most of the situation. What STAR India and INX have done, is just a beginning.