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It’s Reach over Frequency in TRAI’s ad regulation

It’s Reach over Frequency in TRAI’s ad regulation

Author | Noor Fathima Warsia | Tuesday, May 29,2012 3:21 AM

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It’s Reach over Frequency in TRAI’s ad regulation

While there still seems to be some time before TRAI’s (Telecom Regulatory Authority of India) ad regulation that restricts commercial time to 10+2 minutes and asks for a 15-minute gap between two ads comes in play, the industry is divided in two clear pockets on the subject. First – those who believe that the regulation will prove detrimental to television and will squeeze out the smaller players. And second are those who believe that irrespective of the short-term implications of the regulation, it will bring long-term benefits to both, viewers and marketers.

Reach and not frequency focussed media plan
One of the first implications of the new order would mean television demand skewing towards certain channels and properties. “Reduction in ad time will not increase ratings. Once the 15-minute ad gap is in place, content-ad break pattern will become predictable. This will neither enhance viewing experience nor help advertiser in getting incremental ratings. The viewer knows he can come back to the programme after three and half minutes. The additional money the advertiser pays will not get compensated by increase in the slot TVR, which means we would pay Rs 110 for the same number of eyeballs tomorrow that we pay Rs 100 for today,” explained Madan Mohapatra, Chief, Marketing, Future Group.

As marketers are unlikely to increase budgets on this count, the likely impact is a more careful selection of channels. “The increased cost of channels will make life difficult for the frequency channels whose selling model itself is based on higher inventories,” observed K Raghavendra, General Manager, Marketing Services, Jyothy Laboratories.

The channels added towards the end of the planning stage, which typically are the frequency channels such as movies, music and other such niche, are likely to be eliminated as the mix becomes more focussed on reach than frequency.

Channels will choose advertisers
While on one hand marketers will look for certain kind of channels in their mix, chances are that channels too will have to pick which advertisers they can accommodate given the cap on advertising and the fact that shortage of commercial time in one clock hour cannot be carried forward to the next.

New cost equations may lead some marketers to explore other media instead of television but for many, television is still the strongest mass media. “Advertisers are still traditional in their thinking. Since, they want a television commercial, chances are that they will spend. Television is the most power media today and advertising is the raw material for any big brand to maintain its position,” pointed out Anjana Ghosh, Director, Business Development, Bisleri International.

Depending on how the market forces of demand and supply shape up, a situation where channels are unable to accommodate advertisers will arise.

“Let’s imagine that the top four or five GECs, which have strong programming, will increase their ad rates and the advertiser who has been buying those spots continues to do so. There eventually will be a fight between those advertisers because if channels could accommodate 10 advertisers today, in the new order, they would be able to take only six or seven. In which case, they would choose depending on who pays their price or such factors,” said Mohapatra.

The ripple effect
The pressure on inventory may lead some advertisers to look for newer options within television as well. “It may so happen that the smaller channels start getting advertisers to pump money in them,” said Ghosh and added, “I am hoping this regulation will bring in a change. The advertiser will start looking at channel options more pragmatically and not decide on basis of popular programmes and events. Advertising on popular channels and show are becoming more exorbitant. It’s cheaper to give schemes on product to enhance brand value rather than advertise.”

As marketers become more selective in choosing channels in their mix, and even if some of them do bet on the smaller channels in the advent of constricted inventory, chances are that the frequency channels will face some of the toughest times ahead that will challenge their survival.

Nonetheless for some marketers, the most awaited reforms have set in. Raghavendra summarised, “We, marketers are collectively responsible for the share of noise and black-hole investment strategy. TRAI’s ad regulation may cause a backlash of scarcity but it has the potential for effective messaging with minimum exposure.”

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