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How often do we pause and ponder about industry issues that have a bearing beyond just our rigmaroles? Share insights that can further the common understanding? Or, at the very least, point at things that need to be set right. View Point - an exchange4media platform, will fill this void and become a source of understanding, action and perhaps some inspiration.

"A fully interactive brand channel on UK satellite today exists in what is essentially a walled-garden of some 200 channels, rather than the Wild West of 17 million websites. It reaches more than seven million homes and will drive commerce both electronically and through the brand’s outlets."


Bhaskar Majumdar, CEO, Recreate Solutions

As brand owners and brand managers, we have grown up to believe that if there’s a story to tell about a product, there’s no better way to tell it than through traditional television advertising.

This was true in the times when television was a dumb and flat programming and advertising medium. But, given the changing face of digital interactive television in Europe and USA, the scenario is completely changing.

While 30 or 60 second commercials sell the attractions, plans or the low service cost, consumers have begun to demand entertainment, information and closure in the online world--whether it is through Digital Interactive Television (DiTV) or PC or mobile. It is for this reason that many companies and consumers alike have started to hear a lot more about the ‘Branded Television Channel’. It’s everything that advertising already is--and everything it’s not as well.

Brand channels--bespoke TV channels run by companies/ brands as opposed to broadcasters-- are expected to save money in the High Street by pre-educating the consumer to the retail sell, providing entertainment, convenience and a powerful road-to-market. A brand channel is an opportunity to showcase products and services to potential and existing customers as well as providing impartial analysis and advice to help customers make a choice. The content of the channel will be designed to relate products directly to the consumer--the so-called ‘lifestyle’ sells, aggregating a focused group of consumers to their particular passion. Similarly, brands will be able to really explain what they do and why they’re good to have.

In a nutshell, brand channels will enhance the brand--giving it personality--and encouraging the sale through immersive interactivity and real people. People buy from people--it’s a trust issue…the way companies used to do business.

Gateway to an interactive future

The opportunity to launch a brand channel on digital television is becoming a reality. The smartest players will do so because it is already viable today and more importantly they will do so because of tomorrow. The near future will bring new levels of television interactivity including on-demand/non-linear functionality, and broadband video on the web.

The brand channel will become the gateway to an interactive future. The first in will be the winners. If you don’t open that gateway soon, your competitors probably will.

But back to today. Even if businesses are sold on the concept, the power, the possibilities and the inevitability of it all, where’s the catch? Can brand channels really support their own costs, let alone make money? While it’s still early days, it would seem the answer is yes.

A fully interactive brand channel on UK satellite today exists in what is essentially a walled-garden of some 200 channels, rather than the Wild West of 17 million websites. It reaches more than seven million homes and will drive commerce both electronically and through the brand’s outlets, either physically or electronically-based.

Thomas Cook TV

Thomas Cook recently launched a channel on Sky Digital, UK’s DTH platform, making it one of the first companies in Europe to give its brand name to a TV channel. Thomas Cook TV is broadcast 24 hours, 7 days a week and features programmes from Madrid to Mexico as well as flights and late deals.

The channel drives sales to Thomas Cook’s 700 High Street stores, call centres and web operation and is seen as an integral part of the company’s CRM process. Thomas Cook has also recognised the value of its digital video assets; footage from the channel can be used for in-store and broadband web applications. When broadband becomes more widely available, Thomas Cook will be able to send its customers video files of holiday options they have seen from the channel. Since Thomas Cook launched its channel in December 2001, there have been rumblings from a number of UK companies who are looking to follow suit. A recent KPMG report predicts that up to a quarter of major retailers in the UK will have launched a brand channel in the next three years. That’s quite a significant market when you think about the type of companies who are likely to launch a brand channel. But the thing to keep in mind is that while brand channels may be the way forward, there is a lot to think about if you want to make money. After all, brand channels have to cover as much as 24 hours a day, 7 days a week. So how does that work?

Changing production values

Brand Channels are not the BBC or ITV--people won’t watch them for 15 hours a week.

Prudent scheduling and constant updating will allow the channel to remain fresh and provide something new for the viewer at all times. Much of the ‘freshness’ will be provided by ever-changing interactive information and opportunities in the broadcast stream, which is obviously cheaper to produce and change than television programmes itself.

The amount of television content is somewhat defined by the revenue possibilities, but there’s one thing that is obvious: Without the mass audience of terrestrial channels none of this can be achieved through old broadcast models and budgets--and here traditional television companies will struggle.

In producing content for brand channels the television equipment has to cost less and be smarter, the number of personnel has to be less; and each of them will have to cover several skill sets and the production workflow has to be invented once and repeated a thousand times whilst producing very different looking programmes. The whole process also needs to be very commercially focused. Just four reasons that traditional media companies don’t fit the bill when it comes to brand channels.

The bottomline

And so, what should it cost? Realistically a 24x7 channel of quality delivered to over five million homes (on Sky alone) with in-programme interactivity, and integrated into an existing e-commerce platform will cost £6-10 million per annum. Realistically, that’s only a small slice of the marketing/advertising budgets for the kind of companies that will develop these projects.

So typically, a big brand like Citibank can have a 24x7 branded channel running at about £ 8 million per annum. Their annual budget for television spent on other channels like BBC and iTV is well over £ 100 million. They have over the years believed in television advertising so why would they not just come with a channel for their own.

For bricks and mortar retailers, brand channels represent part of a huge cultural revolution with increasingly sophisticated consumers demanding 24-hour multi-channel access to their goods and services. The key is shrewdly blending all channels – High Street, catalogue and electronic into a complementary and compelling consumer proposition. At the top of this pyramid is the brand, and selling that is the job of the brand channel.

There is strong talk of P&G coming up with its own branded channel, which was to cater on a 24x7 basis to the P&G three--Family Care, Personnel Care, Household Care. This would be completely interactive with details on all P&G product lines, etc. To do this, P&G is believed to have kept aside a budget of £10 million, which is a small percentage of their European marketing costs.

The Indian context

In India, all it would cost to launch a digital channel with 4-hour fresh programming a day would be about Rs 20 crore on programming and another Rs 10 crore on infrastructure costs.

For Rs 30 crore, a brand would have a high quality channel on a 24x7 basis showing thematic programmes reflecting their brand value. Compare this with Hindustan Lever ‘s annual advertising spent of close to Rs 500 crore in television in other channels and the other marketing expenses.

When the global brands are thinking, “branded channels in Europe and USA, can they be far behind in India”. And if this happens, the traditional advertising model will take a toss. To quote Sir Martin Sorell on global advertising trend, “The massive dip in ad spend was 85 per cent cyclical and 15 per cent structural. Brands and retailers recognise the corporate and consumer value of having a 24/7 in more than 30 per cent of target homes. This is impacting the traditional advertising ethos.”

 
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How often do we pause and ponder about industry issues that have a bearing beyond just our rigmaroles? Share insights that can further the common understanding? Or, at the very least, point at things that need to be set right. View Point - an exchange4media platform, will fill this void and become a source of understanding, action and perhaps some inspiration.
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exchange4media has been calling me for my Viewpoint, but like a true advertising person, I have no time! So I decided to write it in sleep (if you can walk in sleep why can't you write in sleep?) If it hurts your sensibility or you disagree with my views, please disregard this as a piece of junk - because I know it is impossible to pour water in a glass full of water - to give gyan to advertising gyanis.
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