Guest Column: TRAI ad cap will get many in the line of fire

TRAI ad cap directly affects $4 billion of media investments; it’s a serious issue for the advertising and marketing industry, says Gopinath Menon of Melon Media

by Gopinath Menon
Published - May 22, 2012 8:44 PM Updated: May 22, 2012 8:44 PM
Guest Column: TRAI ad cap will get many in the line of fire

The recent ruling by TRAI is giving television network CEOs sleepless nights. TRAI has announced in a new diktat that only a maximum of 12 minutes of advertising time will be allowed in an hour’s broadcast. This is universal and will apply to all the genres across more than 600 channels.

Since we were referring to almost $4 billion of media investments by brands across the spectrum and content investments of the same degree, it’s a serious issue not just for the media industry but for the advertising and marketing industry as a whole. There will be many in the line of fire.

Media economics and the classic series of errors
Over 90 per cent of TV channels survive only on advertising revenue as subscription revenue has always been a dream. In any market if you give away good content for free, the consumers will be spoilt and will always demand it free.

This has been the number one mistake of channels as there has seldom been a cover price on them. It is here that credible channels such as ‘The Discovery Network’ took some pertinent decision on subscription rates years ago to ease the pressure on advertising and also build stickiness with the viewer.

The second mistake has been the casualness of the news delivery across languages. The objective has seldom been to inform or enlighten. It has been more to shock the audiences. This made each news channel within a certain language nothing but a photo copy of the other. As a result there is no differentiator left for viewers to identify with.

The third mistake was under charging the value of the spoken and seen. I was part of the team that launched the first news channel in Hindi – Aak Tak. Twelve years ago the same programme on DD Metro commanded over Rs 90,000 for a 10 second slot but when it took shape of a channel it came down to an average of Rs 4000 for 10 seconds. The rationale was that it had moved to a 24 hour channel and was not a half hour programme. But this price strategy was the benchmark for all news channels to be launched after Aaj Tak. It was carnival time for media buyers as they started juggling thousands of spots for very little money and the bigness of television was being talked in all relevant platforms.

The fourth mistake was the unreasonable charge that cable operators demanded from the new entrants to let them pass through their gate to the viewer. This cost kept on ascending in the last decade and it hurt not only the newer entrants but also the earlier ones who were paying reasonable amounts as annual gatekeeper fees. New price strategies had been worked out by the local cable operator and the consortiums as they very clearly knew that they were in it for the short haul as the DTH Monster was e lurking close to eat up the local cable guy. The networks still succumbed and hence business models became unfriendly to profit in the distant future. So all channel heads started talking about ‘net worth’ and ‘building scale’ as focused objectives.

The implications of the diktat
Since advertising inventory needs to be cut down, to maintain the same levels of operational logistics you need to enhance price per second. This in most of the channels across genres will be over 60 per cent than the existing rate per second. This simply means that advertisers need to invest that much more to maintain the same levels of frequency, and this does not seem to be a feasible option. Clients normally plan for the year and keep a reasonable figure for inflation but certainly not close to 60 per cent increase.

So channels will get dropped, media planning will gain significance as optimisation will become key. Action at the media agency will change fast as accountability will be key to media plans. This will be a good thing as wastages will come under scrutiny and heads will roll if plans deliver efficiency but no effectiveness. The challenge will be to make products fly off the shelf with lesser frequency of exposure and hence greater media and market connect will emerge. This will please brand managers but ensure that the CEO will question past performance as to why was it not practiced earlier.

We will see channels adopt different modus operandi…some will be up for sale, some will try and cut overheads in the immediate future by reducing the wage bill, some will cut down on production values, reduce the promotional budgets for appointment viewing and new programme launches.

What about the custodians of the written word?
Not many years ago the key mainline dailies of each metro was a modest 12 pages and on weekends went up to 16 pages. It was enjoyable to read and advertising did not come in way of content. Now reading the morning paper has become cumbersome and without purpose, as its increased size to almost 40+ pages on weekdays and more on weekends. To top it, if you shake the normal newspaper you will have at least 10 different leaflets dropping out. Courier services, dentists, food courts, and travel agents – all promise you the offer of a lifetime. Each one is investing tonnes of money to be placed in that august environment but no reader worth his salt gives it a second look.

So the critical question is that is there a ceiling on how much you can put into the morning paper to ensure that the reader gets enlightened and informed in spite of being devoured by the idiot box the night before? This needs pondering or else we will be bequeathed novels in the morning carrying same titles every day.

To sum it up, it will be become less joyful and even more stressful for all those who came into this business with different expectations and different goals. Any business which is stressed for a healthy balance sheet will find it difficult to attract quality talent as well.

However, for the viewers, clarity will emerge on what to expect from each television channel and this might ensure stickiness in the future and help build brands build businesses in the long run.

The author is CEO, Melon Media of Crayons Communications Group

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