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The Face of Marketing

Volume VI G Issue 4 G January 2009

Rs 45

THE GREAT MEDIA

SLOWDOWN The 6th annual Pitch-Madison Media ADVERTISING OUTLOOK 2009 records lower than expected growth in 2008

Now, get ready for the BIG Media MELTDOWN


REVIEW 2008/INTRODUCTION

THE GREAT SLOWDOWN By AMIT AGNIHOTRI

A

fter five uninterrupted years of scorching growth, the great Indian media juggernaut has finally slowed down. And the slowdown is pretty dramatic! While 2008 recorded a healthy 17 percent growth rate, its the prospects of 2009 that are sending the chill down the spines of the media honchos, who’re taken up so much by the raucous growth of the recent past. Riding on the giddy GDP growth rates of over nine percent in past few years, the media and advertising industry grew by close to 20 percent for 2005, 2006 and 2007. But it all came to an abrupt end in 2008—to be precise, in the last quarter of the year. As the reality of the global meltdown touched the domestic shores, and our economy began to slowdownfrom nine percent to about seven percent, the advertising expenditure slowed down too. Added to this were the woes like the worst terror strikes in Mumbai and the spiralling inflation rates, and the Great India Growth Story remained no longer as rosy. According to the Pitch-Madison Media Advertising Outlook 2009, our sixth annual study, the advertising

16 I Pitch I January 2009

and media industry grew by 17 percent. However, this is lower than the 22-percentage points growth at Rs 21,314 crore that we had projected in our fifth Survey in the beginning of 2008. By contrast, our estimates record that the advertising and media spends grew by 22 percent in both 2006 and 2007.

last quarter has shown strong stagnancies and even declines in media spending across media platforms. Primarily, the slowdown in advertising spends over the past couple of months has contributed to this lowerthan-the-projected growth rate. The Survey notes that since November, advertising spends have

14,505 2006

11,915 2005

The AdEx for 2008 is pegged at Rs 20,717 crore, breaching the Rs 20,000-crore-mark for the first time. Last year, the industry size was pegged at Rs 17,690 crore. While during the first nine months, the media spends were on track, the

taken a beating across different sectors. While consumer goods players still continued to show stable media spending, we note that several bigspenders such as automobiles, retail, durables, real estate, travel & tourism, banking, insurance and


PRINT

MEDIA IS HERE

18%

16%

Actual 2008

Estimated 2008

21%

2007

TELEVISION

21, 314 2008 Projected Growth

20,717 2008 Actual Growth

22 % 17%

Actual 2008

17,690

Estimated 2008

19%

2007

2007 RADIO mutual funds have shown significant declines or stagnancies during the last quarter of the year. This has had negative impact across the media platforms we track—print, television, outdoor, radio, the Internet, and cinema. Of course, the impact of the slowdown hasn't been uniform—some sectors

17%

growth the media and advertising industry posted in 2008—5% less than our forecast

like cinema and outdoor have been hit the hardest, while others like the digital media, and to some extent, even television have remained less impacted. While the digital media clocked a growth rate (45 percent) that we projected, television managed to grow at 17 percent. The print media grossed ad revenues of Rs 9,825 crore in the reporting year. It grew by 16 percent in 2008 and continued to hold its place as the biggest player in the media mix with a share of 47.4 percent. On the print media, the big spenders include education, real estate, automobiles, banking and financial institutions. Other than education, other sectors have also shown significant slack post-festive season. Also among the

38 %

Actual 2008

68%

40%

Estimated 2008

2007

INTERNET 52% 45%

Actual 2008

45%

Estimated 2008

2007


REVIEW 2008/INTRODUCTION

HOW THE AD-PIE STACKS UP Outdoor Cinema

6.8%

Internet

1.7%

0.6% Radio

3.2%

Television

40.2% Press

47.4%

banking and financial institutions, while insurance spends remain buoyant, other sub-sectors such as banking, mutual funds, loan advertisements etc, and corporate advertising have shown major declines during the last two months of the reporting year. Second to print is television which fell short of last year's projections of 22 percent growth to reach 17 percent but maintaining its total share at 40.2 percent at Rs 8,319 crore. The reasons for television to have clocked a somewhat better percentage growth is that the FMCG sector, which contributes close to 50 percent of television

18 I Pitch I January 2009

spends, remained unaffected by the slowdown. Outdoor, the third biggest medium in terms of size, was badly hit. It posted a growth percentage of just 11 percent to reach Rs 1,419 crore. We projected this medium to grow

22% is the growth rate that we’d forecast for the media and advertising industry

14 percent. The cinema medium also took a big hit in 2008, in fact the hardest hit among other media platforms, due to a very poor showing by Bollywood, coupled with the economic slowdown and the recurring terror attacks. The bright spot for the media sector in 2008 were the Internet and radio. Radio garnered ad revenues of Rs 662 crore, thus growing at a whopping 38 percent. From just a Rs 200-crore medium in 2005, radio has virtually trebled its size in three years! And with just three percent share of the overall ad spend, this medium has a lot of potential in near future. The Internet is the other winner of 2008. It grew at 45 percent to reach a size of Rs 363 crore and a share of 1.7 percent of the ad pie, up from 1.4 percent in 2007. We have noted an important trend in the year gone-by. In times of slowdown, marketers demand for more return on their investments, measurability and immediate impact grew louder. We spoke to about 20 of the leading marketers about their marketing emphasis in 2008 and 2009, and almost all of them said that 'brand activation' or 'brand promotion' activities that resulted in immediate sales, is what they wanted to put higher priority on. And this makes us believe that the new year could well be the inflection point for the relatively amorphous below-the-line industry in the country. Read more on this trend inside. I


PRINT 9,825 2008

BIG BRO SLOWS DOWN

8,470 2007

7,000 2006

ADEX TRENDS SINCE 2003 After a hefty 21% growth in 2007, print saw its speed slowing down to 16% in 2008.

4,303 2003

20 I Pitch I January 2009

23% Figures in Rs Crore

5,700 2005 4,961 2004

16%

15%

15%

21%


2008

The print media still commands the lion's share of the Rs 20,717-cr ad pie at Rs 9,825 cr, despite a major dip in spends by major advertising categories in the last quarter of 2008 By DEEPTI AGGARWAL

A

dieu 2008! That is what the print media industry must be saying to itself, as it will not be erroneous to say that 2008 wasn't particularly good for the industry. If the initial eight-nine months did create some ripples, the post-Diwali period ended up with whimpers for the industry which was already trying to come to terms with the increasing input costs, driven mostly by the skyrocketing newsprint cost. Advertising also nosedived from November which otherwise, being a festive season, is a high ad spend period. As the Pitch-Madison Media Advertising Outlook 2009 suggests, ad spends attracted by print in 2008 was a result of price rise coupled with increased demand leading to strong growth during the year except

for the last quarter as advertisers cut down on print spending. Despite all this, the print medium continued to command the lion's share in terms of advertising money, at a sizeable Rs 9,825 crore of the Rs 20,717crore ad pie, according to the our Survey. Registering a growth of 16 percent, print fell by two percentage points short of our last year's projection of a good Rs 9,995 crore over 2007’s figure of Rs 8,470 crore when it grew by a smart 21 percent. Albeit continuing to be at the helm, print lost a marginal share and picked up 47.4 percent of the ad pie from 47.9 percent in 2007. A cursory look at the year gone by clearly reveals that most of the publications mirrored the sentiments throughout the year. In the first three quarters,

the medium witnessed a hell lot of expansion across forms, genres, regional languages and geographies, but as the year approached its end, the enthusiasm lost steam with plans shelved and issues taken off the stands. However, bringing some relief to the gathering mayhem was a policy overhaul in December with the government making a provision for allowing a straight 26 percent foreign direct investment in general interest magazines and a 74 percent slab for special interest publications. Another major policy development was the opening up of the doors for foreign magazines to publish their Indian editions. The growth specifics of individual players emphasises that double-digit growth, which had been a trend for the


PRINT industry for the past few years, has given it a miss this time. Commenting on the year-on-year growth estimates and ad revenue in percentage terms, Outlook Group president and publisher Maheshwar Peri reflects, "I’d be certainly happy if we manage to retain what we did in 2007." Echoing similar sentiments, India Today group chief executive Ashish Bagga says his group expects a five to seven percent growth, less than half of last year's figure, as he adds, "print has declined more sharply, which has been very stark since the past few months." This sentiment, however, isn’t shared by regional players. As Lokmat director for advertising and business development Jwalant Swaroop understands, "barring November, our projections have been on course and hence we have had a decent growth of around 25 percent; we hope to continue that till December." Pinning his hopes on local advertising, he says, "if marketers would be able to provide the right products at the right prices, I don’t foresee any significant drop in consumption in the coming months. We hope local advertising will grow as usual." Drawing confidence from the good performance of local players, he informs that "regional markets won't be impact-

ed in a major way. Markets are expected to move steadily and appeared to be insulated from any slowdown and hence there hovers ample reason for advertising spends in these markets. Besides, various packages announced by the government are likely to render a positive impact." Another leading regional player Malayala Manorama posted around 15 percent growth in till November, says its general manager for marketing Varghese Chandy. Another strong player from Kerala is Mathrubhumi, which also had a good year. Its marketing director MV Shreyas Kumar says the groups’ ad revenue increased by around 25 percent. Nonetheless, he cautions, "the third and fourth quarters will see negative growth compared to the rest of the year." A good glimpse of the share of the adspace reveals that English newspapers while leading the table have experienced a fall of one percent to settle at around 34 percent of the overall print ad revenues, while the Hindi space climbed a solid three percent to reach 27 percent. But Tamil, Telugu and Gujarati lost a percentage point each in their revenue share during the period. However, majority of the vernacular media managed to sustain their existing ad revenue shares.

INDUSTRYSPEAK “For advertisers

operating with lower budgets, magazines become an effective medium delivering better RoI” MAHESWAR PERI, President & Publisher,Outlook Group

"Advertisers are cautious when the communication shifts from 'gloss and feel good' to work on functional utility"

RAJIV JAITLEY,

President-Marketing & Ad Sales, Dainik Bhaskar In terms of readership based on IRS Round 1 of 2008, print on the whole failed to impress. Magazines have also put up a weak show. Some of the top line numbers from the latest IRS findings put the traditional leader Dainik Jagran at the helm with a percentage loss over its earlier readership base. Trailing it at second and third slots are Dainik Bhaskar and Hindustan, respectively. Among the English titles, the Times


2008

“Print has declined more sharply. The decline has been marked in the past few months.” ASHISH BAGGA, CEO, India Today Group

“Regional markets won't be impacted badly and seems to be insulated from any major slowdown impact” JWALANT SWAROOP, Director-Advertising & Business Development, Lokmat Group of India continues to hold ground as the language leader, albeit loosing a fraction of its readership base. The daily has also emerged as the sole English player to manage a spot at the high table of top ten publications. The magazines front too saw their readership base declining. For instance, while Saras Salil maintained its lead in ad revenue share it saw a steep 10 percent erosion in its reader-

ship. India Today English grabbed the third spot after a massive 11 percent degrowth in its readership. EARLY SIGNS However, the year started clearly on a positive note as many an international commentators heralded India as one of the few markets where print continues to make sense. An array of new titles debuted on our newstands, while the existing ones spread their wings far and wide. Be it the increasing number of pink dailies joining the ranks or the periodicals staking their claims on the newsstands, the first three quarters saw a lot of positive growth. On the newspapers front, April saw the launch of a pink paper from the Deccan Chronicle stable titled Financial Chronicle, taking the count of financial dailies to six, while some other well-entrenched players further fortified their strongholds whether it is Times of India heading Southward with a Chennai edition or DNA making forays into Bangalore and Jaipur. Among the vernaculars, some major highlights have been Kannada newspaper Sakshi making a start with a high-voltage marketing campaign. Amar Ujala inched towards further reinforcing its position in UP with its Lucknow edition covering eight districts. Another Hindi language

player Dainik Bhaskar launched six editions in Chhattisgarh and, Bhilai, Jagdalpur and Ratlam in MP and strengthened its Northern presence with launches in Punjab, Haryana, Chandigarh, Rajasthan and Himachal. The year also saw a first with the pink dailes—the Economic Times and Business Standard—going the vernacular way by launching Hindi editions. It has also been an exciting time for magazines as they replicated the same story. Outlook Profit and Outlook Lounge from the Outlook group hit the stands in February. The group also collaborated with Gruner+Jahr (G+J) International, the largest European magazine publisher, to launch a licensed edition of Geo in the country. WorldWide Media also launched Indian editions of style magazine Grazia and BBC GoodHomes, while Condé Nast India launched the GQ Magazine. While the India Today group and Axel Springer joined hands to launch Auto Bild, lifestyle magazines like Vaartha group hit the stand with Jade and Beat from the Mid-Day-Maxposure stable along with literary title The Caravan. Overall, the market looked strong enough with advertising revenues consistently pouring in. As Times of India chief executive Ravi Dhariwal shares,


PRINT

Top Spenders on Print Advertisers

2006

2007

2008

Pantaloons Retail

6

6

1

Miscellaneous

1

1

2

LG Electronics

8

4

3

Maruti Suzuki

4

3

4

SBI

31

10

5

Planman Consultants India

13

12

6

Tata Motors

10

13

7

General Displays—Shops

5

5

8

Nokia

15

7

9

BSNL

19

11

10

Samsung

14

15

11

General Displays—Obituaries

12

8

12

Sony India

43

21

13

Reliance Communications

11

14

14

Cox & Kings India

97

51

15

Hyundai India

29

18

16

Hewlett-Packard India

3

9

17

General Motors India

27

17

18

Hindustan Unilever

17

16

19

TVS Motor

18

27

20

"2008 was good till pre-Diwali. Advertising remained strong till the time global slowdown set in. Reader ship too, on the whole, saw an upsurge during the year.” As the first three quarters showed no signs of any slowdown, various players reworked their card rates to offset the impact of rising input costs, especially the high newsprint cost that spiralled more than 30 percent to touch $850 a tonne in March. The market leader Times Group hiked its card rates by 40 percent. While the newspapers did not effect any hike in cover prices, magazine majors not only revised their card rates but also jacked up thier cover price across. However, the effect of input costs heading north coupled with a dip in ad revenue had some newspapers heavily cutting down their pages. SECTOR-WISE SLOWDOWN EFFECT If the first half was replete with positive news, the second half set the alarm bells ringing. As the slowdown began to be felt, ad spends dried up affecting the health of the print industry in a drastic manner. As HT Media chief marketing officer Nilanjan Shome says, "some launches came in the early part of the same year when the economic outlook was still buoyant. As the ominous effect of the slowdown crystalised in the last


2008

English & Hindi dominate ad spends share Language

2007*

2008*

% Gain/Loss

English

35%

34%

-1%

Hindi

24%

27%

3%

Tamil

10%

9%

-1%

Marathi

7%

7%

0%

Malyalam

6%

6%

0%

Telugu

7%

6%

-1%

Gujrati

5%

4%

-1%

Kannada

2%

2%

0%

Bengali

2%

2%

0%

Oriya

1%

1%

0%

Assamese

1%

1%

0%

Punjabi

1%

1%

0%

Urdu

1%

0%

-1%

*Share of ad space by language

quarter, the key print advertisers like realty, banking/finance, IT/telecom, durables nosedived to the tune of 3040 percent." Malyala Manorama's Chandy feels that the economic deceleration has spared none and has dealt a body blow to the industry. "The high growth rate of over 20 percent that we had been seeing over the last five years is not seen currently."

Echoing similar sentiments, Daily Thathi chief operating officer KR Skandaraaj says, "for the JanuarySeptember period, there’s no problem from across all category of advertisers; the budgets were going according to plan but post-September there was certainly a sudden drop in volumes across categories, with some categories totally stopping spends."

As the marketers began a hunt for better performing media mix, print took a hit as our survey finds out. The November figures indicate that print was affected more strongly than television. This is not surprising given that the big spenders on television are still FMCGs which account for over 48 percent of all television spends. Except education, one of the strongest spenders on print, we find that other major sectors have shown significant slack post-Diwali. Dainik Bhaskar president for marketing and ad sales Rajiv Jaitley expresses this well when he says, "yes, advertisers have become cautious in developing and implementing their plans at a time when the communication needs to shift from 'gloss and feel good' to 'work on rational logic and functional utility'." Our Survey finds that among the BFSIs, while insurance spends remained buoyant, others like banking, mutual funds, loan advertisements etc, and corporate advertising have dropped drastically. As India Today’s Bagga says, “volume/value across most categories has been negatively impacted with auto, IT, durables and realty being some of the prominent ones." Times Group’s Dhariwal agrees that categories like


2008

PRINT How print spends moved in 2008 While October saw the maximum insertions, November had the lowest, with December being slightly better

12

10

8 2007 2008

6

4

Jan

Feb Mar Apr May Jun

BFSIs and jobs have cut down their advertising drastically. As ad revenues came under strain, the industry has lately been resorting to downsizing even. Many a publication have even decided to shut down offices/editions. For example, Sakaal closed its Delhi office, India Today group closed down its Bengali edition and Outlook Hindi was converted into a monthly from its earlier avatar of a fortnightly. India Today group also discontinued its three English supplements.

Jul

Aug Sep

Oct

Nov

Dec

Some magazines also discontinued supplements earlier distributed free of cost with the main product, while new entrants shelved such plans. Also, the launches have been shelved or put on hold. The reduction in the number of pages in many leading publications also signifies the rising uncertainty faced. DNA, which was planning to launch a pink daily called DNA Money seems to have put its plans on the backburner. Business Standard, which entered the vernacular space through

its Gujarati and Hindi editions, has closed down the Gujarati edition. Talk, an English magazine from RPG Enterprises was supposed to hit the stands in September may do so somewhere in 2009. Jagran-Network 18 plan for bringing out a Hindi business daily has also been reportedly postponed. However, many players see opportunity in this adversity as Delhi Press director Ananth Nath says, "faced with the slowdown, most major newspapers are experiencing 10-15 percent drop in ads on a monthly basis. However, magazines seem to be less affected by the slowdown and this may become an opportunity to increase their share in advertising spends." Outlook's Peri also feels that the economic turmoil is actually more of an opportunity for the magazines. “With clients operating with lower budgets, magazines become a more effective medium, delivering better RoI. I think the impact on the magazine industry is lower than that of television and newspapers," he adds with optimism. Similar is the opinion of Daily Thanthi's Skandraaj, who feels that things will somber up on the value front. "I don't foresee any growth given the current signs, but I am confident of growing at least 15 percent," he says. I —deepti@pitchonnet.com


TELEVISION

2008

REINVENTION RULES TV emerges as one of the best performing media, growing at a smart 17% at Rs 8,319 cr, as FMCG players have continued their romance with it, and the phenomenal success of IPL being the icing on cake By DEEPTI AGGARWAL

T

he past 12 months have been extremely interesting. The year was marked with several new launches. In some genres, the new entrant has even upstaged the strong contenders," reminisces Aaj Tak chief executive G Krishnan. The year also witnessed the emergence of many a new icon, while the old ones got elbowed out. With the global economy reeling under pressures and the ripples of it being felt on the domestioc shores, it has not been a very exciting year for the industry despite a flurry of activities all the year round. “In 2008, advertising targets were

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30 I Pitch I January 2009

good. While industries like automobiles, realty and BFSIs cut down their spends, FMCGs are seen to be less affected and so is the telecom sector.� says Star India executive vice-president for marketing Anupam Vasudev. He also quickly adds that since these less affected ones are the major spenders on television, the Hindi GEC space is relatively less impacted. "The advertising trends in 2008 looked very robust as most of the categories continued spending," says Discovery Networks Asia-Pacific senior vice-president and general manager-India Rahul Johri. Evidently, the medium clocked an impressive 17 percent growth at Rs 8,319 crore, and emerged as one of the best performing media platforms in 2008. Although it has missed its target of 22 percent growth based on our last year's projections, it has managed to notch up a few paces in 2008 when a


8,319 2008

7,110 2007

17%

19%

ADEX TRENDS SINCE 2003 TV spends grew by 17%, a long way from 2003 when it was a shade over Rs 4,100 cr

6,000 2006

5,003 2005

4,104 2003

4,350 2004

15%

6% large number of media platforms didn't fare well. In absolute terms also, its contribution rose from Rs 7,110 crore to reach Rs 8,319 crore in the year gone-by. Riding on the growth momentum, the medium continued to sustain its share in the advertising pie at 40.2 percent. As already mentioned, the medium saw a whole set of developments throughout the year. Be it the slew of general entertainment channels that seemed to challenge the market leaders or be it the rise of strong properties like the IPL phenomenon presenting a potent mix of entertainment and sports, 2008 turned out to be an eventful year of sorts. AajTak's Krishnan quips that in some genres the new entrants have upstaged the incumbent leaders. Notably, the newest kid on the block, Colors, a GEC from the Viacom 18 stable not only spoiled the parties of the No 2 and No 3 players but also succeeded in dethroning them from their higher pedastals. Making its

20%

Figures in Rs Crore

debut in July, Colors riding on properties like Khattron Ke Khiladi managed to garner 0.8 percent and closed the year on a strong 3.9 percent in December, taking the audience fragmentation to an all-time high. Even the rise of the debutant to the No 2 slot turned the old formula redundant while dishing out a new content pallet for mass entertainment channels to follow. As Discovery's Johri suggests, while talking about the change in viewership trends, "in the past year, we have seen that peak ratings of some of the highest rated shows on television have dropped so clearly that there has been a lot of fragmentation in the past year." Also, T20 format of cricket packaged as the Indian Premier League did give a challenge to the regular prime-time packages on popular channels. The T20 format streamlined cricket programming to sit plum inside prime-time for the first time in the our television viewing history. Also, the format allowed for broad-

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TELEVISION

Genrewise Viewership Share in Percentages Genres

2007

2008

Southern Channels

25.7

23.8

Hindi Mass Entertainment

15.4

18.2

Hindi Movies

10.9

11.6

Reg Satellite

NA

7.8

News

6.3

5.6

Kids

4.8

5.1

Second Line Mass

4.3

3.3

Sports

3.1

3.3

Music

NA

2.3

Infotainment

1

1.5

DD National

2.2

1.2

DD Regional

1.3

1.2

1

0.8

Religious

0.6

0.4

English Niche

0.3

0.1

Others

NA

13.5

English Movies

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32 I Pitch I January 2009

Growth

basing of audiences, a definite positive for marketers. The effects of the IPL eating into GECs share were seen during the 44-days IPL extravaganza, as the mass entertainment channels reported a 20-50 percent drop in

HOW EXPERTS LOOK “We will pull a lot of money out from television in 2009, primarily because of the lack of clarity in measurement tools PUNITA LAL, Mktg Director, Pepsi

Past 12 months saw many new launches. In some genres, the new entrants even upstaged the strong contenders. G KRISHNAN, CEO, TV Today viewership in prime-time depending on the target audience, as our Survey finds out. And as a result, Max's channel share zoomed to 7.3 and 11.1 percent during the April-May period, respectively, compared to otherwise under-four percent figures. The Hindi GEC space found favour among viewers with as much as 18.2 percent share. Also, the emergence of new channels strengthened the GEC plank in terms of stronger viewership base. Another development that took place in the space was that the saasbahu soaps saw a decline with channels pulling out the shows that had, till very recently, delivered very high ratings. Star Plus, the undisputed leader in the Hindi GEC space, saw a


2008

12

AT IT

How did TV Spends Move in 2008 While October had the highest share of ad spends, November and December were the dull months

We’ll be pumping more money into broadcast space in 2009 in line with our image make over drive that is underway now LK GUPTA, CMO, LG India

The first to reduce advertising spend was BFSIs. Also, there were hardly any IPOs, so the advertising revenues did get hit. RAJ NAYAK, CEO, NDTV Media withering away of its share as it started with 7.1 percent share in January and signed up the year with a platry 3.6 percent in December. Another major event has been the FWICE versus broadcasters tussle in which the broadcasters had to seek refuge in running old programming even as the cine workers went on strike for better pay emoluments. This blip proved to be costly for the television industry which was already under tremendous pressure due to the prevailing economic depressionary tendencies. In the Hindi segment, Hindi movie channels too increased their share to 11.6 percent from last year's 16.45 percent. On the other hand, the format-

10

8 2007 2008

6 Jan Feb

Mar Apr May Jun

based shows, which had become an integral part of any channel's recipe for success to create timely interest waves, delivered a mixed bag of results with highly rated shows like the Shahrukh Khan-hosted game show, Kya Aap Paanchvi Paas Se Tez Hain? not faring too well. Another major visible trend has been the return of mythological epics on the small screen, but even these failed to attract any significant numbers. Another trend that has picked up steam is the rise of English entertainment as more audiences got tuned in to the genre. The kids genre too marked a significant increase to touch 5.1 percent from the previous years' 4.8 percent. Turner India's properties Pogo and Cartoon Network also ended the year on a strong note with 1.3 and 1.6 percent, respectively. As Turner

Jul

Aug

Sep

Oct Nov Dec

International India and South Asia president and deputy managerentertainment networks Monica Tata says, "we have had a good 2008 and with our consistent drive and innovative approach succeeded in posting a robust growth." The way the channels are multiplying also has a major role to play, as ESPN Software India executive vice president for advertising sales, business development and new media Sanjay Kailash puts it, "the result has been that more and more channels have started to innovate in their programming mix—a definitive sign of

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January 2009 I Pitch I 33


TELEVISION

maturity in the domestic electronic media scene. We will have to see how the audiences respond to the innovations in the times to come." The sports genre managed to post a miniscule growth in the overall market share despite the huge success of cricket, notching up 3.3 percent of the adveritising pie. Along with these, the economy and business genre of news got a further thumbs up with UTVi making its debut in April and the Economic Times announcing its plan to launch a channel on similar lines by April 2009. In the general news genre, NewsX finally debuted in the last week of March after much flip-flops. However, the rapid increase in the number of channels was of little help to the genre in attracting additional eyeballs, as it showed a slump from last year's 6.3 percent to station at 5.7 percent in 2008. The travel and science channels were also the centres of lots of activities, with Discovery announcing a number of channels and National Geographic Channel coming up with four new channels. The general entertainment genre apart, regional expansion was the toast of the year with many a player criss-crossing geographies in

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34 I Pitch I January 2009

quest of greener pastures. Star India created maximum buzz in this space with new offerings in Bengali and Marathi. The group also entered into a joint venture with Jupiter to gain a majority stake in Asianet Communications. This move is dubbed as a way to yield a smooth access into a relatively tougher Kerala market. The Southern channels continued their supremacy when it came to market shares as they ramped up a staggering 23.8 percent of the overall viewership pie. However,

7.1% the share StarPlus began 2008, but come Nov, it dipped to 3.6% after channel pulled out its popular soaps the decline in their share also ran parallel to it as these channels had reported a 25.7 percent share in the previous year. Regional expansion also bipped high on Zee's radar, as it made forays into many non-Hindi geographies. As Zee News chief executive Barun Das says, "I see a large opportunity in the regional channel segment. Competitive intensity is on the rise, size of the six major regional markets—Tamil, Telugu,

MASS ENTERTAINMENT Star Plus 7.1 3.6

Zee Tv 6.0 2.9

Sony Entertainment Tv 1.7 2.0

NDTV Imagine 0.6 1.4

Colors 0 3.9

9x 0.08 1.2

SAB 0.6 0.8 Jan Nov

Percentage Viewership Share Bars not to scale


2008

Kannada, Bangla, Marathi, and Malayalam—is estimated to be around Rs 2,100 crore, amounting to almost one-fourth of the overall television ad revenues. Zee News is the major listed player that benefits from the regional entertainment market opportunity." Besides just moving deeper into geographies, the channels also did their bit in terms of dishing out highly specified content as more city-centric channels appeared on the horizon. NDTV, after launching NDTV MetroNation’s Delhi edition, further extended its network by unveiling MetroNation Bangalore. There was also a lot of activity in the specialised channels space to cater to the tastes of the fast evolving audience. Showbiz, Firangi, and World Movies are some of names from a long list of debutants in this space last year. But it wasn't all rosy for the television fraternity, as amidst all the talks of fragmentation and expansion the global slowdown made a huge dent into the fledgling television industry in the country. IMPACT OF SLOWDOWN As the tremours of the global meltdown started to be felt, the industry did see a blip but did not get a major hit as some of the largest spenders continued to maintain a consistent volume on this property while axing the budgets for other media platforms. As the November figures from our Survey speak, the spend figures seem to indicate that print has been hit more severely

SPORTS CHANNEL Ten Sports 0.7 0.9

Neo Cricket 0 3.6

Star Cricket 2.8 0.1

3.6% is the overall viewership share of Neo Cricket, making it the largest channel in the genre

Star Sports

consumer goods players which accounted for about 50 percent of overall television spends. In this context, it has to be noted that conZee Sports sumer goods, on the whole, contin0.1 0.4 ue to maintain their spending. As ESPN's Kailash says, "interestingly, ESPN the year also saw more and more 0.1 consumer goods companies, which 0.1 have never advertised before on Neo Sports cricket, chose the game as a vehicle 0.1 to reach out to their audiences. We 0 believe that this trend will consoliDD Sports date further in the coming two to 0 Jan three years." 0 Nov But, the industry stands divided Percentage Viewership Share on its experience of the meltdown. Bars not to scale As AajTak’s Krishnan puts it, "it is too early to comment." However, he clarifies, "advertisers will definitely be cautious, though it would be premature to comment at this stage." While NDTV Media chief executive 0.2 0.1

Powered by than television as far as slowdown in ad spends is concerned. It is not surprising given that the big television spenders are still the

January 2009 I Pitch I 35


TELEVISION

2008

KIDS Cartoon Network 1.3 1.6

Hungama Tv 0.8 0.7

POGO 1.1 1.3

Nickelodeon 0.6 0.8

Raj Nayak says, "the year 2008 hasn't been that good. Things were still better pre-Diwali, but after the festive season things just crashed." Discovery's Johri too feels that there is some concern in the environment outside, but in the domestic television industry and Discovery in particular, hasn't felt much of an impact. However, Johri has a mission statement to share, when he says, "the impact of recession on any channel would be less if you are

Disney Channel 0.4 0.3

1.6%

Jetix 0.7 0.5

Animax 0 0

Jan Nov

Percentage Viewership Share Bars not to scale

is the viewership of Cartoon Network, which leads the pack in the kids genre cautious in your approach and stay focused on your track. There is a way through this slowdown." Down South, Vijay TV, a part of the Star Group, is also saying that the slowdown has not impacted them much. Vijay TV chief executive officer K Sriram says, "no, we don't foresee any great impact." Talking about the past year, he shares, "the ad revenue growth has been positive and the group is faring well." However, Turner India's Tata

36 I Pitch I January 2009

accepts that the slowdown has its effects on the growth projections of the industry, but all isn't bad as she says, "these are definitely challenging times, but we are focused on our long-term strategy and continue to work to deliver the best solutions for clients." Similar is the view of ESPN's Kailash who feels that "the slowdown will impact the overall ad revenue growth of the television industry. But Zee News’ Das differs saying, “there will be some slowdown in ad revenue growth due to the prevailing macro-economic conditions, but we expect to deliver and grow higher than the market average, both in the current fiscal as well as in the next fiscal.” As the tremors of the financial turmoil started to percolate down, some of the largest categories stopped advertising on the medium with immediate effect. As NDTV Media's Nayak says, "after the slowdown started and the financial sector got hit badly, the financial sector players have stopped advertising. Also, there were no more IPOs, so the advertising revenues did get a hit in the later part of the year gone-by."I —deepti@pitchonnet.com

Powered by


2008

OUTDOOR

RAINED OUT After a rosy 2008 first half, when it was the darling of foreign investors, came the long rainy days for the OOH media, leading to a humble 11% growth at Rs 1,419 crore in 2008 By ONKAR PANDEY

O

utdoor, the third largest traditional media format, managed to maintain its third slot in the national advertising pie of Rs 20,717 crore, raking in Rs 1,419 crore in revenues in 2008 — an 11 percent growth over the previous year when the industry grossed up Rs 1,275 crore. Though it maintained its share at 6.8 percent of the overall adpie, this is three percent less than what (Rs 1,454 crore at a 14 percent growth) that the Pitch-Madison Media Ad vertising Outlook 2008 projected. The lessthan-projected growth is understandable in the light of the general decline in advertising during the last quarter of the year. In fact, this medium had a stupendous beginning that went on for the first six months, but the massive decline during the final quarter saw the high growth rate getting pared badly. What were the factors that led to this growth? For one, this media created a

42 I Pitch I January 2009

lot of hype and grabbed enough attention of media planners, thanks to the massive spends seen across various media categories, driven by a red-hot economy. This came to a crescendo in the first half, when several private equity investors, including some foreign funds like Warburg Pincus and Morgan Stanley among others heavily invested in this sector. Around $350 million had been pumped into this media by many players, indicating the buoyancy of this media sector, with operators like Laqshya Media and Times OOH being the major gainers. Analysts say the OOH industry actually began to evolve last year. Some cities witnessed street furniture becoming more presentable, for instance. Another development was the change in the mindset of advertisers to holistically appropriate budgets toward this medium, and not use this as billboards. Similarly, agencies too evolved and are

now providing plans for the entire gamut of OOH, such as billboards, digital and the retail media. In another development, infrastructural landmarks like the Mumbai Skywalks and some other significant public spaces were brought at exorbitant prices in the early part of the year, and new players like Street Culture and some agencies sprang up to tap this growing potential. Thanks to its costeffectiveness, during the recent current Delhi elections OOH was the second most preferred choice for election campaigns after print. Let's look at how the industry players feel about the year gone by. Big Street country head Rabe Iyer says that 2008 saw many new firsts in the industry. The industry witnessed the enactment and execution of regulations. Various government bodies across the states implemented regulations, not just in the big metros but even in mini-metros.


1,419 2008 1,275 2007

11%

28%

ADEX TRENDS SINCE 2003 Over the years, the OOH Media has been clipping a faster growth, but not in 2008

1,000 2006 870 2005

727 2003

800 2004

Jagran Engage general manager for brand development M Kumar says last year saw a lot of projects getting worldclass street furniture with public-private partnership, besides many buildoperate-and-transfer projects in the metros. "We also saw convergence of OOH and radio in the metros. Clients are increasingly demanding more accountability and transparency, especially in upcountry locations," says Kumar. Big Street, started by the Anil Dhirubhai Ambani Reliance Group in 2007 riding on the group's media synergies, successfully built an integrated media model offering holistic OOH solutions to brands like Titan WWF, HIT Innovations and even country's first AC

15%

Figures in Rs Crores

9%

10%

The OOH media is witnessing around 80% decline in ad spends from big spenders like realty, banking and finance SUNDER HEMRAJANI, CEO, Times OOH

bus shelter in Bangalore, among others. SLOWDOWN BLUES After a stupendous first half came the rainy second half of 2008 — the monsoon season normally is a dull period for the outdoor industry — but even before it could shake off the sludge, there came the global economic meltdown that watered down its flourishing growth, a fact very much evident in the Survey. "Since November, ad spends on various media sectors were slacking, and outdoor was one of the worst hit,

witnessing lower spends since the second half. While the slowdown cast a dark shadow over the ad industry in general, it was the thickest in Mumbai, the city that accounts for a significant proportion of outdoor spends. The 26/11 terror attack on the city had only accentuated this as people began to increasingly avoid crowded places," points out the Survey. And since 2008 will be remembered as the year of economic gloom, which engulfed almost everything from iconic Wall Street investment

January 2009 I Pitch I 43


OUTDOOR

banks to even nations like Iceland that has declared national bankruptcy, the performance of this medium will be considered on expected lines. After a stupendous growth in the first half, the industry saw demand slowing down, which peaked in the fourth quarter and is likely to continue for some time. Recapping the year, Times OOH chief executive officer Sunder Hemrajani says, "The industry is facing around 80 percent cut in media spends from sectors like housing/real estate and financial services. The overall growth is expected to see a drop of around 50 percent from what it was earlier projected." Big Street's Iyer also agrees. He points out that in view of the slowdown, there's

optimistic Bhandula. In fact, this is the opinion of most of the industry players that we spoke to, who say that the deceleration is more about sentiments and that OOH was not singled out by advertisers as other media formats too faced decline in ad revenues. They further argue that as the year wound to a close, many big spenders from reality, telecom and banking and financial services sectors, cancelled many campaigns. However, they are optimistic that with the entry of many large-scale retailers and new telecos, the industry will see a rise in spends by mid-2009. On the macro front, Selvel chairman and managing director Noomi Mehta points out that consolidation grounded

2008 saw many new industry firsts like the enactment and evolution of regulations which were executed with seriousness

TRADITIONAL OOH



Private equity investors like Warburg Pincus, Morgan Stanley etc have invested around $350 million. Laqshya Media and Times OOH are two of the biggest recipients of such investments.

 Industry facing 70-80% cut in spends

from sectors like housing/realty and banking & finance. Being the single largest market, Mumbai is the worst hit among the metros.

RABE IYER, Country Head, Big Street been a rationalisation of bid prices in the market. In fact, some properties like Central Railway and Western Railway haven’t found many takers, and even airport bids are very close. "Going ahead, the focus will not be so much on reduction of OOH usage as consumers are still going to spend as much time out of home, but on its choice and usage. Smaller formats could be in greater demand and used closer to the purchasing period. Segmented reach and relevance will score over generating higher mass visibility," notes Iyer. But JCDecaux India managing director Pramod Bhandula does not agree. "I don't see any major shift. The current poor results have more to do with sentiments rather than reality," argues an

44 I Pitch I January 2009

to a halt and IPOs and fresh equity have also suffered as the year entered the second half. "For the moment, the tune is wait and watch, tighten your belt, cut the flab, check that ego and keep running after clients," advises Mehta, who is also the president of the Indian Outdoor Advertising Association. EVOLVING DIGITAL/ RETAIL MEDIA Another fast evolving sub-segment in the traditional outdoor industry is the digital/retail media. Significantly, this nascent segment too suffered along with its counterparts as it's a cost-intensive venture. In fact, this segment was hit the hardest as some players like New Outdoor and V-Jive Media were almost forced to shut shop while foreign player Stroer Media withheld any fur-

ther investments in the country’s OOH space till further notice. Driven by higher sales, thanks to the boom in the first half, many retailers like Future Group, Spencer's and Shoppers Stop opened their own digital media arms or have appointed specialists to do their in-store communications. Analysts say, it can be recalled that studies have proved, around 74 percent of buying decisions are taken at the store aisle, and its here that digital media plays a crucial role. Despite these prevailing negative developments, this nascent industry segment is not worried about the viability of their business propositions. Tag Media vice-president Mahesh Krishnan, for instance, says the slowdown is an


2008

DIGITAL/RETAIL MEDIA 

OOH Media, Enhance Media, Future Media, View24*7, Digital Signage Networks, Live Media, Tag Media, and Spencer’s Retail Media etc are the leading players.



Large retailers like Big Bazaar, Spencer's and Shoppers Stop strengthened their in-house OOH media. While Shoppers Stop runs a radio network, Future Group runs a full-fledged arm, Future Media.

opportunity for marketers to send out messages more effectively and at optimum costs. "Last year was good for us, in 2009 too, we will remain committed to our partners like Spencer's, More (retail venture from the Birlas) and FoodWorld, and would continue to expand along with them. In fact we are bullish about current scenario and our plans for 2009 are almost in place," adds Krishnan whose Tag Media is present at over 500 stores. LiveMedia founder and chief executive Rajan Mehta opines that digital and retail media best captures the 'different strokes for different folks' strategy which marketers can use to target varied consumer segments. "There is a need to communicate the value proposi-

AIRPORTS/METRO OOH



Huge spurt in metro & airport infrastructure and the resultant traffic they attract, have led to media owners diversifying into this media.



Delhi & Mumbai airports are the most sought after advertising destinations, with these airports catering to 50% of the air traffic.

tion for a particular product or services in different ways to different customer segments. Marketers are today able to achieve this very easily through captive audience networks wherein they can effectively create and carry different messages for the same product on screens in different locations in a very cost-effective manner," points out Mehta, adding that the slowdown is only short-term. Even, Enhance Media executive director and country head Kaushik Chakravorty too agrees saying this medium will gain currency in the bad times as advertisers would look for maximising returns and look for ‘better bang for the buck’. But Big Street's Iyer doesn’t buy this

argument, “Marketers arn’t fully ready to tap the latent potential of the digital media which has lead to little development on the creative front. They talk to consumers contextually,” he adds. Airports & Metro Rails Another growing sub-segment in the outdoor space is venue-based advertising. Notable in this regard is the swanky airports, mostly the major international airports which are privatised, along with the Delhi and Kolkata Metros as also the Mumbai suburban rail system, which have caught advertisers' eye. Major outdoor media owners like Times OOH, Big Street, and Serve & Volley among others have lapped up these venues to cash in on the growing opportunities. Airport operators such as GMR and GVK who run the Delhi and Mumbai international airports, respectively, are putting in enormous efforts to improve and revamp the terminals. Times OOH — owner of advertising rights for both the Mumbai and Delhi international airports, Hemrajani points out that airports offer opportunity to convert advertising into purchase (eg duty-free shops and product samplings) especially in the context of frequent and international travellers, who spend more time in transit. "Delhi and Mumbai are the most sought-after advertising destinations amongst the airports. These two airports together cater to more than 50 percent of the country's air traffic," points Hemrajani, adding that Times OOH has put in international quality media products to enhance the environment at these two airports.  —onkar@pitchonnet.com

January 2009 I Pitch I 45


2008

RADIO

SINGING LOUDER! Driven by massive geographical expansion,wider currency of listenership,enabling policies,a new breed of advertisers etc,radio has clocked a stupendous 38% growth,despite a poor Q4 show By KJ BENNYCHAN

ADEX TRENDS SINCE 2003

662 2008

From a paltry Rs 125 crore in 2003 to Rs 662 crore in 2008, the radio industry has come a long way

480 2007

285 2006 150 2004

20%

125 2003 54 I Pitch I January 2009

38%

68%

43%

200 2005

33% Figures in Rs Crore

W

ith close to 270 stations spread across the top 75 cities, the private FM radio industry has come of age in the country. In every sense, barring the profitability as the books of many a player confirm—but it's still long for a capitalintensive industry to be profitable from the start—be its reach (radio reaches close to 90 percent of the population where it’s present) or its popularity or the rising preference of advertisers for this medium thanks to its ability for customisation and cost benefit. This growth has been more visible in its ability to generate revenues. Driven by a host of factors such as more number of sectors including an increased number of local advertisers jumping onto the air waves for brand communication, more content differentiation including news, rapid expansion of the footprint mostly by non-media players,


and wider acceptance of the RAM rating among others, the fledgling private radio industry in the last leg of the second phase of expansion posted an impressive growth in 2008, clocking a smart 38 percent growth in ad revenues at Rs 662 crore, cornering 3.2 percent of the Rs 20,717-crore national ad pie. However, this media too suffered as the other media formats, mostly in the last quarter of the year when the entire industry saw a steep decline in ad spends as the global economic gloom began to spread into the domestic market too. As a result, radio too failed to meet the Pitch-Madison Media Advertising Outlook 2008 projection of 40 percent growth, though it could meet its projected share of 3.2 percent

We’ve done well in 2008, though towards Q4, the high growth that the industry saw tapered off and this was visible across the industry PRASHANT PANDAY, CEO, Radio Mirchi of the total ad pie. Nonetheless, this growth is impressive as radio is the only medium, after the Internet, to grow close to our 2007 estimate when it grew by 68 percent to touch Rs 480 crore. No wonder almost all the leading players have termed the year gone by as an exciting year. What were the major developments, both from the industry side as also from the policy side that made the year so impressive? RECAPPING THE YEAR The most important growth driver has

been the economic boom that’s visible all across the sectors. The year gone by began with a bang and that rocking spirit and growth continued till September. As a result, more and more advertisers jumped onto the radio bandwagon. This pumped an adrenaline shot into the already red-hot sentiments of the operators who used up all their licences to launch stations in all the circles. As a result, by May almost all key operators had completed their expansion plans and were ready for the government to launch the third

January 2009 I Pitch I 55


RADIO

phase of licensing. Also, the year saw many new players including non-media players like Muthoot Group (Big River Radio), Bag Films (Dhamaal 24), Essel Group etc and media players like ABP group (Friends' FM), Malayala Manorama (Radio Mango), Asianet (Best FM) Mathrubhumi (Club FM), Prabhat Khabar (Radio Dhoom) entering the space, while Sun Network (S FM) went on an expansion spree to complete its 45 licences. Under the second phase, the government had offered 337 new stations, of which 245 channels were issued licences and close to 200 channels from them are operational now, taking the overall number of prviate FM station close 270 in 75 cities at present. Another major reason for advertisers to opt for radio was the implementation of RAM in more cities—from the initial three cities RAM is available in six cities—New Delhi, Mumbai, Bangalore, Chennai, Hyder-abad and Kolkata (see tables). The content side too saw a major development with the government, in October, allowing private stations to air news, albeit with restrictions that they could source news only from the AIR capsules, which as been severely criticised by the industry. Late November brought in more good news to the industry with the I&B ministry amending the All India Radio Code to allow political ads on radio—a move that got all round industry support as this is a major revenue booster that may hep them rake in revenues to the extent of Rs 150 crore during the forthcoming general elections.

56 I Pitch I January 2009

Radio Mirchi, Big FM, Radio City, AIR lead the New Delhi

Week1-13 Week 45-48

Mumbai

Week1-13 Week 45-48

Radio Mirchi

21

26

Red FM

20

17

Gold (AIR)

13

14

Radio City

18

19

Fever FM

11

10

Radio Mirchi

15

13

Radio One

11

9

Big FM

14

17

Big FM

11

8

Gold (AIR)

11

10

Red FM

9

9 8

8

9

9

Radio One Radio City Rainbow (AIR)

4

5

Fever FM

4

6

Hit FM

4

4

Vividh Bharati

4

2

Meow FM

3

4

Rainbow (AIR)

3

4

Vividh Bharati

2

3

Akash Vani

3

2

Akash Vani

1

0

Meow FM

0

2

Others

0

0

Others

0

0

Source: Radio Audience Measurement; Figures indicate the percentage share of each radio

On the policy side, in September the government gave its nod to radio broadcasters to set up subsidiaries/ amalgamate/demerge their existing entities through transfer of shares without the previous lock-in period of being in operations for five years. The government also hiked the FDI cap in non-news to 49 percent. However this did not have any significant impact as no operator could rope in foreign funds since then—as of now only two to three operators have FDI infusion. Another development was the 15-20 percent ad rate hike by the industry in October, following the wider reach of

RAM. October also saw the government launching the first-ever community radio in collaboration with the Society for Development Alternatives, an NGO, at Taragram near Orchha in the Bundelkhand region of Madhya Pradesh. Thirty-four NGOs have so far got permission to operate community radio stations across the country. Significantly, radio brands themselves were promoting aggressively throughout the year. The JanuarySeptember AdEx data show a hefty 63percent jump in print advertising by radio stations, as against 25 percent by the television players.


2008

listenership sweepstakes Bangalore

Week1-13 Week 45-48

Kolkata

Week27-39 Week 45-48

Radio Mirchi

25

18

Radio Mirchi

22

21

Big FM

18

26

Big FM

19

19

Rainbow (AIR)

13

10

Friends FM

14

14

S FM

12

10

Red FM

10

10

Radio One

10

9

Fever FM

8

9

Amaar FM

7

8

Radio City

6

8 Meow FM

7

7

Vividh Bharati

6

7

Rainbow (AIR)

5

4

Fever FM

4

6

Gold (AIR)

4

4

Radio Indigo

3

3

Akash Vani

2

2

Gyan Vani

2

2

Power FM

2

2

Akash Vani

1

1

Vividh Bharati

1

1

Others

0

0

Others

0

0

up on inventory and grew from really small bases last year. The older, bigger players really have struggled, though. Mirchi grew by around 25 percent in the first half." It may be noted that Mirchi completed its rollout with all the 32 stations going operational by February. Mirchi made history when its promoters acquired the England-based Virgin Radio for Rs 448 crore in June. However, it reported a net loss of Rs 3.27 crore in the second quarter as

270

the approximate number of private FM stations spread across the top 75 cities

station during Weeks 1-13 to Weeks 45-48 in 2008

INDUSTRY SPEAK UP How have the leading players performed during the year? Recapping 2008, the largest private operator by listenership (see the tables), Radio Mirchi chief executive Prashant Panday says, "we had a good first half, but unprecedented challenges in the third quarter. Tough times call for tough decisions, and we are working at making the best of the situation. But, there’s no denying the fact that the advertising business is in a bad shape now. I feel, however, that by January, a lot of bad news may dissipate as brands come up with new budgets."

On advertising and ad-revenue trends, Panday says, "clearly, radio has done well in 2008, though towards the final quarter the 52-percent growth rate that the industry saw, tapered off, a trend that was visible across the media industry. Still this is an impressive growth. Again, almost half of this growth was inorganic—the massive geographical expansion. On a samestation basis, the growth might have been around 20-25 percent in the first nine months. If this same-station growth is broken up into its constituents, then most of the growth came from the smaller stations which filled

against a net profit of Rs 63 lakh y-o-y, mainly due to amortisation of licence fee and depreciation charges on equipment in 22 new stations. Big FM chief operating officer Tarun Katial says, "radio saw increased spends from traditional print spenders and even television spenders. Ad revenue growth till November was around 70 percent. Advertisers are clearly seeing the benefit of the ability of radio to deliver superior reach compared to print at a far better cost effectiveness. In a tough economic environment radio is clearly emerging as a powerful tool to support brand plans." Big FM, the Rs

January 2009 I Pitch I 57


2008

RADIO

INDUSTRYSPEAK “We’d a good H1, but had unprecedented challenges in Q3.There’s no denying that advertising business is in a bad shape now.” PRASHANT PANDAY, CEO, Radio Mirchi

“We further consolidated our position in 2008. We also could take the brand beyond radio to other media.” ABRAHAM THOMAS, CEO, Red FM 400-crore initiative from the Anil Ambani group, is the largest operator in terms footprint with 45 stations—20 in the North, nine each in the West and the South and seven in the East. It went global in June by entering Singapore in association with MediaCorp Radio. The Singapore offering, known as Big Bollywood FM, broadcasts live Bollywood content. Radio City chief operating officer Apurva Purohit, who is also the president of the AROI, says, "2008 was a year of fulfilment for Radio City, as it could offer even richer experience to both listeners and advertisers. The successful launch of our national network was followed by a consistent and uncompromising city-focus in every

58 I Pitch I January 2009

“Radio saw more spends from traditional print and even TV spenders. Ad revenue growth till Nov was around 70%.” TARUN KATIAL, COO, Big FM

“2008 was a year of fulfilment for us, as we could offer even richer experience to both listeners and advertisers” APURVA PUROHIT, CEO, Radio City market of our operation, which was taken across to our listeners with very successful and clutter-breaking campaigns. Launched in 2000 in Bangalore, Radio City is present in 20 cities and has completed its second phase rollout with the launch of its Pune station. Red FM chief operating officer

225

the no.of AIR stations.First community radio station was set up in Oct in MP. 30 more to come up soon.

Abraham Thomas too notes that 2008 was good for his station as "the year saw us further consolidating our position. Besides that, we worked on taking the brand beyond radio to other media with associations like Bindass Live with Malishka and Bajaate Raho Awards. Overall, 2008 was a year of progressive reforms, paving the way for further changes in the years ahead. Most of the changes talked about were policy changes like allowing political ads and news, etc." MyFM chief operating officer Harrish M Bhatia also says that 2008 was a very productive year for his station from the beginning. "Since we had completed our launches by the end of 2007, we could concentrate on growth and consolidate our position in 2008." My FM operates 17 stations. Similar is the view of Tomato FM chief executive Naval Toshniwal, who describes 2008 as a phenomenal year. “The permission to carry political ads was the biggest development of the year as this would be a major revenue stream for the industry,” he says. However, he admits that November was tough due to the slowdown, which saw ad spends getting pruned." Friends’ FM business head Amritendu Roy too says that 2008 was a great year and his station had 60 percent overall growth. As the industry enters a crucial phase in 2009—declining revenues on the one hand and mandatory expansion under the third phase on the other—we will have to wait and watch how the industry will fare in 2009. I —ben@pitchonnet.com


INTERNET

CLICKING IT BIG The online industry ramped up Rs 363 cr, claiming a decent 1.7% of the ad pie, with a 45% growth. Better measurability and an impressive RoI fuelled this growth march. By DEEPTI AGGARWAL

O

ver the past 12 months, the Internet has certainly established itself firmly amongst large advertisers in the country. It is no more a question of ‘Why to use the Internet’ but ‘How to use the Internet,’ says Google India business head for travel and local business Narsimha Jayakumar. Nothing perhaps better sums up the strides the medium has taken, even though 2008 wasn't the best of the times. One medium that will have a sigh of relief in these troubled times is the Internet, for the marketers are asking for a measurable RoI on every advertising rupee they spend. The Internet effectively presents itself as just the medium that marketers have been looking for but somehow always overlooked. Based on the findings of the Pitch-Madison Media Advertising Outlook 2009, the digital media

66 I Pitch I January 2009

ADEX TRENDS SINCE 2003

363 2008

The only media to hit our growth forecast, logging in 45% growth

250 2007

165 2006

70 2004

50 2003

40%

45%

52%

50%

110 2005

57% Figures in Rs Crore


2008

17% has been the overall growth rate of the total ad industry as against 45% of the Internet

emerged as the best medium in terms of a year-on-year performance, logging in a smart 45 percent growth, keeping its date with our last year's Survey projection. In the year goneby, the new media also expanded its size to touch Rs 363 crore over the last year's Rs 250 crore, claiming a decent 1.7 percent of the total ad pie which went on to register an overall growth rate of 17 percent. The Internet, both as a media platform for users as well as advertisers, still largely remains an unexplored

domain as the penetration level and advertisers’ confidence remain low. But, as the industry as well as the most keenly cherished advertisements have taken a hit and marketers have turned very demanding, this measurability-driven medium radiates a ray of hope. Google's Jayakumar, reflecting on the tectonic shift in advertisers' mindset, says advertisers today are realising that the Internet enjoys comparable or even better reach compared to popular news channels

and any English newspaper. One of the biggest advantages of the Internet is the ever increasing number of eyeballs that it is so ravenously adding everyday to its existing stock. As Times Business Solution cheif executive R Sundar contemplates, "the Internet penetration does continue to grow more steadily in our country. While a majority of the new users are still under-30, we witness more strikingly meaningful and engaging interactions (real-time spent per session)

January 2009 I Pitch I 67


INTERNET

across all age groups." Microsoft India marketing officer for consumer and online business Rishi Shrivastava also feels that "people are increasingly turning to technology to find and share information and experiences across multiple platforms. Microsoft strongly believes that this trend in consumer behaviour represents one of the biggest opportunities today." NDTV Convergence chief executive Sanjay Trehan informs that the low numbers presents an opportunity for the medium to achieve an unprecedented growth rate, something which the more evolved media formats would find difficult to emu-

themselves up to advertising; blogging and social networking sites and much focus on user-generated content have also come up in a big way." Google's Jayakumar also feels that increasing relevance of social networking sites is helping the cause of the online media and driving up its revenues from advertising. "Advertisers have started using popular social networking sites, thanks to their ability to offer a chance to target consumers accurately, especially the youth," he points out. Social media also allows for more intimate brand engagement through the use of innovative applications and this trend, the industry feels, will be

“People are increasingly turning to technology to find and share information and experiences across multiple platforms” RISHI SRIVASTAVA, Microsoft Consumer & Online Marketing Officer late. "The Internet penetration is growing and it has found favours with the consumers looking for information, news, e-Commerce, net banking, etc. Advertisers have also well adopted this medium to break the clutter of print and against more expensive television advertising," Trehan argues. The emergence of Web2.0 and an increased amount of user-interface and user-generated content also seem to be an answer to the marketers' quest to engage the consumer in a dialogue. As Infoedge Media managing director and chief executive Sanjiv Bikhchandani says, "social networking sites have opened

68 I Pitch I January 2009

strengthened in the times to come. Rediff chief executive Ajit Balakrishnan reasons that online videos are also pushing up the number of users. "Recent months have seen the dramatic emergence of online video, particularly user generated (as opposed to professionally created) ones. In many countries, the audience of online video sites rivals the audience of many television channels," explains Balakrishnan. Another major reason for the rising interest of advertisers in this media platform is that large traditional advertising shops have also displayed interest in it, bringing about a big perceptional change of

MARKETERSPEAK “Our focus will be more on the digital domain next year. Accordingly, the online media will be getting a bigger share of our ad money."

H S LHEEM,

MD, Hyundai India

“Low numbers of online consumers present an opportunity to achieve an unprecedented growth rate.” SANJAY TREHAN, CEO, NDTV Convergence

the medium. A glimpse of the list of specialised services that traditional advertising shops today have on offer reveals that digital and interactive services are actively becoming an important part of the total equation, although at a meager level. Some of the positive signals that 2008 emitted for this media include the rise of digital ad networks and affiliate networks. Infoedge's Bikhchandani points out that "ad networks and affiliate networks are also gaining market share." Quasar Media co-founder Manish Vij also finds the rise of online ad networks as a positive sign for the rise of interactive advertising in future. Another trend


2008

“We will spend more on TV, Online and BTL in 2009. We have got a long-term plan on our table.” LAKSHMIKANT GUPTA, CMO, LG India

“The downturn has forced all major publishers to deliver better value, relevant targeting and realtime metrics.” R. SUNDAR, CEO, Times Business Solution that Vij notices is the increased spending in the specialised websites popularly called the vertical portals. Hyundai India managing director HS Lheem echoes this when he says, “we will focus more on the digital domain in 2009. Accordingly, the online media will be getting a bigger share of our total advertising money." MEASURABILITY DRIVES Also, as Yahoo India sales director Pearl Uppal finds, the measurability factor—often the subject of wrath of many industry watchers in the past—is turning out to be a saviour in these times of turmoil. Uppal feels that the digital medium is seeing stronger traction from advertisers as

marketers look to optimise and increase their marketing efficacy and it is its measurability that’s the answer to the needs of marketers. Infoedge's Bikhchandani also feels that client awareness and performance-based evaluation such as click through rates, clicks etc are very positive signs for the medium. MakeMyTrip chief executive Deep Kalra opines that a right mix of innovative solution and measurable technology is what the marketers are seeking and the Internet can deliver that efficiently. "Performance continues to get more importance in tougher times. There is greater focus on the right kind of analysis besides

form where its audience/customer exists, the returns from the branding activity can be relatively more than the lead generation activities," Trehan shares. Infoedge's Bikhchandani also most clearly sees this shift happening in the past 12 months when he says, "we have also seen a lot of brand campaigns which are innovatively planned to increase engagement." Yahoo's Uppal too feels that display advertising is also getting its share of play on the medium when she says, "display advertising online is proving to advertisers that it is the most effective media to drive engagement and interaction, and that it

”Client awareness and performance-based evaluation such as click through rates, clicks, etc are a positive sign for the medium” SANJIV BIKHCHANDANI, MD & CEO, Infoedge simple metrics of CPA, CPC or CTRs. There is an ideal mix for businesses within various options on the Internet and markets are indeed finding them out," feels Kalra. OVERTAKING LEAD-GENERATION NDTV Convergence’s Trehan suggests that the brands have moved ahead on the growth curve, although earlier they were interested in vanilla lead-generation-based activities for building brands online. "Companies with lead- generation requirements are also considering online branding spends. They are also effectively experimenting with advertising on video and WAP. If a product is duely promoted on a plat-

delivers the desired impact on persuasion and purchase metrics." TRANSMIGRATION ALL THE WAY Mainline advertisers have started to move beyond experimental advertising on the Internet to a more continued and consistent activity. As Quasar's Vij says, "growth in digital share from advertising sectors such as automobile, entertainment, insurance, IT, durables are highly positive signs and so also the experiments by consumer goods players. Google's Jayakumar feels that an integration of online and offline campaign is working in favour of the medium. He comments, "advertisers are integrating their television/print/outdoor

January 2009 I Pitch I 69


2008

INTERNET

Top 10 Indian Online Properties As per July 2008 comScore data, Google is the most visited site in the country, while Rediff is the largest Indian portal, followed by Times Internet & Naukri

Online Properties

Total Unique Visitors in ‘000

Total Indian Internet Audience

28,886

Google Sites

19,746

Yahoo! Sites

18,704

Microsoft Sites

11,980

Rediff.com India

9,246

AOL LLC

6,325

NIC.IN

5,953

Times Internet

5,948

Wikipedia Sites

5,264

Naukri

5,105

eBay

5,020

campaigns more tightly with the Internet. Television commercials are getting tested using an online channel which is a good sign for the medium." This development also speaks of the instant feedback that this interactive medium is able to deliver. SLOWDOWN IMPACTS Despite all the positive signs and meeting last year's projections, the online players also felt the pinch of the slowdown. The industry stands divided on what it has brought to the industry. Some believe that the prevailing conditions will reinforce advertising on the Internet while others doubt that the conditions can

70 I Pitch I January 2009

frail the medium's prospects. NDTV Convergence's Trehan says, "companies inclined towards traditional medium have also started experimenting with the Web. These will allow the digital market size to

45% had been the web’s growth rate in 2008, claiming Rs 363 cr over Rs 250 cr in 2007

increase in the next 12 months." Yahoo's Uppal also feels that more brands are testing digital for the display and brand engagement value as it has gained the scale to offer optimum reach to key consumer segments and is engaging them in a far superior way than the traditional broadcast media. Webchutney's Nanda also feels that the slowdown has manifested two aspects: more spends on digital launches rather than off-line advertising and budget-cuts by a lot of major advertisers. However, Times Business Solutions’ Sundar feels that the immediate impact of the economic downturn on the Internet earnings has forced all major publishers to deliver better value, relevant targeting and real-time metrics. Thus, making the industry even more accountable for every penny spent online. Infoedge's Bikhchandani feels it will be premature to air a comment on the total impact but then lesser number of ads are appearing online, as many big spenders like the ones from the field of finance have reduced their respective budgets. Nonetheless, some fresh advertisers might prefer to shift into the online medium due to its implicit and visible higher measurability compared to other media platforms, he argues. The industry waits for a mixed 2009 with its fingers crossed— whether there would be a lull or a moment of reckoning for the online media so that it can demand its rightful place in the media mix. I —deepti@pitchonnet.com


CINEMA

2008

LOSING THE SHEEN Like OOH,cinema too disappoints with just 24% growth at Rs 129 cr,down from our projection of Rs 157 cr, due to the slowdown,terror attacks and a poor showing by Bollywood with 90% of its releases getting bombed By ONKAR PANDEY

I

n terms of box office results, 2008 was more or less similar to 2007, where we had 90 percent of Bollywood offerings failing the critical Friday litmus tests, is how the noted film critic Taran Adarsh takes stock of the year gone by when it comes to the cinema medium. No wonder, the cinemas failed to make much of an impact on the advertising revenue street too. Cinema advertising, of late, has come a long way from the days of anti-smoking and family planning adverts which were often considered as nuisance by audiences to being a smart tool for marketers to hawk messages. But things have changed now, the medium has seen a hefty 50 plus-percent cumulative growth in advertising over the past three years. But as other media formats witnessed, 2008 was not that rosy for the cine media too, due to the lingering economic crisis that had multiplexes being among the hardest hit as

78 I Pitch I January 2009

footfalls began to become increasingly sparse. The 26/11 terror attack only speeded up this downslide. The downside of this is evident in the Pitch-Madison Advertising Outlook 2009 Survey, the cine advertising is pegged at a meagre Rs 129 crore,

steeply lower than our last year’s projection of Rs 157 crore. With a paltry 0.6 percentage of the overall national advertising pie, cine advertising grew by 24 percent, significantly lower than the 50 percentage growth our last year’s survey projected.


129 2008

104.5 2007

ADEX TRENDS SINCE 2003

24%

90%

Being a newbie, cinema advertising was hit due to marketers risk-aversion measured investment plans

55 2006

23 2004

72%

21% 32 2005

19 2003

39% Figures in Rs Crore

90% of the Boolywood offerings in 2008 failed to pass the muster at the box office

What's more surprising is that this major deceleration happened despite the fact that among the traditionally heavy users of cinema advertising— fast moving consumer goods companies, automobiles, and lifestyle brands—only automobiles fared poor-

ly during the last quarter of the year. In fact the slowdown has not impacted the consumer goods sector at all if their sales and profit numbers are any indication. And herein comes the role of the slowdown and the recurring terror attacks across many major cities

time and again during the year—which showed its deadliest face on 26/11 in Mumbai, a major market for movies. "Cinema too has been facing the brunt in the last three months of the year. The slowdown has definitely lead to lesser footfalls in multiplexes, and in

January 2009 I Pitch I 79


2008

CINEMA cities such as Mumbai, the terror attacks would only further suppress demand in mid to short term. In such a scenario, advertisers reduced their spending significantly on this medium in the last quarter, says Madison Media analysing the Survey. The downslide was so drastic that even two blockbusters Ghajini and Rab Ne Bana Di Jodi, released n December could not help reverse the negative sentiments in any considerable degree. But Cinemax senior vice-president Devang Sampat disagrees, he says cinema advertising has become an important part of any campaign today. "Advertising used to contribute only around three percent of our turnover back in 2005-06, but now this is as high as 10 percent.

TOP 5 HINDI MOVIES OF 2008 Movie

Collection(in Crore)

Ghajini

Rs 200

Rab Ne Bana Di Jodi

Rs 105

Singh Is Kinng

Rs 107

Race

Rs 105

Dostana

Rs 103 Figures are approximate and may vary.

turnover would be around Rs 165 crore, out of which around Rs 15-16 crore would be from advertising, a 100 percent jump from 2007," explains Sampat. Similar is the view of the Pyramid Saimira-owned cine advertising

Advertising used to contribute roughly three percent to our turnover back in 2005-06, now it’s as high as 10% in 2008 DEVANG SAMPAT, Cinemax, senior vice-president

And in the short-run I do not see any major decline in revenues as I have a number of advertisers who booked for some year-long campaign activities. At least we have not been impacted yet, though I see a dip from January. However, to tide over this we have already decided to launch innovative measures like co-branded tickets and other promotional activities," Sampat adds. Sampat claims his halls receive roughly one crore footfalls a year. "Our revenue from advertising has grown almost four-folds in the last three years from 2.5 percent to almost 10 percent today. Our 2008

80 I Pitch I January 2009

agency Dimples Cine Advertising joint managing director Rajesh Nari Karamchandani who says his agency saw an upward clip of 15 percent in its revenues in 2008. But he too expects a dip in spends in 2009. A YEAR OF FLOPS The world's most prolific film industry that Bollywood is, has churned out over 200 films in the year gone by, but trade pundits say a staggering 90 percent of them got bombed at the box office. While several big-ticket flicks such as Drona, Love Story 2050, Yuvvraaj and Karzzz bite the dust during the year, the few saving

graces came in December with the Aamir Khan-starrer Ghajini and the SKR-cast Rab Ne Bana Di Jodi making it big. Both these films raked in mounds and mounds of moolah—to the tune of Rs 150 crore in ticket sales. Ghajini has made history in the Hindi filmdom by grossing up a hefty over Rs 200 crore so far! Other major hits included Akshay Kumar starrer Singh is Kinng which also reportedly garnered Rs 150 crore, Jodha Akbar and Race, each earning around Rs 100 crore. But there were positive signals emanating during the year as well, One major development was the decision of leading Hollywood studios—Sony Pictures and Walt Disney—to invest in some Hindi films. Another major event was the Anil Ambani group's $550-million investment in Steven Spielberg's DreamWorks to start a new studio. This is the biggest foray of any domestic company into the American film industry. I —onkar@pitchonnet.com


2008

PUBLIC RELATIONS

RIDING BAD TIMES The Rs 300-cr PR industry is growing at over 20%, not withstanding the slowdown, talent crunch and high attrition.With specialisation, digital media use and better services, it's set to deliver a bigger bang for the buck. By ONKAR PANDEY

P

ublic Relations, a subset of marketing communication, is becoming increasingly important these days, especially as advertising space gets more and more cluttered. PR came of age during the last decade when the need for companies and brands to build a strong relationship across multiple stakeholder groups began to go up increasingly. PR has become a prominent tool for furthering brands, more so as advertising becomes primarily a defence mechanism for established brands and not to building new brands, where PR comes more handy. Despite this, PR spends compared to advertising spends are not encouraging. A 2001 survey by Thomas L Harris/Impulse Research found that consumer products companies spend only roughly 0.05 percent of their overall marcom budget on PR. According to industry insiders and analysts, the domestic PR industry is

82 I Pitch I January 2009

around Rs 300 crore, and is growing at over 20 percent year-on-year, despite severe talent crunch and high attrition rates of 30-40 percent. Genesis Burson-Marsteller chief executive Ashwani Singla, illustrating the recent Satyam controversy, says, it has amply demonstrated the importance of transparency and good corporate governance for corporate reputation. Therefore, the business of corporate reputation management should move beyond mere press relations to more stakeholder engagement on a sustainable basis, he adds. Ipan president Radhika Pallonjee opines that true value of PR is when communication campaign marries the business needs of a company. PR helps build credibility and third-party

endorsement for companies, their leadership, products and services and overall well-being. Several global PR agencies have entered domestic market over the last decade, thanks to its high growth rate and tremendous potential. While the biggies such as Perfect Relations, Genesis and Vaishnavi Communication have 10-15 branches across the country, the medium-sized agencies maintain four-five branches and the smaller ones are city-specific. Many of these are affiliated to/ or are subsidiaries of global PR companies. Weber Shandwick and O&M have their India offices, whereas Fleishman Hillard has an affiliation with Lexicon. There are also specialists like Text100 and 2020 for IT companies,

We have been registering sound growth over the past few years and 2008 has been no exception, despite the slowdown ASHWINI SINGHLA, CEO, Genesis Burson-Marsteller


Imprimis for healthcare, and Adfactors PR for financial clients. Though healthcare is the fastest growing sector, the public sector, the environment and CSR are also emerging as growth areas for PR industry. 2008 RECAP While most analysts term the year gone by as a good one, a few call it a mixed bag, owing to the general slowdown. Genesis' Singla reiterates, "we registered sound growth over the last few years and 2008 was no exception. The industry manifested strong positive momentum too." Genesis has seven wholly-owned offices and reaches out in more than 100 cities through

its branches and affiliates. Rediffusion Y&R group president and Showdiff Worldwide chief executive Lokesh Tiwary maintains that 2008 was a defining phase in the industry's life cycle. "Rediffusion will be closing the year with a 30 percent growth," he remarks. Headquartered in New Delhi, it has offices in six other cities and presence in 200 cities across the country. "Defying all fears, it has been a favourable year in terms of business growth for both large corporates as well as small home-grown companies. There is a growing realisation of the critical role that PR plays in a communication mix. And clients have been

quick to invest seriously in PR," observes Tiwary. Ipan's Pallonjee echoes the same sentiment when she informs that 2008 was very exciting, as the agency could consolidate businesses across practices- IT and telecom, financial services, FMCGs and lifestyle. Ipan is part of three leading international networksHill & Knowlton, Eurocom Worldwide and Cohn & Wolfe, with offices in New Delhi, Mumbai, Chennai, Bangalore, Kolkata and Hyderabad, and a number of associates in over 100 cities. But Integral PR chief executive Sharif Rangnekar differs. "It's very natural to have an adverse impact

January 2009 I Pitch I 83


PUBLIC RELATIONS

when the global economy is not in a good state. The first few months were extremely positive but as inflation rose and growth slowed, like many other industries, PR also witnessed similar trends," he observes. Still he claims that his agency tasted growth as it signed up four new clients in the last three months. Present in seven major cities it boasts of a stringer support network across 16 other cities. SLOWDOWN BLUES It's likely that various companies would renegotiate terms with their respective PR partners as the slowdown deepens. Some reports also suggest that since the sectors main-

nature. While, Pallonjee believes that rooted in every crisis is an opportunity, more so for PR primarily because it's the only communication discipline poised to address changed business, political and social envi-

.05% reportedly the average share of PR spends in overall marcom budget of leading sectors

I see greater specialisation, a fuller basket of services, and exploring the digital space as the three key evolving trends in the industry LOKESH TIWARY, Group President, Rediffusion Y&R PR ly affected by the economic crisis are banking and financial services, technology, realty and infrastructure, PR firms dealing with healthcare, FMCG, and education etc, are happy as their growth remains unaffected. However, some players like Rediffusion's Tiwary sees a silver lining in the slowdown as clients are already expecting agencies to create a bigger bang for the buck. "It's good because this will force PR agencies to further invest in training, infrastructure, innovation and better practices." Tiwary explains. Genesis' Singla opines that since PR spends are relatively smaller compared to ad spends, the impact is limited in

84 I Pitch I January 2009

ronments and help protect and steer corporate reputation. Impacted by the current environment, some agencies are set to redefine their communication budgets too. Rangnekar feels that the time has come to recognise PR as an industry as this is the time when it can play an extremely important role for institutions in need of communicating effectively to their stakeholders. CHALLENGES GALORE The overriding concern for the industry is a serious shortage of skills-the attrition rate is as high as 40 percent, according to an industry report. Work pressures apart, such high attrition rate is attributed to

2008

the diversification of intellect in PR activities helping the executives avail a plethora of opportunities. Being fairly nascent, the industry does not have too many established players and hence battles a leadership crunch. ON CLOUD NINE IN 2009 Analysts opine that with the corporates achieving significant size and scale, their PR campaigns should match their ambitions in terms of reach, impact and scale. A healthy combination of creative thinking and execution capabilities across geographies, consumers and media will be a critical success driver. Singla of Genesis predicts that public relations and digital communication will continue to outperform other forms of communication provided the budgets are competitive and more performance oriented. "Digital communication will emerge as a new channel of engaging stakeholders as information and influence sources shift to the Web and technologies converge besides the growth of public affairs expertise as government evolves from a player to a referee," Singla concludes. Similar is the view of Tiwary who opines, "I see greater specialisation, a fuller basket of services, and exploring the digital space as the three key trends eveolving in the domestic public relations industry in the new year." Being a low-cost, but effective medium, the industry may make gains as the slowdown deepens. —onkar@pitchonnet.com


OUTLOOK 2009/INTRODUCTION

BLEAK

OUTLOOK PRINT

RADIO

TELEVISION

2008

2009

2008

2009

2008

2009

16%

0%

17%

7%

38%

15%

Rs 662cr

Rs 762cr

Rs 9,825cr

Rs 9,825cr

By KJ BENNYCHAN

I

f the previous pages have had a dose of bad news, then these pages are full of worse news. If the severe deceleration in ad spends that began in November and December 2008, which got only accelerated in the first few weeks of 2009, is any indication, then the immediate prospects of the advertising and media industry look really bleak. In fact, the 2009 horizon is full of dark clouds. And this comes after an uninterrupted ride on the growth highway for three successive years! The Pitch-Madison Media Advertising Outlook 2009 foresees a paltry two percent growth in the 2009 calendar year. In other words, practically we see little growth at all in the year ahead as far as advertising expenditure is concerned. And this bad forecast is emerging from our detailed analysis of the media numbers, and inputs from close

90 I Pitch I January 2009

Rs 8,319 cr

Rs 8,901 cr

to 50 top CMOs, and advertising and media professionals. The Survey pegs the media and advertising industry size at Rs 21,199 crore in 2009, a tad over what it grossed in the previous year at Rs 20,717 crore. Among the different media formats, we see television, the Internet, and radio growing, albeit at much lower levels than in the past three years. Print spends, at best, would be stagnant visà-vis 2008, while cinema and outdoor would decline in absolute spends. While it would be zero growth for the print sector which had been on a raucous growth path for some years now, television is expected to manage a growth rate of just seven percent, thanks to the consumer goods sector, which so far has not been hit by the slowdown. While the big brother print media grew at a healthy 16 percent at Rs 9,825 crore in 2008, the seven per-

cent growth for the television space is way below the 17-percent growth it achieved in 2008. In fact, this is a significant decline vis-à-vis past three-four years, when it grew over 20 percent. In 2009, television spends will be primarily driven by consumer goods players—the foundations of television advertising—who would continue to spend, and would grow by around 16-17 percent. But a significant number of other sectors, notably, durables, auto, banking, corporate brand building, IPOs, and retail would decline. Also telecom and DTH are likely to spend less, leading to the overall slow growth. The major reasons for the flat growth of the print media are following the slowdown, the critical print spenders like automobiles, realty, banking, durables, corporate advertising, IPOs, retail etc would cut down on their spends. These sectors represent more


INTERNET

ments in their overall share in the ad pie too at 3.6 percent which is up from 3.2 percent, and 2.1 percent, up from 1.7 percent, respectively in 2009. The reasons for a reasonable growth of radio include opening of new stations, providing localised advertising options for advertisers, advertisers' increasing confidence on the medium both from executional and operational

1,419 crore it had grossed in 2008 to Rs 1,135 crore in ad revenue earnings and its share from 6.8 to 5.4 percent in 2009. The reason for this very poor performance is that it has been reeling under lower demand over since October, and Mumbai, which accounts for a significant proportion of outdoor spends, has been adversely affected. In case of cinema, we see a negative

CINEMA

OUTDOOR

2008

2009

45%

25%

Rs 363cr

Rs 453cr

sectors mentioned above. Hence, zero growth for the medium in 2009. Also, along with this de-growth, print media is also expected to see a shrinkage in its overall share in the national ad pie—from 47.4 to 46.3 percent, yet maintaining its lead position in the overall ad spends sweepstakes. But television will see a major boost in its overall ad pie share—from 40.2 percent in 2008 to 42 percent in 2009. While the Internet and radio media which will grow at 25 percent and 15 percent respectively, would be the main saving grace of the year, outdoor and cinema will be the worst disappointments. It can be noted that both the digital media and radio had red-hot growth rates of 45 percent and 38 percent in the past year. The Survey pegs the size of these media formats at Rs 762 crore and Rs 453 crore, respectively in 2009. Accordingly, we see minor improve-

2008

2009

2008

2009

11%

-20%

24%

-5%

Rs 1,419cr

Rs 1,135cr

Rs129cr

Rs 123cr

perspectives, its ability to localise advertising which help advertisers do concentrated bursts with limited outlays etc. Hence, while the core sectors of radio which are similar to print would decline, the medium overall would continue to grow. Similarly, the Internet would continue to grow in spends, as in the times of slowdown marketers would look for cost-efficiency coupled with measurability. Hence, while the core sectors of the digital spenders include those of print, one senses that the spends on this medium are not likely to fall as this medium demands only lower outlays vis-à-vis other media formats Also, the reach of the Internet is only bound to grow over the next twelve months, adding to its popularity and reach. The third largest medium outdoor will register a massive negative growth of 20 percent—a steep fall from Rs

five percent growth in spends vis-à-vis 2008. It is likely that the non-measurability of cinema spends is going to be counter-productive. Advertisers are likely to place safer bets on their spending in bad times. The decline in multiplex footfalls will also be a big turn-off leading to lower spends. While this may sound cataclysmic, it's perhaps better to face the reality and get prepared for the Great Indian Media Meltdown. Several large media firms have already announced hiringfreeze and even salary cuts. Plans for new print titles or channel launches have been put on the back burner. We, at Pitch and Madison Media, will keep an eye on how the advertising and media sector shapes up in the next few months and will return with a special mid-year update on how these projections are playing out.I —ben@pitchonnet.com 8319

8319

than 35 percent of the print spends. As mentioned earlier, one has already been sensing the slack in these sectors since last November. While certain other sectors such as education, insurance, and consumer goods would grow. The impact of these declines would be so hard that even the heavy election advertising for the forthcoming hustings is unlikely to offset the degrowth in the

January 2009 I Pitch I 91


TELEVISION

TIME FOR TOUG The second largest ad revenue grosser will fare better than most of its counterparts By DEEPTI AGGARWAL

F

or the small screen, the last year has been one of fair performance and the industry would like to maintain the same strike rate but a number of factors led by the global economic meltdown are proving to be serious obstacles for the industry's growth momentum. Based on the projections of the Pitch-Madison Media Ad Outlook 2009, it can be said that the new year will be a little less bright for the television media in the country with the industry estimated to post a lesser growth rate of seven percent only. The second largest medium is likely to record an advertising revenue of Rs 8,901 crore in the new year. Comp- aratively, a seven percent growth rate is a major decline vis-Ă -vis the past three to four years performance when this industry had posted double-digit growth figures without a break, riding on the economic boom when the national GDP has been logging in over nine percent growth year after year, and the resultant increase in the spending power of consumers. Articulating his apprehension, Zee News chief executive officer Barun Das says, "if the economic scenario deteriorates further, advertising revenues may see a slowdown." However, the saving grace for televi-

98 I Pitch I January 2009

sion media has been the consumer goods segment, which has in fact been the foundation of the television revenues. Probing a little deeper, our Survey finds that the fast moving consumer goods sector would continue to spend and also make an increase to the tune of 16-17 percent, while a large number of strong spenders on the television medium would cut down on their spending in 2009. Some of these categories would include the automobile sector and the banking part of the banking and financial sector, IPOs (considering the ongoing mayhem on the bourses) corporate brand building and retail would also exhibit a decline in activity in 2009. Still, some marketers continue to repose their faith in the medium as LG Electronic chief marketing officer Lakshmikant Gupta says, "continuing

8,901 crore the ad revenue that television is likely to clock in 2009 on a growth of just 7 percent

Growth Index

17%

7%

8,319

8,901

2008

2009

with our strategy from early 2008, the next year will also see our advertising focus shifting, apart from television, to the Internet, in-store, etc. We have a long-term plan and despite the times, we are confident of achieving our goals." Gupta's statement reflects that while more and more marketers are putting more money into below-the-line activities, the advertising spends on television would continue to remain though not as strongly as it was during the past few years. And the industry has braced itself for the not-so-great times ahead! Zee News’ Das feels that if the slowdown


2009

HER MEASURES in the Rs 21,200-crore advertising and media industry in the new year

Highlights FMCG players, which are not affected by the slowdown yet and are likely to spend around 17%, will continue to be the biggest spenders on television. FMCGs account for 48% of all television spends. But spends from durables, auto and banks would take a big hit. continues the ad-revenue may feel a pinch. But Das is hopeful that the Indian economy will perform better and that would augur well for the industry as well. Star India executive vice-president for marketing Anupam Vasudev opines that the first half of 2009 will be more affected by the global economic conditions as there would be more pressure on businesses. But in the second half, as the businesses start to consolidate, things would start improving. “We also take heart from the fact that Media is still in a growth phase and the rural markets continue to remain strong and haven't been affected much

by the slowdown.” says Vasudev. HBO India country manager Shruti Bajpai feels that when the going is tough, and there is a slowdown in the economy people may cut down on their entertainment and travel but they will willy-nilly watch a lot of good entertaining television bringing hope to the industry that while the customer eyeballs are there, the advertisers will court the medium. NDTV Media chief executive Raj Nayak also believes in the axiom that in good times you advertise in bad times you have to advertise, and as the cost of building up the brands would go down the advertisers are going to continue to spend on television, keeping the sail steady. Discovery's Rahul Johri foresees, "in a downturn, the advertiser needs to spend money but the way he distributes it among channels changes. Since he wants to put his money only on top ten channels, you need to be among those top ten to keep the ad revenue flow regular." According to AajTak chief executive G Krishnan, "the objective for any media platform is to drive the advertising revenue by increasing the deliveries and providing innovative communication solutions to the advertiser. When the clutter increases, the advertiser will start paying a premium for consistency." Thus, he feels that

these factors would be, unquestionably, the clear differentiator. With industry sentiments still remaining upbeat and the marketers continuing to spend on the medium, the year doesn't look bleak for the industry; however, there is some scope for improvement as Discovery's Johri feels that some innovative content and programming is the way forward as he says, "digitisation is a big opportunity in coming times. Since the market offers a big chunk of young audience, there is a room for specialised channels with fresh programming." Reflecting similar sentiments, HBO's Bajpai points at some key factors which drive ad-revenues—how seriously channels take their content, how well they time the launch of new shows and initiatives to get the biggest impact, how competitive are the rates on offer and how well are they promoted at both the client and consumer levels. Zee News’ Das also says that he is not pessimistic about 2009. NDTV Medai's Raj Nayak begs to differ, though. Nayak is of the view that the economic turmoil is bound to affect the industry targets. Nayak reasons it saying, "if you look at sales one can easily see that the sales have been low. Therefore, I would say that it is time for tougher measures." I —deepti@pitchonnet.com

January 2009 I Pitch I 99


OUTDOOR

RAINY DAYS If 2008 was bad for the outdoor media, 2009 is going to be worse, with the By ONKAR PANDEY

T

he ongoing slowdown has certainly impacted sentiments across various media platforms right from print to television to outdoor, as marketers tighten their pursestrings. But the sluggishness has permeated down to OOH in a much deeper manner. Owing to lack of proper accountability and measurability, outdoor has been among the worst hit media with the industry facing severe cuts in spends from key sectors like real estate, banking and financial services and Mumbai—the biggest outdoor market—has been the most affected, according to the industry and analysts. Looking at the projections of the Pitch-Madison Ad Outlook, 2009 will see a drastic 20 percent negative growth in advertising spend on the outdoor

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media. The share of the outdoor media will shrink to 5.4 percent in 2009 from the present 6.8 percent in the overall advertising pie. As a result, the industry is expected to see a decline in revenues from 2008 figures of Rs 1,419 crore to Rs 1,135 crore in 2009. But, there's a silver lining too, the lull growth period that the industry is facing for the last three-four months, is expected to pick up from mid-2009, say leading industry stakeholders. JCDecaux India managing director Pramod Bhandula says the industry is on track, and the recent cuts in spends is more because of sentiments than market conditions. "I feel that growth will remain around five percent or no growth during the first half of 2009 and then it will be back to its pace as it was

Growth Index 11%

1,419 2008

2009

1,135 -20%

during the same period in 2008," informs Bhandula. CONSOLIDATION ON CARDS Interestingly, some experts suggest that the slowdown will bring in a phase of consolidation in the industry which will separate the men from the boys. "The slowdown shall bring forth the stronger and serious players in the business and will have a cleansing effect to the entire industry or a consolidation in the business," reveals Serve & Volley senior general manager Virender Raina. Big Street country head Rabe Iyer says research in the medium will lead to accountability. Local and small national players may get marginalised, if they don't innovate and build specialist expertise. More regulation will lead to more tenders and transparency. And innovations will be closer to the point of


2009

TO CONTINUE industry projected to register a 20% negative growth

Highlights Despite our projection of a massive 20% negative growth, most of the OOH players are expecting a better growth in 2009, as they expect a faster economic recovery as early as by the end of the first quarter of the next fisc purchase and corporate manpower will bring structured and objective decision making,” argues Iyer. Tag Media vice-president Mahesh Krishnan says, "2009 will set the men apart from the boys!" Navia Starcom India and Asia chief executive Sanjay Shah opines, "there is bound to be consolidation in the times to come. Synergies and technology are going to play a major role in the near future." In short, most of the players that we spoke to are bullish about their 2009 plans and growth prospects. Some players are even ready with their expansion plans for 2009. TRENDS & PLANS 2009 Serve & Volley’s Raina says 2009 shall be a landmark year for the industry which shall not only see growth on a faster pace but would also see a major

shift in terms of the total advertising pie. “Consolidation is on the cards. Good year for most of us in the industry,” says Raina. Enhance Media country head Kaushik Chakravorty agrees saying, "we’ll consolidate on our service and product offerings and also enhance our capabilities to provide better products and optimal costs within defined timelines. This will mean a bigger team for our increasing business relationships with our existing and new clients. Also we’re in active discussions with various like minded players for creating what I call the i2i network—ideation to implementation," he elaborates. However, Ghraphisads managing director Mukesh Gupta is keeping his fingers crossed and expects the market to get back in shape. “It will take some time but we are hopeful that after the general elections in April-May, if a stable government is back, growth would be back on track," opines Gupta. Jagran Engage general manager for brand development M Kumar says 2009 will see robust growth as a lot of projects that are currently underway will be operational. New projects especially in transit/ambient space will also be new options to look at. We’ll aggressively follow a ‘specialist agency’ approach and pitch for business. Jagran Engage also plans to invest in new opportunity especially in tier two and three locations. Big Street’s Iyer informs that his

company is still enjoying the new entrant status and so is buoyant about 2009. “Like all beginners, we hold the unique advantage of understanding the trends and their implications and apply them to scale our business. We’ll continue to focus on driving solutions through its 3i model (insight, innovation and impact) for creating customer and consumer delight alike," says Iyer. He adds, with better technologies and smarter inventory, the role of relevance and contexts will increase in the industry. Experts also suggest that 2009 can be a critical year for the digital/retail media which remains unexploited due to low creative feedstock. They also note that 'metrics' will become increasingly important and players who have invested in analytics will benefit. Enhance Media’s Chakravorty sums it up well: "three things will stand out— more scientifically developed, aesthetically designed, technology-enabled properties will be introduced in various formats. Consolidation of a fragmented media ownership is already underway and rules and regulations, formats etc are getting standardised by authorities. Lastly, tools, processes, and measurement matrics will become critical." However, going by the nature of the OOH media, only a faster recovery will see advertisers going back to this space for brand campaigns.I —onkar@pitchonnet.com

January 2009 I Pitch I 103


RADIO

MUFFLED MUSIC The medium would show resilience although with lesser vigour as the slowdown deepens By KJ BENNYCHAN

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eflecting the slowdown in the rest of the media industry, the Pitch Madison Advertising Outlook 2009 says the radio medium will continue to grow, albeit at a much slower pace of 15 percent, against the last year's stupendous 38 percent growth, to rake in Rs 762 crore in advertising revenues, up from the Rs 662-crore revenue it had cornered in the past year. The Survey also projects that the industry will significantly increase its overall share of the advertisers' money at around 3.6 percent, which is 0.4 percent up from the share this medium had in 2008. This optimism is driven by the geographical expansion that the industry underwent last year and the likelihood of a rousing participation in the third phase of licensing which will be opened anytime now. Also, since the recent past advertisers' confidence in the effectiveness of this medium has been on the increase—both from an executional and operational points of view. The localisability of radio advertising provides advertisers to do concentrated bursts with limited outlays. Hence, while the core sectors of radio which are similar to print, would decline in growth rates, we do feel that the medium overall would continue to grow— the localised reach, coupled with lower

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outlays and greater advertiser confidence on execution being the drivers—says the Survey analysing the reasons for the poor growth in 2009. 3RD PHASE OF LICENSING Despite a bleak future, the industry is betting big on the third phase and a possible relaxation in airing sports and current affairs news in a much more open manner. Though everything is set for the third phase of licensing, the government is holding back the auction process as the current sentiments are down not only across the media space but even on the marco side. The regulator Trai had submitted its recommendations on the third phase to the I&B ministry last November. Its recommendations among others included: continuation of the city-level licensing process in the larger interest of expediting the process; removal of ceiling limit of ownership of 15 percent of the total permitted stations by any permission holder; removing the restrictions on ownership change after the starting of operations; continuing with the existing restrictions on the sources of news and current affairs (review may be considered after three years); categorisation of content to be treated as non-news and current affairs broadcast for another three years; continuing with the cur-

Growth Index 38%

662

762 15%

2008

2009

rent level of floor-price of licence bids; and automatic renewal of permission with higher of the 'future value' of the one-time entry fee paid by a bidder or the latest one-time entry fee paid by any licence bidder for a similar category city licence in the same state with the existing permission holder having the first right of refusal. It can be noted that during the second phase, the government had been earning close to Rs 40 crore in licence fees annually. The second phase saw 337 frequencies being offered to 40 licence-holders in 75 cities. The staterun All India Radio, which does not


2009

come under the licensing process, runs over 225 stations across. INDUSTRY: CAUTIOUS OPTIMISM When we elicited the views from the leading lights of the industry for the new year, we got a mixed set of views.

Highlights Radio would continue to grow, albeit at 15 % driven by massive expansion. Its ability to provide localised advertising options will see more marketers using radio space for brand building. However, core sectors of radio, which are similar to print, would decline. On one hand they are hopeful of the third phase, on the other they are also hopeful of the positive policy environments like political ads and news on the medium, helping the industry grow faster both in terms on revenue generation and content differentiation. Radio Mirchi chief executive Prashant Panday says the slowdown has hit all media segments and radio is not insulated. "Over the next 12 months, it looks really difficult to predict media or radio growth rates. What’s clear is that the next few months will remain weak," Panday is candid. But the head honcho at the largest radio station by listner-

ship, sounds optimistic when he says by January MNCs would come back with new budgets and that should improve the situation, and that will be followed by the domestic companies in April. Also, the April-May hustings will surely give a big boost—this is a Rs 5075 crore opportunity—that should take care of the first half. But he is not sure as to how the rest of the period will fare. "In any case, growth rate should improve next year from November 2008 levels because of the low base effect. But still I’d rather stick with this than try and predict anything firm at this stage. Radio will closely follow other media growth trends, but it will continue to grow faster than the rest for the next few years till it hits a six-seven percent share of the national advertising industry, driven by the next stage of expansion," says Panday. Radio City chief executive officer Apurva Purohit aggrees saying, "the year 2009 isn’t going to be an easy year for any industry, however, to what extent is something that no one can predict now. If the government’s stimulus initiatives work, a recovery will be in sight as early as April 2009 and if not, then we may be in for a long haul of slow growth." However, Big FM chief operating officer Tarun Katial is more positive, as he believes that during the slowdown, advertisers would seek and recognise the value of radio in their plans and increasingly. "Wider reach of radio, coupled with decline of the print in terms of reach and the higher stickiness of radio suggests a good future for

growth and profitability," he says. Similar is the view of Red FM chief operating officer Abraham Thomas who says the very nature of radio— eing very 'local' and 'live'—lends itself well to advertisers. I expect radio to corner 8-10 percent of the ad spends in the next few years as there’s an increa sing demand for BTL advertising options and radio is more suited for such BTL campaigns. "The share of radio in the ad pie is the second lowest after the Internet, while its reach and effectiveness is manifold. I believe radio is grossly undervalued today, and that's why it's projected to have one of the highest CAGR in the next few years. Radio is already proving to be a more cost effective medium for local/retail advertisers looking at reaching a large number of people, as radio's CPT is around Rs 331 compared to Rs 1,176 for print," argues Thomas. MyFM chief operating officer Harrish Bhatia is also bullish. In fact, he says, "MyFM is definitely looking forward to a very brighter year in 2009. We are already geared to embrace the permission to broadcast news and current affairs and are hoping that the settlement of music royalty issues will give a boost to the growth too. These issues are common to all players. Furthermore, the third phase will help us establish ourselves as a leading station with national footprint." Alhough the industry is optimistic, it is too early to reach any conclusion as all will depend on how the economy fares in the next two quarters.I —ben@pitchonnet.com

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INTERNET

MOUSE HOUR After an impressive 45% growth, the mouse trains its guns for a big kill in 2009 By DEEPTI AGGARWAL

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he Internet, which has till now been taking home the consolation prize for its size and relative growth, can now more emphatically stake claim for a bigger pie with an enviable growth prediction in times when most media platforms are either bleeding or are out there, posting a miniscule growth. According to the Pitch-Madison Media Advertising Outlook 2009, the medium signals to arrive as one of the most formidable mediums in the year 2009. The 2009 projections peg the size of Internet at Rs 453 crore with a year-on-year growth of a good 25 percent. Our Survey finds the Internet to emerge as one of the few mediums that will push the growth momentum for the advertising industry. For the first time in many years, Internet will be able to cross the two-percent mark to claim 2.1 percent of the total ad-pie. One of the reasons why internet promises to deliver better results in 2009 is that it is likely to play its measurability card more effectively and more reasonably. Since the core online advertisers also constitute majority of heavy print spenders, eyeing for better measurability, they won’t squeeze the

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ad flow for this medium. Lower outlays and better measurability vis-Ă vis other media would ensure growth for the medium. In addition to this, the reach of the Internet is also bound to fatten and grow over the next one year, contributing to the increased over-spends. Many analysts perceive that while advertisers are pushing for better cost efficiencies, they will also want to grow their top lines. And the economic slowdown can prove to be auspicious for the launching of new products, stealing market shares or sharpening the brand images. As Google India business head for travel and local business Narsimha Jayakumar contemplates, "while some advertisers are pruning advertising, quite a few are looking to invest more efficiently.

25% The 2009 projection pegs the size of the Internet at Rs 453 crore with a 25% growth

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45%

25%

363

453

2008

2009

With capital becoming scarcer and scarcer, advertisers are looking for RoIs and other metrics more carefully than ever before. This trend is there to stay and would be keenly watched. This augurs very well for the new media." Jayakumar adds that growth will be principally driven by more advertisers adopting the medium for brand advertising and more consumers opting for online research and shopping. Advertisers in sectors like consumer goods, telecom, retail, healthcare and education are also likely to grow


2009

their investments online. This, certainly will help consolidate the gains made in the year 2008. Even the specialised agencies are sensing it to be the correct time for

which indeed reap the benefits. NDTV Convergence chief executive officer Sanjay Trehan is of the view that the time is more than ripe for the trend to see a replication in India. He

Highlights The online industry is poised to grow to the tune of Rs 453 crore, acccording to our Survey Internet is likely to post a 25% growth rate year-on-year Internet will be able to cross the two-percent-mark for the first time to claim 2.1 percent of the ad-pie in 2009 Ad-spends from sectors like consumer goods, telecom, retail, healthcare and education are likely to grow in the online media more online advertising to pitch in. Webchutney chief operating officer Rahul Nanda observes, "this period is definitely an opportunity to showcase the clients the RoI capabilities of this new medium. We do hope to ramp up an even higher percentage of the overall marketing budgets from 2-3 percent to around 5-10 percent on a year-on-year basis." Mature markets have very clearly exhibited that when the mass media platforms do shed their share, obviously it is the interactive and, of course, the below-the-line mediums

says, "the advertising spends on the Digital medium—website and mobile will increase. The Internet spending is still growing in US and this trend will be certainly reflected in India as well. "The companies earlier inclined towards the traditional medium have also started experimenting with the web. This will, in all probability, pump growth into the evergrowing digital market over the next 12 months or so.” Well aware of the fact that Internet still forms a paltry sub two percent of the ad spends, Times Business

Solution chief executive R Sundar comments, "the Internet continues to be a niche-spent medium for most of the major spenders. The domestic digital media industry accounts for only about two percent of total media spends; however, this economic downturn has indeed pushed advertisers to look out for more accountability for their ad spends." The very measurable impact and immediate returns of the online advertising medium will help advertisers target specific groups, making it more easier and more cost effective for them. Yahoo India director for sales Pearl Uppal also strongly believes that the factors of measurability and targeting will be the aces for the Internet to continue to post a robust growth story. "I believe some of the best work on digital display advertising is beginning to happen now and will further accelerate in the year 2009." says she. Quasar co-founder Manish Vij also feels that he sees a bright year for digital advertising but the clients will have to display faith and have patience. MakeMyTrip’ Kalra says, "if sales promotions, new launches, etc. are your goals, then internet is the right option to choose from a host of other options." While 2008 has been a good year for the Internet medium, will 2009 further accelerate its growth and prominence in the ad mix? If the number of internet users and the reasons for spending time online continue, looks like Intenet is here to stay.I —deepti@pitchonnet.com

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2009

CINEMA

A COMPLETE BLACK-OUT Slowdown is likley to have one of its worst impacts on cine advertising medium

Highlights

Growth Index

The ad-pie share of cinema advertising is likely to remain static at 0.6%

24%

129 123

2008

2009 -5% By ONKAR PANDEY

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f 2008 was bad for the medium, 2009 is going to be worse, says the Pitch-Madison Ad Outlook 2009, which predicts a negative five percent growth in ad spends at Rs 123 crore from Rs 129 crore it netted in 2008. And the reasons are not hard to find: Already reeling under the pressures of the downturn and the terror fear psychosis gripping the public, the year 2009 is likely to be bad for this medium. However, the Survey predicts that the share of this medim in the overall ad-pie will remain at 0.6 percent in 2009 too, as it projects an overall flat growth for the ad industry. But a lot will depend on the Bollywood fare on offer, if the number of hits increase than there is a likelihood of increased earnings. Coming to the big ticket hopes for 2009, the first big bonanza is going to be the

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Akshay Kumar- and Deepika-starrer Chandani Chowk to China, released in January. In addition other films that marketers can ride their products on are Kambakht Ishq, the SRK starrers Billu Barber and My Name is Khan, the Aamir-starrer 3 Idiots, Salman’s London Dreams, Hrithik’s Kites, Delhi 6 and Mani Ratnam's Raavan among others. Also a lot will depend on the general security environment. Noted film critic Taran Adarsh predicts, "2009 should be good for Bollywood, and I hope the major stars to do well at the box office. But, everything depends on good stories as proved by Ghajini." Cinemax India senior vice-president Devang Sampat is hopeful of the year ahead. "This medium is there to grow. Earlier it used to go as a miscel-

laneous expense part of the marketing budget, but now people are treating this medium as an important element in the ad budget allocation," says Sampat, whose Cinemax chain is targeting to take the revenue share from advertising up to 12 percent of the overall turnover. The chain is also expected to open more halls in 2009. Dimples Cine’s Karamchandani expects a considerable interest in the activation business. "I foresee growth in our BTL division in 2009," he says, adding digitalisation is the way forward, "Digitalisation of projection system will eliminate production cost and logistics involved and more importantly addresses the monitoring issue which plagues the medium," he says, adding clients are now seeking a 360-degree approach to this medium, both for on-screen and offscreen, and so the key will be innovation. But if there are no good movies then, it will be a tough year ahead. Some analysts predict a good year ahead for Bollywood as they believe that the industry will not be hit by the meltdown. Their optimism stems also from the faster growth of multiplexes in cities and towns. Another reason is the better packaging and marketing of movies. However, as of now it is better to be cautious and keep your fingers crossed. Yes, if these predictions come true, then cine advertising will be the biggest gainer. I —onkar@pitchonnet.com


B R A N D A C T I VA T I O N

SLOWDOWN IS FAST-TRACK FOR SOME! By ONKAR PANDEY

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any industry analysts predict 2009 to be the inflection point for the evolving activation marketing business. The ongoing slowdown has meant not just crunched marketing budgets but also a frenzied move towards more measurable marketing strategies for marketers who are smarting under slowing sales. In their efforts to reach out to the tight-fisted consumers who are more watchful than ever to part with their hard-earned money, marketers are increasingly choosing non-mass media initiatives which are loosely termed as brand-activation or below-the-line marketing initiatives, as the way forward. The Pitch-Madison Ad Outlook 2009 Survey has already indicated stagnation in the ATL spends, indicating that the days of heady double-digit growth are over, at least in 2009. Our Survey predicts just two percent growth in 2009. Print is likely to witness zero percent growth and television just seven percent—a massive 10 percent drop from 2008's 17 percent. Outdoor and cinema have been the worst hit media, both would see 20 and five percent contraction in ad revenues, respectively. It's not that only marketers who are

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2009: An Inflection point for the brand activation industry G

Clients are demanding more ‘measurable and instant returns on their marketing spends’ and hence more activation campaigns

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Through-the-line, below-theline, brand activation, brand promotion, non-traditional communication, integrated communication, brand engagement, experiential marketing…many names for the activation space!

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Triangular contest in on among independent players, mainline creative ad agencies, and media agencies to corner market share in the evolving activation space


changing their media-mix in favour of the activation space to ensure higher conversion rates in these trying times, other factors like fragmented consumer base, cluttered media space, and changing consumer behaviour towards purchasing and media consumption are also pushing the BTL business further. Let's look at how some of the leading marketers are driving the way forward on the activation front. In 2008, Samsung India spent a phenomenal 55 percent of its marcom budget on the activation space. Deputy managing director Ravinder Zutshi informs that owing to expansion in semi-urban markets, there’s a higher skew towards BTL like in-shop displays, roadshows etc in 2008. "The skew towards BTL will remain in 2009 too," Zutshi adds. Big mass media spender like CocaCola India have already gone down the activation route with the sponsorship of the Rural Olympics and other social initiatives. Going forward we plan to further strengthen our BTL communication, says the company spokesman. Even though mass brands like telecom and FMCGs will continue to give television a higher weightage in their media plan, thanks to its wider reach, even they plan to actively use digital and activation domains actively. Again, durable brands like LG and Whirlpool are actively planning to use BTL strategies like in-store experiential marketing to attract customers, and so do auto firms like GM and Hyundai. Says Hyundai India managing director HS Lheem, “we will definitely be realigning our advertising and media strategy. In 2009, our focus will be more on non-traditional media." Mobile opera-

tor Idea Cellular chief marketing officer Pradeep Shrivastava says, "we have always had a 360-degree approach, and we will continue to do so in 2009 as well." Such bullish reactions from marketers showing a definitive move towards the brand promotions/activation platform is the main reason why many an industry analyst reckon 2009 to be the year of activation discipline. THE NAME GAME What's in the name, a rose by any other name will still be a rose, goes a famous proverb. Though activation/ BTL definitely seems to be the flavour of the season, its definition and nomenclature has spawned into a story of its own, with different players terming it differently per their ease and style. To keep confusion at bay and without getting into another debate, we at Pitch, have decided to call it ‘brand activation' in these pages. But to get a hang of the things in the industry, we spoke to various experts and players, and it appears that there isn't any consensus on naming this industry just yet. Some of the popular nomenclatures used by the industry are: through-the-line, below-the-line, brand activation, brand promotion, new-age or non-traditional communication, integrated communication, brand engagement, experiential marketing etc. While GroupM CEO Vikram Sakhuja says ‘activation agencies’ is the most appropriate term, as its intention is to bring a brand experience to life, Lowe chairman R Balakrishnan defines it on a broader scale as: "channel planning to identify most influential marcom plan." SolutionsDigitas managing director Srikant Sastri says his agency is streamlined into four broad areas: expe-

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B R A N D A C T I VA T I O N riential marketing, retail/trade marketing, direct/one-to-one and digital marketing. Explaining the concept further he says, "a DM agency is different from a brand promotion agency as the latter focuses on providing live-brand experience, while the former does one-to-one marketing relying on a strong database and technology use." SIZING IT UP As of now, it's hard to exactly size up the brand activation/BTL space due to lack of billing information and high level of fragmentation in the space. But according to industry insiders, the BTL market is worth anything between Rs 500 and Rs 2,000 crore, and is growing at a healthy 20-plus percent annually. A leading player 141 Sercon managing director Vijay Singh says, "it's very difficult to ascertain the industry size; however it’s growing at 25-30 percent." While Candid Marketing managing director Atul S Nath is more moderate, "The organised activation/BTL space is worth around Rs 500 crore," he says. While, leading events management firm Wizcraft director Sabbas Joseph pegs it at around Rs 2,000 crore. WHY THE BTL BOOM? One thing is clear that BTL growth is for real and here to stay. Besides the pressing economic conditions and marketers’ measurable RoI worries, other factors like growing popularity of organised retail, technology and the ability of this medium to engage consumers and brands in a two-way communication process leading to instant and long-term connect, have also turned the tides in favour of this fragmented space. Almost all the creative and media agencies, have come up with or are plan-

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ning to set up dedicated activation units to cater to the rising marketers demand for higher RoI. Leo Burnett NCD KV Sridhar says the slowdown is for real and you'll see more BTL activities as sales and cash are going to be far more important than long-term brand values. Lintas Media chairperson and CEO Lynn DeSouza too says this medium will grow further, adding however, "but not at the cost of in-house media like television which will continue to perform well too." Candid Marketing’s Nath says, growth of organised retail and its rising attractiveness among consumers and the heightened competition are forcing marketers to create two-way communication platforms. ZenithOptimedia senior VP Navin Khemka says, "as media intake fragments, the way we build brands must also change. The time has come for some rules to be re-written." Echoing similar sentiments Encompass CEO Sukrit Singh, says brand promotion agencies are taking extra step to provide better services. "Pressure of slowdown will force marketers to try different non-traditional channels. ATL-BTL divide will start to blur, only impact will matter," he adds. Wizcraft’s Joseph opines technology has made reaching out to customers via BTL easier and efficient and also brings the much-needed transparency between consumers and brand. Similarly, RC&M’s Priya Monga says BTL activities like DM are highly effective in getting the message to end consumers and assess market behaviour through conversions and experience. Raising a significant issue on the speed of shift towards BTL, Publicis India CEO Nakul Chopra says, “the

speed vastly differs from geography to geography. India could have been faster lest issues like economy of TV medium and low Internet penetration.” A TRIANGULAR CONTEST The various experts and mainline agencies that we spoke to inform that a slow and steady shift towards BTL has happening for the last four-five years. As a result, in a bid to get a head-start and corner majority share of marketer's money, a triangular fight is unfolding among the three major contenders: the mainline creative ad agencies, media agencies and various independent players in the brand promotion/activation space, who claim to be pioneers. Most of the mainline agencies have started their own activation arms or acquired leading independent BTL operators. Among the major deals include Publicis acquiring Solutions in 2007 and re-launching it as Solutions


Digitas. The agency also owns one of the biggest BTL agencies Dialog. The WPPowned Bates acquired 74 percent in event management firm Sercon in 2006 and re-launched as 141 Sercon after being merged with Bate's activation arm 141 India. As recently as 2008, JWT acquired majority stake in event management firm Encompass. Mudra too has aggressively entered the activation space acquiring brand promotion agency Candid Marketing. Leo Burnett’s Sridhar says his agency has set up Arc Worldwide to address the new media ecosystems. While Lintas Media, which already runs various activation services like DM, PR, digital media, healthcare, rural communication etc, plans to beef up its channel planning to use these diversified BTL divisions for integrated solutions. Even McCann World Group, in an effort to beef up its activation offering,

has launched its second agency TAG early November 2008, making India only the third market after San Francisco and Tokyo. Announcing it, McCann World Group India chairman Prasoon Joshi had said, "TAG is designed to approach brand challenges in an unconventional way…given the status of the economy there is a strong need to provide effective and accountable solutions that solve the problems where they exist rather than just restricting ourselves to mass media options." Media specialists such as GroupM, StarcomMediaVest and Zenith Optimedia too are staking their claims in this evolving market place. GroupM South Asia CEO Vikram Sakhuja informs his agency has been servicing BTL needs of its clients for the last four years with their specialist unit Dialect. “Dialect has completed over 400 activation projects in 2008," adds Sakhuja. Starcom MediaVest has seven different units to cater to varied brand needs that include activation as well, while ZenithOptimedia too plans to set up specialist arm for BTL soon. Starcom MediaVest’s Ravi Karin says, "we’ve the capability to deliver smartest integrated marketing solutions to our clients." ZenithOptimedia’s Khemka says, "we are in the midst of setting up a specialist arm to perform non-traditional and cross media platform solutions." Independent specialist brand promotion agencies are witnessing a peak in their businesses too with an increasing number of brands approaching them with their specific activation requirements. Jagran Solutions, from the leading Hindi newspaper group Dainik Jagran, for instance has done activation

for brands like TVS Scooty Pep+, Microsoft and Red FM among others. Similarly, 141 Sercon has undertaken activation campaigns for Sun Micro, Asian Paints, HDFC, Nortel and CavinCare. Encompass have worked for clients like Accenture, Ford, GSK, HP, HSBC, Microsoft, Nokia and Pepsi among others. Others like RC&M and event management specialist Wizcraft too have a good number of clients. But giving a little reality check on the industry, Mumbai Draftfcb+Ulka executive director and CEO Ambi Parameswaran says mass brands will continue to woo television and may even up their stakes, as this medium ensures maximum reach in a diverse country like ours. "BTL will benefit only if it’s sales driven. While 2008 went well till September, the last quarter saw a steep fall, and 2009 is expected to be tough. But if the economy recovers, BTL will move-up by mid-2009," he adds. And it's not that everybody is convinced that the brand promotion and activation space is a different marketing ballgame, worthy of being analysed separately. Starcom MediaVest’s Ravi Karin opines that one shouldn't be treating marketing through ATL and BTL lenses alone as it could be dangerous for the marketing discipline as a whole. Yes, the debates raised might not conclude here. But, with the activation space sure to witness more heady action as the year progresses, the players in the space will have a definitive end for sure. Keep a tab on the future issues of Pitch for detailed analysis of the brand activation space. I [With inputs from KJ Bennychan & Deepti Aggarwal]

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Pitch Madison Media Advertising Outlook 2009