Boarding the ad gravy train

Boarding the ad gravy train
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First Published: Mon, Jul 30 2007. 12 15 AM IST
Updated: Mon, Jul 30 2007. 12 15 AM IST
First, Pepsico Holdings India Pvt. Ltd sponsored a special train, as part of its Blue Billion campaign, to ferry cricket lovers to the three Champions Trophy match venues last October. Now, it has its snack brand, Kurkure, as the name of three summer specials of South Western Railway.
“Has Kurkure arrived?” is a constant refrain at the Bangalore railway station. And what passengers are referring to is not the popular brand of high-on-chilli crispies but Kurkure Express, which runs from Bangalore to Nagercoil. The other two Kurkure Express trains link Bangalore to Chennai and Hubli.
To get thousands of passengers talking about its brand, Pepsico has paid Rs10 lakh for the sponsorship of the three trains. A tidy sum for South Western Railway, which recently hit upon the idea of allowing companies to sponsor special trains that did not have names.
And this is not a one-off case. Airtel, too, has its colours painted on rail coaches, as have organizations such as Western Union Holdings Inc., UTI Bank, Sony Television and Hindustan Unilever (HUL). But not everyone is repainting trains in their brand colours. L’Oréal group’s Garnier, for instance, plans to advertise its hair care products on train tickets and reservation charts. All these companies attest to the fact that the railways is a good vehicle for ads to reach a mass audience. And now, more advertisers are jumping on the bandwagon as the railways accelerates efforts to net ad revenue.
Take the Kurkure Express, for instance. It was made possible because of a special scheme conceptualized by the railways. “We offer a package to the companies. They get to name the train as well as feature their advertisement on its exterior. In return, they have to pay for the advertisement and also contribute to the upkeep of the train,” says Mahesh Mangal, an officer with South Western Railway who is part of the branding project.
Other railway zones can also tap into this branding scheme. The ministry has issued a circular which would allow general managers in each of the 16 zones to call for similar tenders, inviting companies to sponsor particular trains. “This is a totally unexplored revenue stream for us. We will try this for a while and see how much we can earn,” says a Railway Board official, who handles space marketing.
Shifting gears
To optimize advertisement revenue, the railways is selling ad spots on all possible properties—from neon signs in parking lots to train windows and food trays. This, apart from hardselling the traditional hoardings and banners at stations and kiosks. With one of the largest networks in the world, it hopes to leverage it to earn around Rs500 crore in the next two years.
Its sheer size may justify its mega plans. Indian Railways operates more than 9,000 passenger trains, which are used by about six billion passengers every year. It has more than 7,000 stations across cities, towns and villages. Plus, it operates more than 5,000 freight trains. All this translates into a huge advertising opportunity, both in terms of ad space and reach.
Till now, the 154-year-old organization had relied mainly on traditional mediums such as hoardings at railway stations and the odd small ad inside train compartments for ad revenue. “We earn less than Rs100 crore from space-selling efforts across India,” says a former Railway Board official.
The rather cumbersome process of placing an advertisement on railway property had limited participation. Gautam Jhanjee, head of assets (North India), Clear Channel Communications India Pvt. Ltd, an outdoor advertising company, points out that state-owned companies and banks had been using this medium more. “Other than that, it is mainly the telecom and FMCG industries which use trains as a medium for advertising, because they sell mass products and this is a mass medium,” he says.
So, a five-fold increase to Rs500 crore in ad revenue, is an ambitious target. The amount is much higher than what the biggest media buying agencies, such as Mindshare, Maxus, Lodestar or ZenithOptimedia, generate. Even a mid-rung media company such as New Delhi Television Ltd generates consolidated ad revenues of just about Rs13 crore. The Essel group’s television network of more than a dozen channels earned about Rs702 crore in advertising revenue the last financial year.
All aboard
Now under the scanner are innovative schemes (such as train sponsorships) and every element of train and station property. Interiors and exteriors of trains, tickets, waiting rooms and parking lots are all being explored for their advertising potential.
Decision-making is being decentralized and strategic moves may ensure the big players begin to advertise more with the railways.
The railways does offer unparalleled reach across income groups and regions. The network reaches almost every Indian, one way or the other. While the daily commuters on Mumbai locals form one category of consumers, the business executives travelling first class on a superfast Shatabdi between New Delhi and Chandigarh form a more select group.
Also of significance is the regional spread of the railways. At a time when many companies are keen to tap into the bottom of the pyramid, stations in small towns and villages provide an ideal canvas for advertisements. An advertiser can reach more than one region at one go. Compare this with the reach of television (60%) and newspapers (around 20%), and it is obvious why the railways would make an attractive medium for promotions.
“Advertising on trains is very cost-effective. Its reach is vast, especially for products that have a mass outreach,” says Sanjay Shah, CEO, StarSight India, the out-of-home media affiliate of Starcom MediaVest Group. Five of StarSight’s clients have advertised on trains, including Institute of Management Studies and ING Vysya Bank.
The cost factor is a huge draw. “To advertise on trays and window panels of the entire train, it costs companies about Rs4 lakh, and to advertise on the exterior of the train, Rs6-7 lakh. For the amount of eyeballs it gets, it is definitely a cheaper option than other mediums,” Shah says.
Apart from the eyeballs, advertisements on railways enjoy a captive audience. “Advertising on the railways is capturing the idle time of the audience, which is really effective,” says Ravi Rockey Ambrose, head of Ogilvy Action, the outdoor division of advertising agency Ogilvy and Mather. Its clients ICICI bank, HUL and Hutch have advertised on the Shatabdi Express, and in Mumbai’s local trains. “The average time spent in the Shatabdi Express is at least three or four hours and the entire time, the passenger could be staring at the message from the advertiser,” Ambrose points out. So, not only does the railways provide a wide cross section of audience, it catches them at their most receptive.
While advertisers are reviewing outdoor options in the wake of the railways’ efforts to revamp marketing slots, there are others who are already tapping the spin-offs.
Mumbai-based Axis Ad Print Media, for instance, has won a tender for printing high-quality, multi-colour tickets for South Central Railway. According to the director of the company, Pradeep Gupta, the tickets are printed on high-quality paper and would have enough room for advertisements. The revenue earned from the advertisements would be shared between the company and the railways. “We plan to introduce scratch-and-win contests on these tickets. We have already signed contracts with some of the leading FMCG companies. The clients are convinced about the effectiveness of the medium as they know that they would get a huge captive audience,” says Gupta.
Changing track
Opting for a decentralized approach, the railways has recently empowered general managers in zones to take decisions on raising revenue through advertising without seeking the Railway Board’s approval.
In an effort at consolidation, the railways has also stopped issuing separate tenders for hoardings at each station. Says Praveen Kumar, general manager of South Western Railway: “Now, general managers can issue a single tender for booking spaces at several railway stations in various divisions under the jurisdiction of the particular general manager.”
This might help bring about a significant change in the profile of companies which advertise with the railways. Till now, local companies were more visible on hoardings at railway stations. “The single-tender move will ensure that the big players, who invest in technology and quality, get more play,” the official adds.
It may be the start of a new race for space.
RAILWYS: Ad Vehicle
Reach
More than six billion passengers travel by railways annually.
The Indian Railways operates 9,000 passenger trains and 5,000 freight trains, There are 7,000 stations across cities, towns and villages, which give an advertiser a country-wide canvas—and allow for regional focus.
Innovative schemes
Targeting a five-fold increase to Rs500 crore in ad revenue, the Indian Railways is hardselling many novel ad spots such as train tickets, food trays and neon signs at parking lots. It has also launched a special scheme that allows sponsorship of summer special trains.
The advertiser gets to brand the train service that allows maximum recall.
The railways has decentralized advertising tenders. General managers in the 17 railway zones can issue tenders for advertisements. It is also possible to float combined ad tenders for several railway stations, facilitating the entry of bigger brands.
Cost
Compared to other outdoor media, the railways provides a wide reach at a competitive price. Placing an ad on food trays and window panels of the entire train costs companies about Rs4 lakh.
A display on the exterior of the train can cost up to Rs7 lakh.
Gouri Shah contributed to this article.
narayana.k@livemint.com
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First Published: Mon, Jul 30 2007. 12 15 AM IST