Sandeep Goyal, chairman of Dentsu India , is a busy man. For the past month, the man behind Lastminuteinventory.com, which he calls the world’s first online real-time media exchange, has been pitching this venture to media owners. He’s now in the second round of presentations—these are targeted at media agencies and advertisers. Goyal spoke to Mint about the media exchange which will go live for trading on Diwali and go commercial from 1 January 2008. Editedexcerpts:
Give us an update on lastminuteinventory.com
I am creating a mall, which must have stores first, or people who retail (media sellers).
Lastminuteinventory.com is the world’s first online, real-time media exchange dedicated to trading, and monetizing inventory available unsold with media owners till the last minute. It is a portal that provides a new sales channel for media owners to reach and engage geographically dispersed media buyers.
The people behind the venture are Dentsu India, with knowledge inputs from Dentsu Japan, and with small but significant investments by some media owners. It is owned and run by Last Minute Media Pvt. Ltd, which will run as a completely independent corporate identity with arms-length relationship with its equity owners.
Opportunity to trade is open to all members of lastminuteinventory. What is lastminute inventory? It is as defined by the media seller, and could be inventory pertaining to the last three days or ten minutes, whatever’s left to sell.
How it will work?
It is an online trading platform, and the entire deal is closed online. Advertisers and agencies can evaluate the available media inventory. The advertiser, however, has only browsing rights of available inventory, and can assemble a cart online, mail it to his buying agency; then the buyer and he can discuss the same, but only the media agency can place the bid on lastminute.
You can buy by fixed price—say, a media owner has thirty seconds of ad time available and will sell it for Rs10,000. If acceptable, it’s bought with no time lag or bidding. The bid-by-price route is a tendering process, the seller puts a floor price and the highest bid wins. The rest of the fulfilment is offline, directly between the buyer and seller and has nothing to do with lastminute. We are neither owners or sellers of the inventory or guarantee that the lot will be sold.
Will a bidder know who the other bidders are? And what about no-sell clauses?
Neither media owners nor bidders know who places the bid or at what price, only how many bids have been placed is known. Once the bid is closed, the owner will then know who the bidders were—99% of the time, he would pick up the highest bid. There’s a one per cent chance he won’t and there’s no bias in-built — an agency or client could be crossing internal credit limits and the bid may therefore not be accepted.
But if a media seller makes a habit of not selling to the highest bidder, then in extreme cases lastminute will intervene if necessary. But we are not an arbiter or in law enforcement, we are only a market maker.
If you lose ten on ten times you know you’re underbidding and if you win ten on ten times you’re over bidding. Agencies have to sharpen their skills (bidding). Sellers can withdraw a ‘lot’ till the last second before the bid closes, since the ad time/space could have been sold offline before that. Agencies too have the same privilege. They too can withdraw a bid till the last second before closing time.
When do you plan to roll out this service?
We have first put TV in place, then print-- newspapers first and magazines have been worked on later. TV, print radio inventory will now open about the same time; we will also soon start digital outdoor, and then outdoor and digital.
Bidding and trading will start from Diwali, but we will not take a commission (at first). From Diwali till end of the year, we will not take commission allowing constituents to settle down. From first January, we will start to charge our regular transaction fee.
We also have tools and analysis on site and getting into a tie-up with TAM Media Research Ltd, so that when you click on available inventory you can get last episode and last TRPs (Television Rating Points). We are trying to work with TAM, so that members can cross over their spreadsheets on to TAM’s site and get deeper analysis. We will attempt to do the same thing doing with other media—radio, press etc, and will looking at tying up with RAM (Radio Audience Measurement), IRS (Indian Readership Survey), or whatever the research body.
What are the economics of this business?
The annual membership fees for TV channels is Rs 2 lakh for a year for the main brand (Star Plus in the case of Star TV, for instance), and as the menu drops for every other subsequent channel (such as Star Utsav) under that brand name only the fee will be Rs 1 lakh. For a print brand, the fees will be Rs 2 lakh/annum and Rs 50,000 per edition thereafter and for vernacular we are looking at making this less expensive as their editions are smaller. For ad agencies, again, the membership is Rs 2 lakh. Our fee is 3% on every transaction, of whatever’s the listed amount.
My projections: for year one starting January 1, 2008, (we will do) Rs 100 crore of transactions at very conservative estimates, which should leapfrog to Rs 500 crore the next year and so on.
Some big media buyers such as WPP Group or Madison Media Group still haven’t signed up. And WPP is said to control nearly 50% of the Indian ad market
That’s OK. But, don’t forget many of their clients are on my list and that agency is at risk to let his client go somewhere else. Not a single client has said they wouldn’t want to be a member. I’ve made presentations to them (WPP and Madison) and maybe they’ll consider it later.
Will media owners get better ad rates for a property via this site?
Experience on auction sites shows that if the market price is Rs10,000 and you put a floor price of Rs9,000, you will get one and a half bids since it’s very close to market price and buyers reckon they might as well buy offline. But when you (the seller) look at any offer above Rs1, you are actually opening it up and may get bids of Rs5000, Rs6,000, Rs7,000--a good deal.
Understand also that the market price may be Rs 10,000 for an ad property, but a big buyer such as Levers (Hindustan Unilever Ltd) may already be getting it at Rs 5,000.... And if say selling price is Rs7000, the media owner will get Rs2000 higher than the Lever price of say Rs5000.
Don’t you see a conflict of interest in Dentsu, an ad agency, having an equity stake in the site? There are fears that Dentsu Media could use information from lastminute to grab business from other media buyers.
A Dentsu media guy will not have an iota of advantage over a media guy sitting in another agency in lastminute. Why did such ventures not succeed before? Well, they opened a mall, but no one wanted to open shops in the mall (few media sellers enrolled on the site). Malls anywhere in world first get anchor clients; they give them equity, preferential parking, preferential location, that’s why the guys comes in earlier as members.
Dentsu Media has no access to data, now or later.
Why do ad and media bodies have problems with your model?
It is all fine as long as client gets the best deal. No one asks a media body to become the government. Nobody governs someone else’s business.
What else do you have in mind for lastminute?
Reverse auctions, and also perhaps setting up microsites for advertisers. Now lastminute is vanilla; we will put other flavours and look at complete democracy