Advertisers opt for short-term deals, opportunistic buying

Advertisers opt for short-term deals, opportunistic buying
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First Published: Wed, Jan 28 2009. 12 45 AM IST

A good bargain: With fewer rivals vying for media properties, advertisers have more freedom to negotiate, even on prime properties.
A good bargain: With fewer rivals vying for media properties, advertisers have more freedom to negotiate, even on prime properties.
Updated: Wed, Jan 28 2009. 12 45 AM IST
Mumbai: Annual media deals are increasingly making way for short-term buys as shrinking budgets force advertisers and media specialists to go back to the drawing board.
Some companies, which earlier planned and booked ads for an entire year at one go, are now pushing media owners to accept short-term deals, where ads are booked or bought on a monthly or quarterly basis.
A good bargain: With fewer rivals vying for media properties, advertisers have more freedom to negotiate, even on prime properties.
Even as some advertisers now need to gauge revenue positions every month before making media commitments, some believe that the already hefty media discounts could get deeper in the coming months.
“We believe that in times of certainty, pick the long-term deals. In times of uncertainty, the short-term ones work better,” says Sandip Tarkas, president, customer strategy, Future Group, who also oversees media buying and planning for the group that owns Pantaloon Retail India Ltd, India’s biggest publicly traded supermarket operator.
The company used to tie in 80% of its ad budget in annual contracts. It has now pushed that percentage down to 60%, saving 40% for short-term deals and opportunistic buying done closer to the date of release.
While companies may have their annual ad budgeting in place internally, funds are increasingly being sanctioned monthly or quarterly, says Chandradeep Mitra, president, Mudra Max, the specialist media unit of the Mudra Group. This helps advertisers keep a closer eye on ad spending and the value it brings them. “Everyone will wait and watch… no one wants to stick their neck out and make long-term commitments,” says Mitra.
Also, it’s no secret that advertisers across categories have been reducing ad expenditure.
With fewer rivals vying for media properties, advertisers such as Future Group and Anil Ambani-controlled Reliance Communications Ltd, the country’s second largest mobile-phone operator, have more freedom to negotiate, even on prime properties.
“We are considering and evaluating short-term buys because media inventory pressures have eased and hence quality scheduling of spots and the premium attached to short-term buys is diluted,” says Sanjay Behl, group head, brand and marketing, Reliance Communications.
The company continues to sign annual deals on marquee properties in cricket, music and award shows, among others, which are now coming at “fabulous rates”, says Behl, but the lion’s share of regular advertising for the brand is being done on a short-term basis.
There are mixed responses from media owners on this. On the one hand, stronger ad vehicles usually welcome the flexibility offered by short-term deals. “No media owner wants to commit a good rate or discount for the entire year as they are hopeful that the situation will improve in the near future,” says Mitra, adding that this is a good time for short-term deals as media owners dole out discounts and value-adds.
Colors, the recently launched Hindi general entertainment channel, or GEC, for instance, is discouraging annual deals till the channel viewership stabilizes, says Sejal Shah, vice-president, India Media Exchange (IMX), the centralized media buying unit for Starcom MediaVest Group and Zenith Optimedia.
The flip side is that the strategic plans and liquidity of many other media owners could be negatively impacted by short-term planning.
New media titles and properties could particularly attract short-term deals. “As the market is very dynamic and very uncertain, a company’s risk-taking ability goes down substantially,” says Rohit Gupta, president, Multi Screen Media Pvt. Ltd, which broadcasts channels such as Sony Entertainment Television and MAX.
So, while sure-fire properties, such as the Indian Premier League, that have worked for advertisers in the past will still attract booking eight months in advance, the same may not hold true for new properties.
“Earlier, we were able to pre-sell new format shows up to six-eight months in advance and at a premium as advertisers wouldn’t take a risk; they would just go right ahead and block the property. Now, we’re not sure if the new properties will get buyers,” he says, adding that advertisers are more likely to pick slots closer to release dates.
Maheshwer Peri, publisher, Outlook Group, however, says they are seeing agencies and clients trying to consolidate on annual packages. Clients with multiple brands are especially negotiating better deals across the entire brand portfolio for all titles under a group. “These annual deals offer certainty for us and good packages for them (advertisers).”
He, however, adds that this is probably confined to the print media, in contrast to television, where advertisers may be seeking short-term deals since ad rates are high.
Meanwhile, media specialists such as IMX are recommending short-term deals to clients.
“It’s a myth that annual deals are a better option now as you have to renegotiate deals all the time. Especially when it comes to Hindi GEC, the month-on-month fluctuation (in viewership) is so much that you have to go back and renegotiate deals, so it’s better to do short-term deals,” says Shah of IMX.
gouri.s@livemint.com
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First Published: Wed, Jan 28 2009. 12 45 AM IST