New Delhi/Mumbai: Question 1: What worries Indian television broadcasters the most right now?
Answer: A 12-minute per hour ad limit and a war over ratings.
Question 2: What makes digital media happy right now?
Answer: Same as the above.
From French cosmetics manufacturer L’Oréal S.A. to the Gujarat Co-operative Milk Marketing Federation, better known by its brand Amul, product campaigns are increasingly going online as consumption of digital media expands.
Meanwhile, commercial breaks on television are getting squeezed by the regulator—only 12 minutes of ads per broadcast hour. On the other hand, advertisers are confused as ratings for TV shows are unavailable because of the ongoing battle between broadcasters and audience measurement agency TAM Media Research Pvt. Ltd.
Last week, L’Oreal launched a digital-only advertising campaign for its hair care brand L’Oreal Paris Fall Repair. The video for the ad created by digital media agency FoxyMoron garnered more than 1.7 million views on YouTube in one week. The digital space allows companies to wrap advertising into social media applications in ways that are simply not possible on TV. For instance, Amul launched a Facebook application and a microsite for its latest advertising campaign, “Eats Milk with Every Meal”, created by DraftFCB Ulka, the brand’s advertising agency.
To be sure, there is a vast disparity between the amount of money spent on TV and that spent online but the nature of the medium ensures that advertisers need to be much more innovative.
Television advertising is estimated at Rs.16,525 crore a year, while print accounts for Rs.15,250 crore, as per data from the media buying agency GroupM. The size of the digital advertising market is estimated at Rs.2,2Rs.2,938 crore by the end of FY2014. Ad spending on social media went up from Rs.94 crore in FY2012 to Rs.300 crore in FY2013, according to IAMAI.
Video advertising on the Internet has been growing at a rapid 40% over the past one year and is expected to speed up further to 60% in the next few months, according to estimates by media buyers.
“Issues between industry stakeholders have clearly accelerated growth for video on digital media platforms. Planners are planning content for the audio/video or AV format, it’s no longer TV,” said Jai Lala, principal partner at Mindshare, a WPP agency.
As indicated above, this means serious money is moving into digital media.
Demand for digital
Consumer goods companies are spending over 10% of their total ad budgets on digital advertising, particularly video, as opposed to less than 5% a year ago. For automobile and finance clients, this number is above 20%. Critically, these sectors aren’t spending so much money on print or radio, Lala said.
“As advertising inventory and space on traditional media gets constrained, you will see advertisers exploring other avenues. Clients are demanding more and more in digital. The trend is towards thought-out and planned digital strategies which are effective,” said Dhruv Jha, business head, brand experience, Lodestar UM, an arm of the Interpublic Group of Companies.
A senior media buyer added that the number of digital media advertising deals since the broadcasters’ row with TAM began have been more than those concluded in the last six months put together. However, he did didn’t put a number to the advertising expenditure that’s moved online.
TAM Media Research, a joint venture between Nielsen (India) Pvt. Ltd and Kantar Market Research, is the only television audience measurement agency in India. The channels say its weekly ratings don’t reflect viewership numbers and fluctuate inexplicably. They want the ratings to go monthly. The advertisers say the move is regressive and need the weekly ratings to make sure money is being spent appropriately. The Telecom Regulatory Authority of India (Trai) has imposed a 12-minute cap on advertising per hour of programming on all channels. Trai, which regulates the telecom and broadcasting sector in India, issued a notification to this effect in May. The channels will have to switch to the new advertising regime from October.
“As a result of these latest developments, we have seen significant number of consumer goods clients discuss full-pronged digital media strategies going forward,” said Praseed Prasad, head of digital trading at GroupM, a media-buying agency.
He said that broadcasters are expected to increase television advertising rates as regulation limits inventories. “Higher rates will push advertising, especially, from news channels and other niche genres on television to online video,” Prasad added.
Not everyone believes that digital’s gain is TV’s loss. Mahesh Murthy, founder and CEO of digital media agency Pinstorm, isn’t convinced that the advertising shift to digital media is a knee-jerk reaction to the viewership tussle.
The spurt in digital brand-building investment was already planned and allocated a few months ago by brands for the financial year, he said. Furthermore, he doesn’t see advertisers moving back to TV even if the ratings issue is resolved.
According to Murthy, the floodgates to digital started opening up a year ago and the tipping point came when Indian Internet usage crossed 100 million people in November 2011, as per IAMAI.
It’s now pegged at more than 150 million and two properties, Google and Facebook, have over 125 million and 75 million users, respectively. “Compare this to The Times Of India’s direct reach of 7 million and English TV channels’ reach of barely 1 million-plus and you have a silent palace coup that has just taken place in Indian media,” he said.
The products of The Times Of India group compete with those of HT Media Ltd, publisher of Hindustan Times and Mint, in various markets.
Brands such as L’Oreal and Amul point to a larger shift in advertising content from television to digital media platforms such as YouTube, Facebook and Twitter. Automaker Tata Motors Ltd is among companies that have endorsed an advertising shift to digital.
“We do believe a shift is happening...with digital playing a more important role in the marketing mix,” said Ranjit Yadav, president, passenger vehicles business unit. “It is well established now that YouTube rivals viewership of large on-air networks. It is not just pushing content but digital gives space to develop targeted content, video or otherwise while keeping cost per reach competitive.”
The company’s Nano small car was among the first that could be booked online. The Nano’s Facebook page has a fan base of more than 3.85 million.
The shift is making for several new partnerships, given that new capabilities need to be added to skillsets.
Group M, the media agency of the WPP Group, has an alliance with 04 Digital Media Pvt. Ltd, a company promoted by Optimystix Entertainment India Pvt. Ltd, the television production house known for shows such as Crime Patrol and Comedy Circus. The initiative, dubbed Mash Up, is a content-led brand solutions company with a focus on video-led engagement. The alliance has already signed clients such as Bharti Airtel Ltd, Ford India Pvt. Ltd, Mercedes-Benz India Pvt. Ltd, Shoppers Stop Ltd and Skoda, Mint reported earlier.
The consumption of video on the Internet is surging. Indians spend approximately 19 billion minutes watching videos online every month, according to data from GroupM. There were nearly 80% more video views in 2012 than in 2011, and the current market size in India amounts to more than 43 million monthly unique viewers, and over 3.3 billion monthly video streams, it said.
The company said Internet video consumption is expected to increase sixfold by 2016. Add to that, the cost of producing content for digital media is substantially less than that for producing an ad film for traditional media such as television, making this avenue much more cost-effective.
A commercial on television is a one-time paid exposure of content, said Glen Ireland, chief executive, Dentsu Digital. On a digital platform, content is created and developed once but it is shared multiple times and goes viral. “Social media is the multiplier,” Ireland said.
Google Inc.’s YouTube platform is clearly as the most popular site for video consumption, with more than 40 million unique visitors a month. Over 8100 million minutes of video were watched in India in the month of May, as per data from digital research and marketing agency ComScore Inc.
Praveen Sharma, head of media sales, Google India, said YouTube had seen its user base in the country double, attracting more premium content partners and therefore advertisers.
The viewership of digital content, including online video, has gone multiscreen, with over 30% views coming from mobile devices. “That said, advertisers are seeing value in using the online video platforms for engaging audiences online and we are very pleased with this growth... We can safely say that YouTube is now integral to any video-based media plan,” he said.
The rise in viewership for online video in India has pushed up advertising rates as well. YouTube raises charges 10% every year as advertisers come on board. The question about whether digital advertising is effective does keep cropping up though. “We need to see how well it works and does it really have the impact that television has created. You need to find believers and then takers (of digital media) and that will come with a more mature market,” added Jha from Lodestar.
Another factor is the changing nature of TV consumption overseas, where episodes of a series are released at once and Apple Inc. is said to be working on ad-free TV. Digital video recorders, available in India, also make viewers inclined to fastforward through ads.