The Indian consumer as we know her today was reborn in the early 1990s when the current political regime ushered in a new era. Since then, there has been a dramatic change in the consumer?in her ideology, her behaviour, her actions and her approach. But I dare say that change either in media or in the advertisers? approach to marketing and/or media has not kept pace.
A growing young and urban population, emergence of new sectors such as business process outsourcing (BPO), information technology (IT), travel and hospitality and a boom in organised retail and media and easy finance have all led to one important economic development? more money with more people. Accompanying this phenomenon is a sense of optimism and confidence in the individual consumer about her ability to earn even more money in the near future, leading to more spending power and ?desire? for a better life style. Today?s new consumer has less time, more money, is more demanding but fickle, has a mind of her own, is more difficult to reach, is a multi-tasker, is more individualistic, is more selfish and is willing to spend more money on herself. That?s quite a change, isn?t it?
If I compare these changes to the changes that have taken place in the media industry in the last 20 years, the way advertising is bought and sold, I dare say, there has not been too much change except for change in scale. The advertising industry in the early nineties was possibly valued at about R3000 crore and is today at just under R30,000 crore. Yes, so there is a change in scale, but not too much of a change in structure or composition, except for the arrival of cable and satellite TV, a plethora of channels, titles and an emergence of digital platforms, after a waiting period of 20 years at about R2000 crore. Not much of a change I would say.
Where do I see the industry five years from now, in 2017? Well, certainly a further change in scale at around R50,000 crore, but not very dramatically different in terms of structure or composition or in the way advertising is bought and sold.
If TV today accounts for 44% of the spend and digital, separately, at 8%, I see TV and digital together accounting for 55% of spends. Internet and digital alone will contribute to 15% of the media pie, up from the current 8% with mobile playing a dominant role. With increasing convergence of TV, mobile and the personal computer (PC), aided by a reduction in the cost of TV panels, computers, smartphones and data cost, I see the audio-visual media gaining in importance and becoming critically important to tomorrow?s marketers. There will be free interplay between TV, mobile and internet because all the three devices will offer the same features and facilities; audio-visual and interactivity being two of them. More TV viewing will take place through personal video recorders, spelling ?bad news? for advertisers and broadcasters.
A common belief, based on what has happened in the West, is that print is likely to suffer dramatically in the future. I, for one, do not share that view, at least not for the next five years for India. Print today barely reaches 350 million Indians out of a total population of 1.2 billion, and with literacy growing, the number of new readers that would come in at the bottom end of socio-economic classification would be substantial and would more than make up for the few lost at the top end to the digital world. The gap in advertising rates between English print media and language print media will reduce.
The total time spent on media will increase dramatically. While time spent on TV and print will remain static, additional time will be spent on internet/ mobile and these will not eat into the time spent on TV and print.
With digitisation, broadcasters will develop a healthy second stream of revenue from subscription which will make their business less dependent on advertising, which in turn could drive advertising prices up. However, this increase in prices alone will not result in a steep increase in advertising market value. Media owners often make the mistake of assuming that if prices go up, so will advertising market size. The home truth is that advertising budgets are decided by advertisers’ revenues and not by availability of media or by media rates. If the latter was the case, the outdoor advertising market should have multiplied many times because of the number of pedestrian overbridges that have come up all over our cities and news channels would have had a dominant advertising share in the television space. But that is not the case.
Radio and cinema will continue to have a marginal role and will grow only on the back of extensive retail advertising if it can be harnessed. Outdoor will grow only on the back of modern technology and agglomeration (emergence of four or five major players controlling at least 60% of the market), but I don?t see either happening in a hurry.
Media owners rue the fact that advertisers push hard for efficiency and push for rate decreases on the back of volume increases. If advertisers were to move the paradigm to effectiveness, and not efficiency, in my view the media pie would get seriously and negatively impacted because advertising volumes may come down, despite unit prices going up. We know that new advertisers and new brands reap rich returns in their early years, but advertisers spend big bucks on mature brands to retain their position or maintain share of voice, not questioning effectiveness, so much. But advertiser push for effectiveness is unlikely to happen.
Media that has been an attractive business proposition in the last decade, both from an economic return and valuation point of view and from the point of view of wielding power and glamour, I dare say, would become less attractive at least on account of the former and the boys would get separated from the men.
Some trends that I see picking up with the advertiser are:
Fast moving consumer goods will wholeheartedly buy into the concept of multimedia. Exposure will need to be supplemented by experience, thus, leading to substantial investments in below-the-line, activation and outreach programmes.
While exposure, reach frequency, cost per rating point (CPRP) and cost per thousand (CPT) will continue to be the parameters on which advertisers will buy paid media, advertisers will also push for exploiting owned media and earned media.
n Effectiveness of plain-vanilla gross rating points will come down. Advertisers will spend more on impact or properties, but with questionable returns.
Advertisers will want to focus more on contextual advertising and those media that can offer such opportunities will gain tremendously.
Advertisers will begin to look at their advertising content as that which educates and entertains with subtle emphasis on the brand message. Such advertising will create magic for the advertiser.
While I have outlined above what is most likely to happen, I would like to end with my wish list of what I would like to see happen in 2017:
An advertising industry that has grown to Rs 1 lakh crore on the strength of effectiveness, on the back of effective brand plans, not efficient media plans.
An established common comparable currency across media, perhaps CPT.
At least 50,000 advertisers on TV and 2 lakh advertisers in print, double the current number on the back of a concerted programme that advertises advertising to stimulate the growth of small and medium enterprises.
An industry-accepted definition of impact buys and engagement to justify the premium asked, which would make way for more accountability in advertising spends.
A single media owners association that transcends print, TV, radio, outdoor and digital.
A TV meter that captures programme viewing and advertisement viewing effortlessly without any action by the viewer, that can be installed remotely and data from it accessed remotely, and that which costs less than R20,000 to enable installation of at least 50,000 to 1,00,000 such meters.
The author is chairman and managing director of Madison World, a 24 -year-old diversified communication group, with 23 marketing and communication units.
