New ideas, new concepts and emerging new technologies are shaking up the way the television industry operates, reports Dipali Banka
Imagine on a weekend, while you are watching a movie on television, an ad pops up during lunch time offering one pizza free for each one that you buy. You press the green button on your remote control to accept the offer and place your order and because of the sensor orientation of your remote control, the pizza chain locates you, calls you and delivers hot pizza in 30 minutes. This is interactive television advertising at its nascent stage!
We are witnessing so many new technological developments within the broadcast and content consumption arena that industry dynamics are likely to witness major change in the way they have been functioning so far. Targeted Television Advertising, also known as ‘spot cable advertising’ in Western countries, is making its way into India and bringing in a whole new set of advertisers for the television industry, which because of its ‘mass’ status, it had not seen much of. Apparently, the content is also largely moving from mass to niche to on-demand.
As a consumer base, we are done with being a captive audience and with more access to high speed Internet on the go, except for news and sports, TV may not need to be ‘live’ at all. Video on demand and interactive video advertising platforms are sprouting up to make the most of accessibility. Interactive media will see explosive growth in the next few years.
Digitization of TV distribution, burgeoning sales of smart phones and LCD/LED TVs, launch of hybrid TV products, wider choice of available content across genres, etc., will lead to huge growth in consumer engagement and mediums that allow that to happen. But are we, as an industry, organized enough to adapt to this technological shift and be part of a mega trend? Do we have enough performance metrics and pricing models to take this to the next level?
Interactive Ads
Any new concept or media takes time to evolve. Interactive advertising will have a rather smooth ride as its performance metrics is directly associated with the response it generates. The key aspect here is razor sharp targeting and knowing where the customer is, which makes the content even more contextually relevant.
Bangalore-based company Lukup, which began operations in 2011, has evolved to become a platform that creates interactive content and delivers them to consumers on television, mobile phones and home media players. It works with leading digital television operators such as Airtel DTH and DishTV, select TV channels from the UTV and NDTV network, select digital TV and Mobile OEMs (Original Equipment Manufacturers), and leading media agencies and advertisers. The company expects to earn Rs 20 crore revenue this year and hopes to increase that with the launch of new hybrid TV products (ones that deliver live TV and online content on a single screen) that are retailed direct to consumers.
Jivox is another platform for interactive video advertising from creative customization to campaign execution and analytics. The company’s technology enables brand advertisers, digital agencies and publishers to deliver highly engaging video ads powered by interactive and social sharing widgets. Jivox is used by several hundred leading global brands like Microsoft, Yahoo!, Nokia, General Motors, HP and Google.
“TV channels are carefully evaluating what we offer and how it impacts their viewers and business model. Key issues are related to finding out where, how and what interactivity is required and should be allowed on their channels,” says Kallol Borah, Founder, Lukup. Media agencies are mostly very progressive and open-minded on innovation, he adds, talking about the role media agencies are playing in the ecosystem. The key issues are evaluating benefits for their clients, in terms of additional viewership and consumer engagement that interactive media delivers. Performance metrics and pricing are also key issues, Borah says.
Since there have been no pricing models for interactive TV so far, how do they price the inventory? “Pricing based on CPT (cost per thousand) on TV is at least 10 times lower than on online media. CPA (Cost per Action) pricing on TV is missing completely. To start with, we are pricing interactive inventory on TV based on reach and viewership and maintaining parity with TVC pricing models. This year, as we launch on hybrid set top boxes and connected TV platforms, pricing of interactive TV media will start to be driven by user engagement and as a result, rates will go higher and move closer to existing digital mediums,” says Borah.
“Currently, it’s really about the sweet spot in terms of pricing that works for the digital platform owners and the television channels,” states Ashok Lalla, Leader- Digital, Mindshare South Asia. Pricing models will no doubt evolve as the medium and its usage does, just as it has in the case of mainstream television. One may also see innovative pricing models that will win the day.
Targeted TV Ads
Targeted TV ads enable TV channels to increase their per-spot yield and inventory utilization significantly with zero additional investment in content, distribution, sales or technology. This provides a non-linear growth path to TV channels that are under significant pricing/revenue pressure. This service is popularly known as ‘spot cable advertising’ in the US and ad spends worth US$6 billion are spent on this medium every year.
In India, start up companies like Amagi, SureWave and Vubies (promoted by Rediff.com) have been able to extract additional revenues from existing advertisers, move BTL/print budgets to TV as well as bring a completely new class of regional/retail advertisers to their platform - all at no additional cost to broadcaster.
Amagi has been running commercial operations for close to three years. In the last year-and-half, the company has grown at 400-500% to become a multimillion dollar organization. The company, which has increased its presence in 40 cities in India, has added nearly 300 advertisers in different categories like education, jewellery, apparel, real estate, FMCG, white goods and auto dealerships in six months. So how does this system work?
Amagi buys inventory from national/satellite TV channels at a premium, splits the same spot in multiple cities and offers it to city or regional level advertisers at a fraction of the regular rate. So the TV channels get additional yield per spot, additional inventory utilization and an additional set of advertiser categories, which were so far not available to their platform. The group of retail advertisers get a taste of television advertising. When the company began its operations, it was only the remnant inventory and home ads that were being offered for target TV ads, but now Amagi claims to consume up to 20% of their entire inventory, thereby delivering significant value to them in the process. “Today, most of our business is strongly driven by clients - any innovation is first spurred by endusers who benefit the most; in our case as well, our clients are driving their agencies to embrace our service,” says Amagi’s cofounder KA Srinivasan.
The company also offers a service to allow advertisers to change their creatives in different regions for which they charge a premium. That premium is then shared with the TV channels. SureWaves, another technology company, also offers a national television spot network by aggregating inventory of local cable television channels on a single platform called SureWaves Media Grid and offers this audience to national level advertisers. Advertisers are then able to outline their media planning strategies and insert their campaigns into the TV channels. The company has partners with nearly 35 flagship television channels, for example Asianet in Kerala, GTPL in Gujarat and UCN in Vidarbha, Maharasthra. The company claims to have on board more than 50-60% of the top 10 advertisers in the country. “Cable viewership is amongst the largest in the country and the advertisements here lack transparency. We are actually organizing this entire unorganized sector and making it highly accountable,” says Rajendra Kumar Khare, Chairman & Managing Director, SureWaves.
The company also provides services of digital distribution of ad creatives and a platform where they can localize a satellite channel’s feed in local channels and attract local advertising for it.
Over-The-Top TV
According to InMobi’s Mobile Media Consumption Survey, mobile scored higher than any other medium across a variety of activities for mobile Internet users in India. Around 33% of 2,200 respondents across the country spend more time on mobile than television, which is at 27%. Not surprisingly, more and more TV channels want to be present on the mobile medium. We recently saw Star TV focusing on going fully digital
last year and also companies like UTV which are simulcast live on their YouTube channel and Facebook fan page. The company is also present on mobile TV across all operators and will be launching its own applications which will allow viewers to watch videos on demand but watch live TV via Android apps and the Apple store.
Zee New Media, the digital arm of Zee Entertainment Enterprises Limited (ZEEL), recently launched India’s first and only OTT (over-the-top) TV distribution platform which aims to offer TV channels and on-demand video content to consumers on their mobile phones, tablets, laptops, desktops, entertainment boxes and connected TVs. Ditto TV has partnered with Multi Screen Media (Sony Entertainment Television), TV Today Network, BBC and ZEE to host a total of 21 channels for content to begin with. Zee New Media targets 100-channel availability on Ditto TV in the next nine months and a subscriber base of 1 million users within the first year of operation. “In terms of revenues, we anticipate that Zee New Media, of which Ditto TV is a part, will eventually account for 10% of ZEEL’s overall revenues,” says Vishal Malhotra, Business Head, New Media, Zee Entertainment Enterprises Limited.
Talking about the ratio of revenues coming from the digital medium, Sameer Pitalwalla, Sr. Vice President UTV Interactive and Business Head, Celebrity and Video Products says, “Today our ratio of advertising to subscription from the digital medium is almost 50:50.” Like most other companies, UTV relies on third party ad networks for their digital ad inventory. According to Pitalwalla, it is better to work with ad networks in the initial phase where your focus can be on increasing scale and also the sales team might have difficulty in competing with a small base of inventory. And as you achieve a larger viewership, it is better to start sponsorships and premiums and then eventually do the whole widget yourself, he adds.
There are also companies like What’son- India which specialize in television search. The company managing these searches for Set Top Boxes from Airtel, Hathway or Tata Sky and builds such programmes for IPTV, mobile TV and cable DTH. The company also manages search for various digital platforms like mobile portals, tablets, mobile apps, tablets apps. “Recently, we built TV search for smart TVs. For instance, the latest Sony Bravio has a whatsonindia app, and you can sift through millions of shows. We are building a host of solutions for OTT devices and apps,” says Atul Phadnis, Founder-CEO, What’s-On-India.
Earlier this year, Cellcast Interactive India launched a social TV channel called MyTV, which is free-to-air, and ad-free, wherein brands can be directly integrated into the content. The channel features about 20 hours of in-house programming and works on direct participation of the viewers through IVR, Internet and SMSes.
According to Phadnis, we might see more devices getting connected to the TV sets in the future and that will again give users new content to play with, whether gaming devices or operative reorders. We might also see OTT devices which supplement or compliment STB (Set Top Boxes) emerge as Smart TVs take off in a big way.
Concerns
The key concern from media agencies for these new technologies in the domain has been the need to have larger value inventory and third party monitoring. The television industry is based on numbers, specifically people meter TAM. But this does not give a proof of play to the advertiser as to the region in which the ad was eventually played. “Transparency in reporting, quality of delivery and proof of play are the key concerns that will be fundamental factors that these firms need to focus on to evolve their business,” declares Arnab Mitra, National Director, Digital, Starcom MediaVest Group. “The day these companies come and show me the level of transparency and proofs of play, I would like to invest in them. But without that, I cannot go to my clients and carry out research at their cost,” he adds.
Currently, adoption of these new platforms is at a pilot /experimentation stage for most companies. As channels see audiences growing, there’s no doubt that the focus will become more mainstream, feels Ashok Lalla of Mindshare.
Feedback: dipali@exchange4media.com
