DAN Interviews

"TV ad rates will continue to be under pressure" - Ashish Bhasin

MUMBAI: From leading brands discussing the advertising fraternity’s readiness to deal with the digital onslaught to panel discussions after panel discussions dedicated to cracking the content code of the digital world in reputed conferences; the Indian media world is truly enamored with the word ‘digital.’ And rightly so, as the media has completely changed how the trade works in the sector.

But little is being discussed on the specifics of digital media’s effect on television and its business. To put this into perspective and shed light upon the current realities of the television industry from a media executive's point of view, indiantelevision.com reached out to Dentsu Aegis Network chairman and South Asia CEO Ashish Bhasin.

In a free flowing conversation, Bhasin opens up on sophistication employed in a new age television plan with the help of data analysis, ad-rates discrepancies in India, future of TV media from advertising perspective, and more.


Does Big Data and interpreting it play a role in today’s TV plans?

It is important to pay attention to Big Data and analyse it right. At Dentsu Aegis Network we have set up our own data stack, which is driving through econometric modelling. That team is using it...it is composed of a young team of statisticians and senior data analysts, economists, and technicians who are analysing and decoding the available data on behalf of our clients.

For example, you can get 44 percent reach for a particular plan on television. Now if you spend 10 percent extra on your budget, you probably can get 46 percent reach on the same plan. This 10 percent of budget spends for 2 percent of incremental reach isn’t viable for the client. Thats where the data team comes in, who have developed a software who figures out where is that wastage happening. They combine the television exposure and digital exposure and tells us here is the sweet spot for advertisers to spend that 10 percent on.

The age old problem of advertising is that advertisers know 50 percent of their advertising works but don’t know which half. Our approach helps the advertisers to know to some extent which half works.

Many fear that digital will eat into television’s ad revenues even as TV continues to grow. What are your thoughts on this?

Well in the distant future, in theory, digital will eat into television's market share because everything will become digital. It is already happening in the more mature western markets but in India that has a long way go because television penetration has some way to go. We are all seeing it still from a Mumbai-Delhi point of view but the growth is not going to come from these two metros, there is already 100 per cent penetration there. The growth will come from tier III tier IV rural towns.

There it is a long way to go. Therefore for the next five to 10 years there is enough space for all media to grow. Even print, which is collapsing everywhere else in the world is still still growing in India because literary levels are growing. But we don't doubt that digital will grow faster – at least we believe - than any other medium.

Will the per unit realisation (valuation) of television go up?

Per unit realisation is the function of the audiences you get. More your distribution, more your audience, more is the realisation. I don’t think it will go because there are contradictory factors acting. On the one side you are getting more audiences, on the other side, the time of these audiences is getting more fragmented. It is getting fragmented -- within television, and also between television and digital.

So, there will be a balancing factor. It won’t collapse like it has in many other parts of the world. It may go up but gradually because there will be the other factor of the fragmentation which will come into play. There will be the two paradoxical forces acting together.

Compared to markets like US, Indian television ad rates are very low even after adjusting the purchasing power parity. Your comments?

I think it is unfair to compare US national rates with Indian semi regional rates because they are operating on completely different bases. There are 300 million people in the US. Out of that the TV audience is about 150 million. Per person per secondage average if you compare the two, you will understand, there are two different bases you are operating from. It’s unfair to compare US national rates with Indian semi-national or regional programs. Because then what you should compare is the 0800 ads in Minnesota, Iowa. You see their rates, their rates are less than or equal to the rates in India, even though the ones there are in dollars. The Super Bowl, one refers to, is a dense packed audience nationally - it is a unique phenomenon.

Could the IPL be that property in India?

It probably could be, But the IPL has already peaked; it will not go beyond this. That’s why IPL is commanding the premium; one spot on IPL is so expensive. It is anywhere between Rs three to five lakh for a 10 second spot.

What trend do you notice in the current television advertising rates per spot?

I feel that the pricing on television will further go down. Today, we are looking at 0.1 rated programs. There are hundreds of programs that rated 0.1 by BARC. Tomorrow, you will be having programs with e rated 0.05, hypothetically. An advertiser is ultimately paying for the eyeballs the show is getting. If that number will go down, suddenly the prices can’t go up right?

It is true that some premier shows will command higher ratings, such as a cricket match etc. But I don't see the ratings going up in general.

An advertiser is only paying more money to get more audience. To an advertiser it does not matter whether the viewer is watching it on Zee, Sony, Star or Colors, he is interested in that my target audience, say a million people, where do I reach them? So, if the reach or number of people is going to get more and more fragmented, then the per spot rate is headed south. Overall the advertiser may end up spending more because he has to take that many more spots to reach the audience he wants, but the per spot rate realisation will not go up, it will come down.

The problem with television is also that there is too much supply, too many channels, too much inventory. The TV industry had one chance to limit the supply when the TRAI asked them to limit ad time on TV to 12 minutes an hour. Limiting supply could have had to benefit of taking rates up. But the industry did not comply with this. Hence, now there has been a commodisation of television air time.

Do you think we will need TV broadcaster going forward?

The reduction of dependency on a broadcaster is at least five to 10 years away in India, which is what I keep reminding people. We are at that sweet spot where everything is going to grow. While there will be a lot of digital pressure and digital will grow fast, actually if there were no other contradictory pressures, TV should have started collapsing. That will not happen because TV is growing.

Doordarshan has started giving away its Free Dishes in the south now. They started this in the north earlier. With this the penetration of free to air channels is going to really rise. Hence the distribution increase is going to keep an inward positive upward pressure for TV coming up. Digital is going to put pressure on it to push it down. Therefore it will remain in balance for four to five years. Finally, digital will prevail. Once you more or less have penetrated India. You have more or less got everyone in. That stage, that will be tipping point when digital will take over.

What will happen when Jio launches?

Globally, if you see, smart phone penetration when it goes over one third, it’s the rule of thumb. That’s the inflection point in digital anywhere. In India we are probably at around 18-20 per cent. We are about 12-18 months away from that point. The moment smartphone penetration crosses 33 per cent, bandwidth gets available cheaper and cheaper. And you get good quality bandwidth. That inflection point is going to happen.

How will that impact the advertising agency?

Lines are blurring. There is no difference between media or technology or content. There is only one solution. And the advertiser is looking at a comprehensive digital solution from his communications partner.

What does a traditional client looking for digital solutions want from an agency these days?

The client today doesn't want generalists. He wants super specialists. If it is digital, he doesn’t want a normally media guy to handle it, he wants a digital specialist to handle its social media, a search specialist and then a display specialist.

The clients today want the benefits of specialization but he does not want the hassles of silos. Fortunately or unfortunately, all the legacy agencies are constructed in silos. For a guy in a creative agency, it does not matter if the media goes to any other agency. Because they are all separate companies. Because of this they have not been able to provide a single solution under one umbrella.

The reason we have been successful is that we are structured as one P&L. Everything from media in India reports into me – whether it is Carat or Isobar or iProspect or Dentsu Creative or whatever. And that is our biggest strength because you can bring talent in, think around the client in one seamless way. And almost all of the others have not focused on this.

Your take on ad blockers?

Ad blocking is a very tricky subject. As a consumer when I look at it, ad blockers are damn good because audiences don't want an intrusion when they consume content. I think advertising businesses are to be blamed for getting the pushback from the consumers because people just went berserk with displays online. Consumers are not paying to see your advertising, they are paying for content. So if advertisers start intruding so much, there will be push back. And it will only go up unless we figure out some standardisation. The future of digital advertising is going to be opted.

We see ad blocking in conjunction with bot fraud and click fraud, it will lead to a scenario where the media will collapse unless the cleaning up doesn’t happen.

We have a large programmatic buying division. The biggest challenge they face is how do you that it's a human being consuming the content on the other end. So ad blocking will continue to happen unless you have incentivized the consumer to opt it. Either by choice or by incentives. Privacy laws will get stronger, they are much stronger abroad than they are here.