WPP-MC India director (investments) Sanjoy Chakrabarty says the CAS controversy over conditional access to TV channels will have a big impact on the media and advertising industry|
Mumbai: The conditional access system, or CAS, for television viewers to be implemented in India after 14 July 2003 is embroiled in controversy. Since it will have a tremendous impact on the media and advertising industry, domain-b interviewed Sanjoy Chakrabarty, director (investments), WPP Marketing Communications India Pvt Ltd, to understand the media buyer's viewpoint.
Chakrabarty, who was earlier media director at Hindustan Thompson Associates, looks after the buying requirements of all WPP clients (MindShare and Maximize) excluding MindShare Fulcrum, which manages the Hindustan Lever portfolio.
WPP Marketing Communications is today the world's second-largest media and marketing organisation and the largest such entity in India. Founded in 1998, with the merger of the media operations of JWT and O&M, WPP operates under the MindShare brand, which is part of a network of over 60 global communication companies incorporating expertise from the WPP group companies together with the MindShare specialist units. These are MindShare Digital, MindShare Direct, MindShare Consumer Insight, Maximise, the Advanced Techniques group, BroadMind, and the WOW factory.
Worldwide WPPMC's clients include American Express, De Beers, Ford, IBM, Kellogg, Kimberly-Clark, Kraft, Nestlé, Pepsi, Rolex, Shell, Sony, Unilever and Warner Lambert. WPP's clients in India include HLL, ICICI, Pepsi, Kodak, Ford, Onida, Star TV, De Beers, Nestle and Electrolux, making it India's biggest media buyer with billings in excess of Rs 1,500 crore.
WPP aims to corner at least 30 per cent of the estimated Rs 7,000-crore media-buying market in India. Since its launch in India in 2002, WPP Media's different operating and specialist units have won almost 90 per cent of businesses pitched, numerous Emvie awards and also won the Unilever Worldwide Communication Channel Planning Gold.
WPP Media India has recently added yet another feather to its cap. The company comprising MindShare, Maximize and MindShare Fulcrum has won the Agency of the Year Award from the business weekly Business Today. This is the second award the company has won within a year of its inception, close on the heels of the Best Media Agency Office in Asia Award. WPP's handling of the post-CAS scenario after 14 July 2003 will be minutely studied and emulated by all other media professionals in India.
Excerpts from the interview:
What are your views on the CAS controversy?
Our basic business is advertising, through which we reach out to the consumer. CAS will certainly impact our business directly. We would certainly need to know which homes opt for CAS and which don't.
Which type of homes go ahead with CAS and how many, will also be very important because that will impact directly on the viewership and ratings of different programmes. This, in turn, will have an impact on the pricing. After 14 July 2003, we will have to carefully analyse how the market moves.
With regard to set-top boxes, the change in price from Rs 7,000 down to Rs 999 will have a tremendous impact on the market. Many more users may now opt for CAS than was earlier estimated. This is a major hurdle that has been crossed. No one can stop consumer entertainment. If set-top boxes prove to be too expensive viewers will stick with free-to-air channels.
But although set-top boxes now appear to be affordable, what is not clear is how much will be charged for each pay-to-view channel?
Yes, that's true. It will be necessary to establish what the total monthly outgoings will be. The free-to-air channels should not cost more than Rs 72 per month. The cost of pay-to-view channels is not clear at all. As per the earlier regime, the monthly costs were heading towards the Rs 400-per-month level. This is where the resistance could come in. If the additional tiers of choice lead to a total monthly expense beyond Rs 200, viewers may become selective. This will have a direct impact on viewership and, therefore, the ratings.
Will it not suit you if everyone does opt for a set-top-box?
We would prefer that costs come down to such an extent that no one thinks twice about it. We do not have a tier system where the base tier is free and totally mass-entertainment driven. We do not have a pyramid type tiered structure above this with pay-to-view channels at the top. If such a structure were in place viewers at the highest level would of course be a small percentage, but they would be 'high-value' customers, with very specific likes and dislikes, such as sports channels or foreign movie channels. If there were a second tier it would be more oriented towards entertainment and they also would not mind paying.
What about households with more than one TV set?
In such homes they may decide to fit the set-top-box on only one TV. At the tier-1 level, with discerning viewers, there may be no objection to even paying separately for each channel but they may also opt from watching certain channels once their interest levels decline.
At the tier-2 level, viewers are likely to prefer paying for a permanent bouquet of favourite channels. Of course, the channels can do some fine-tuning, like Fashion TV has done, and opt for offering both free-to-air and pay-to-view channels. The content will obviously be different and tailored to individual viewer profiles. Star, Zee and Sony will probably aim at tier-2, the broad-based entertainment level, but will the masses be able to pay for all three? That will depend on whether the total monthly cost crosses Rs 200 or not.
What is the likelihood that having a set-top-box will become a status symbol?
Yes, that could happen, but some viewers may decide to go for it, yet opt for only the bare minimum of pay-to-view channels. If the choice is between Star, Sony and Zee it will all boil down to content. The channel with the best content, in each individual viewer's opinion, of course, will be selected.
In the past, TV serials with multi-crore budgets have been pulled off air because of poor TRP ratings even though they have been of good quality.
This scenario should certainly change in the pay-to-view environment. There will be a major shake-up in the content area. Each channel will have to generate a 'pull' effect to capture and retain viewership.
The viewer will exercise much greater control by expressing his or her preference for certain types of content by paying for it. The channels will no longer be able to manage with only one or two very good programmes and ignore the rest. The entire basket of programmes will have to be good. If a particular programme is good but not a blockbuster material in terms of revenue generation, the channel may still be able to comfortably sustain it, and thereby satisfy their viewers. The assured revenue from CAS will ensure this.
It would be beneficial to both viewers and channels if a steady revenue stream could be assured from widespread set-top-box usage. Riding only on the back of advertising support is wrong. It becomes a downward spiral. If a programme is good but not a blockbuster it gets axed. Content quality never improves and, therefore, viewer standards also never improve. Content deteriorates to the 'most acceptable denominator' level, cutting across all viewers, as long as it generates maximum revenue. Quality will always suffer in such a scenario.
Will it also signal a shift away from TRP phobia?
No, TRP phobia will continue. After all, that is a very bankable currency. But in addition to TRP ratings, the distribution pattern will become very important. Through CAS, if channels can actually reach out to specific types of households, it will become equally important. Viewership reports will be studied with great care and distribution patterns will become as important as TRP ratings.
Is it true that it may be technically possible for some viewers to 'hack' or 'bypass' the set-top-box and thereby access all pay-to-view channels while paying only for one?
I cannot comment on that.
Where will the main impact of CAS be felt?
The main impact will be experienced in Mumbai and Delhi and to a much lesser extent in Kolkata and Chennai. Mumbai and Delhi are definitely the cities of opinion leaders and business decision-makers.
Between Mumbai and Delhi, Mumbai is more important. It is the centre of power for business decisions. Of the total viewership in the four metros only 20 per cent may be from Mumbai, but this 20 per cent is the most important in terms of viewer profile. Mumbai's viewers have a larger-than-life impact on this industry.
CAS will be applied only to these four metros. All other cities will remain unaffected. Only when the CAS experience has been fully understood, particularly in Mumbai, will other cities be considered.
CAS is bound to lead to audience fragmentation, compounded by new technologies like TiVo, which permit the recording of TV programmes and subsequent sharing over the Internet. How will media planners tackle this?
Media planners will have to function more like multitalented brand or account managers, providing a range of specialised services to their clients. This is already happening. The main emphasis will be on numbers. Who is watching what, and when? We will have to learn how to get those numbers and analyse them. Then will come the second important skill - consumer insight. Understanding the consumer's mind will become much more critical. Today's media planner cannot be satisfied only with media selection.
But media planning currently focuses only on media 'spend' issues?
We have already started multidimensional analysis of consumer behaviour. We call it a 3-D study - a 360-degree analysis of all possible areas of communication with each type of consumer. We analyse a complete typical day in the life of a targeted consumer. From the time he wakes up till he goes to sleep at night. We try to identify all possible means of reaching out and interacting with each consumer, whether through radio, TV, newspapers, magazines, outdoor, exhibitions or events.
So you cannot be called media planners anymore?
No, we are now called CCPs - communication channel planners. We constantly plan for successful contact-point opportunities. How to interact at each contact point. How to measure its efficacy. Each contact point is then given a rating in terms of the budget available and the advertiser's requirement. The aim is to offer the best value-for-money options to our clients.
In addition to this we also lay great stress on analysing the influencers. The mother, for example, in case of products aimed at children. If we can generate favourable word-of-mouth publicity from influencers, we can be successful in our other efforts. The influencers need not be consumers of the product; they should only recommend it.
Media planners have so far been considered the owners of valuable information about consumers. Now, with interactive TV channels coming in through CAS who will be the owners of this information?
All the major TV channels are as information-savvy as media planners. But it is still a one-way street. Once interactivity gets established through CAS, the volume of information flow will shoot up, especially from viewers. Channels will no longer sell a programme based only on TRP ratings. They will offer a 'business solution,' instead.
For example, what is the difference between Kyon Ki…on Star Plus versus cricket on ESPN? They both provide content but attract different viewer profiles. The packaging of content and viewer profile will become more fine-tuned. Tomorrow, if CAS succeeds, the channels will also be able to provide detailed audience-household information. It will then become a 'business solution'. Targeting of households will become more precise and focused.
The data will be 'owned' by the channels but the usage of the data will still remain in our realm of expertise. That is more important. It will be the intelligent and effective use of this data that will make all the difference. An effective media planner will, in that sense, function more like a 'brand manager' or 'account manager' and seeks inputs from a variety of experts or specialists to generate value-addition for the communication channel plan.
The 'creative' solution-provider, the 'media' solution-provider and the client, who is the de facto 'marketing' solution provider, must all work in tandem and readily co-opt into the overall strategy. A specific strategy may even include non-traditional media such as advertising-funded programmes, films, film promotions and events. Such specific inputs are now increasingly being considered as a regular part of the CCP strategy.
Will a CCP's role as a value multiplier become more difficult in future?
Yes, the days of a blanket 15 per cent agency commission are long gone. The future will be based on a fee and incentive model. We will have to dedicate more and more specialised resources to each client, to develop effective solutions. We will become more like a consultancy organisation. Performance targets will be set and we will provide varying solutions throughout the year. At the end of each year we will jointly analyse the extent to which mutually agreed targets have been met and then we will be further compensated with incentives.
However, our business has to run smoothly through the year. We may add experts and resources as and when called for. Therefore, we must shift to a fee-based structure to support this effort throughout the year. I feel this is a good development. From a situation where agency commissions have been dropping drastically we are now moving towards a compensation structure where the client can evaluate all the value-additions done by us and compensate us adequately, to the extent that we deserve.
Will this increasing complexity again make you powerful?
We will now function like a large consulting firm. As long as we can add value we will be adequately compensated.