Campaign India Team
Jun 04, 2009

Is the slowdown forcing media rates south?

Campaign India asks marketers and media planners on the impact of the slowdown on the effective rates in mediaThe economic climate has changed and no one can get away unscathed. Not even the mighty media owners who hitherto, riding on years of healthy growth, were in a dominant position to demand rates they deemed fit.

Is the slowdown forcing media rates south?

Campaign India asks marketers and media planners on the impact of the slowdown on the effective rates in media

The economic climate has changed and no one can get away unscathed. Not even the mighty media owners who hitherto, riding on years of healthy growth, were in a dominant position to demand rates they deemed fit.

The current slowdown seems to have brought the market forces back into play where increasingly the demand and supply dynamics, coupled with intense competition, are pushing media rates to equilibrium, read realistic, levels. “Some media vehicles that were being sold at a huge premium till last year have been forced to correct their rates downwards. They had no other option as they were beginning to see a drop in demand,” says Mona Jain, India head – strategic investments, India Media Exchange. “We have tracked inventory demand for television. While core primetime remains untouched, due to it becoming more affordable and efficient with drop in prices, the off prime time slots have dropped in inventory.In the print media, a host of special schemes were floated to maintain space fill but there was a substantial drop in demand anyways. It appears to be resurging, but with more rationalized pricing.”

Other than tacit drop in prices, media owners have also been offering more for the same price, essentially meaning that advertisers are demanding far greater value than they were managing earlier. “The advertisers have the liberty to explore alternate options which are more effective and efficient,” says Jain.

Media owners seem to have hit a Catch-22 situation where on one hand they need to invest in good quality content to ensure audience eyeballs and hence, the advertisers monies, while on the other hand make their offering affordable. And then there is the whole measurability issue which will add to media owners’ list of woes.

“It will put more pressure on media to prove the efficacy of the medium they are selling rather than rely on ‘perception’. Lot of media brands spend hugely on building the right media imagery; I think they will have to back it up with the requisite numbers too. Today, the advertiser is also under pressure to deliver more for less and would go to great lengths to ensure that each dollar spent by him delivers without fail,” says Pradeep Pandey, director, branding & communication, Aegon Religare Life Insurance.

However, in any economic condition, there exist over-priced media properties that threaten to disrupt the market equilibrium; IPL being one of them.

While some believe that they eat into the viewership of the expensive programming being run on mass entertainment channel and probably push the prices down, Sudha Natrajan, president & COO, Lintas Media Group quips, “The way our media market has been structured over the past few years, the year has been chequered with high ticket properties like high profile cricket event, big reality shows especially during festive seasons, etc. We have learnt to work in this scenario, and plan and buy accordingly. I do not think it affects the market equilibrium much.”
 

 Sudha Natrajan, president & COO, Lintas Media Group
“Rationalisation of costs, and identification and elimination of elements contributing to monetary inefficiencies are being done at every stage of running a business. Media cost is one head that sometimes features 2nd right after cost of raw materials, for a consumer marketing organisation. As there do not exist benchmarks that can be readily verified with, an advertiser is always bound to feel that his media agency must get his media costs down. There is greater pressure on media owners to perform to get them to share responsibility for the net outcome of the results of the media expenditure on brand health performance. ”
 

 Anil Uniyal, COO, Network18 and head, TV18 media operations
“A buyer always jumps on an opportunity to reduce prices. So even if a particular client or an industry is not impacted by a slowdown, they would seize this opportunity to bring down the price. The slowdown also puts greater pressure on measurability. While in the good times, most would have gone overboard, with reduced monies and more accountability the pressure will obviously be there on media owners to deliver. High ticket properties like the IPL, while at one level, help energise the media scenario and propel clients into action, on the other they upset the equilibrium for other channels/genres since this may come at their expense. ”
 

 Simran Hoon, national sales head, Colors
“During times of slowdown, clients spend. However, they are judicious in their pattern of spending and much more critical in evaluating the ‘value proposition’ that channels would offer. The buyer and the seller are under pressure to deliver as per the agreement. What goes in our favour is that we continue to deliver the highest reach and hence the impact of slowdown for us has been marginal. The top three players in any category continue to command the lion share and are not directly impacted by the demand and supply equation. However, the equilibrium does tend to get affected by big properties such IPL/Elections.”
 

 Pradip Pandey, director, branding & communication, Aegon Religare
“Some rationalization was required as some media properties were going for astronomical rates. TV channels were giving in to the exorbitant demands of producers and the advertiser ended up paying higher for a spot on the show. In print, few major publications would regularly jack up the rates. The slowdown has certainly helped reverse this trend. Lowering of media rates is a result of other factors like excess supply and competition. On any category, it’s always good for the customers if there is fierce competition between at least three players. In which case, advertisers as consumers will benefit for sure.”
 

 Mona Jain, India head – strategic investments, India Media Exchange
“With the slowdown, there have been constant demands from the advertisers to correct the rates. That’s the first thing which comes under scanner! The downturn has actually finally enabled rationalization of rates across all media. It has also opened up the media to be more flexible in discussing engaging ideas on brands- which the media owners were closed to in better times. This has enabled delivery of better ROI and given us a freeway to do some exciting stuff. Slowdown has put greater pressure on measurability for media owners as they are now forced to re- look at their benchmarks and pricing policies.”
 

Source:
Campaign India

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