by teamrec(Competition for TV Advertisement)
I am part of various social, professional and micro blogging networking sites like linkedin, toostep, bigadda, twitter, orkut and recently I came across a blog, which read:
“These days pay channels have become almost common and we hardly find any free channels. We pay for the programs in the channels and not for the advertisements. But the advertising companies, steal our precious time and sneak in ads without our permission. When I am asked to pay for what the channels transmit, we obviously study the programs that the channel broadcasts and pay for it. But we don’t get details of advertisements we need to watch and whether they are relevant to my interest for which I am paying the channel or not is also not available. In my opinion, as my time is precious to me and its my asset, breaking every 10 minutes for advertising is like stealing my time (my asset) for which I think the TV channels should pay us back!!!!”
Is he trying to say something, which is coming from our heart and mind as well?
More than 150 TV channels in different languages, targeting different niche segments available to the Indian audience, it leaves a question mark on mass impression and its impact of TV advertisement on the sales of any product. Again, I won’t be denying its importance but definitely questioning the reach and impact. In the changed market scenario, where due to global recession, many lost the job and source of income and those who managed to retain their job has not seen the growth in their income. But this does not hold true with the prices of food and services, which has left very less disposable income in the hand of consumers. So, consumers are now looking for more customised and economical way to fulfil their requirement. In this scenario, a mass advertisement medium like TV has a limited role to play.
Here I would like to refer to my favourite Management Guru Mr. C. K. Prahlad from his latest book “New Age of Innovation”, where he has given the concept of “R=G” and “N=1”, which means resources are global and no company should try to own it and further no company in the world with whatever capacity they are having, is not capable of satisfying the need of one consumer. So, the question is, can mass advertisement medium like TV create desired level of impact? Is it the right strategy to treat all the consumers like herd and give the same communication? And if the communication will be different, then will it sustainable revenue model? What other options are available? Reaching to all consumers (read audience for the purpose of advertisement) with a customised solution would be impossible but the audience groups can be made small and targeted to achieve better benefits at limited cost, but how?
Point Of Purchase Advertisement: Retailing is one of the key pillars of Indian economy and contributes 35% of the GDP. Out of over 12million retail outlets, 4% is bigger than 500 Sq. Ft in size. With the entire hullabaloo about the size of Indian retail market, it is fact that Indian modern as well as kirana retail is seeing a change and growing at very fast pace and has 200,000,000 sq.ft(19,000,000 sr. Mtr) area, which is huge . With an average 450-500 footfalls per day at normal supermarket or convenience stores and 7000-8000 per day in hypermarket in weekdays, daily inflow of consumers are too big to be imagined. A customer on an average spends 30 minutes in any supermarket format store get her pick. It offers a huge potential of point of purchase advertisement to the companies. Consumer increasingly demands more from marketing messages, and assumes more control over how she chooses to receive them, it’s clear that we need to not only understand but master the effectiveness of engagement touch points. In-store marketing is a critical communications device and deserves a seat at the table.
We all know that consumers have changed in recent decades. As additional options have become available, media usage patterns have changed dramatically. Thus, the task of building and maintaining brand awareness among consumers has become harder. As the pace of life quickens, consumers have less time to devote to any single activity and are demanding that the information they receive from marketers be more relevant and personally beneficial.
These changes in consumer behaviour have led marketers and retailers to increasingly embrace the concept of the retail environment as a vehicle for building brand equity in addition to selling products. We human beings are known to form a homogeneous group everywhere and move around and live around together, particularly in India and I think around the world. That’s why we tend to show area wise culture and way of life. Retail organizations, either modern format or traditional, by its essence, focuses on this homogeneity of any particular area and tries to cater their demand. Advertisement at that point of purchase provides a better and more effective way to put forward the marketing message to a segment of consumers with the more control on impact.
Let me give an example to explain it. Suppose and advertisers decides to put forward his marketing message through point of purchase mode of advertisement and he picks of 100 modern format retail outlet of that area and pays Rs.5000/- per store to the retailers to hire one bay each at all the store. This will cost him Rs.5, 00,000/-. As mentioned earlier, normally a supermarket format store attracts around 500 footfalls per day and spends around 30 minutes there. So any product with the front facing bay advertisement will have at least 50000 impressions per day. Then the cost of impression for that day will be just Rs.10/- and if we further deep dive and break it to the level of 30 second ad spot of television, then it will be just 16 paisa per impression. Further, if we calculate it for one month, then it will go below 1 paisa. This is just one part. Another part is that the retailer will be buying the product to fill the shelves from his own money, displaying and monitoring it. Their staff do all the persuasion and hard core selling because retailer is now supposed to take the things further from that point and not only recover his money but make margin as well. Here the impact of marketing message on sales will be more visible. Advertiser need to only keep a check on that retailer does not put any other things in the bay by carrying out surprise visits of their sales staff. With the point of purchase advertisement and product display, consumers will be able to take the buying decision instantly.
To focus on the decision making process, a study by POPAI international found that the average in-store decision rate is rather high, but clearly depending on the product category, e.g. 21% for baby-care and 75% for chips/snacks, on average 55%. If you take this point into account, then the cost per impression will become insignificant. Many purchasing decision are made, or can be heavily influenced, on the floor of the store itself. Shoppers are susceptible to impressions and information they acquire in stores, rather than just relying on brand-name loyalty or advertising to tell them what to buy. Forester Research has completed studies that show that advertisement and company sponsored blogs are least trusted source of information on product or services, while point of purchase persuasion, recommendations from friends and online consumer review commands the highest trust.
In the case of TV advertisement, although the perceived CPM can be lower, but if you talk about impact on sales, it will be very difficult to separate from the sales promotions and distribution channel efficiency.
Online advertisement: Other emerging mode of advertisement medium are online advertisement and as per Pitch Madison report, it has already pocked 1.7% of total advertisement spend in 2008 of estimated market size of Rs.584 Billion and it is showing staggering 59% growth rate against the growth of TV advertising at 18%. Not only that, according to one of the report published, E-Commerce in India itself was to the tune of Rs.10,000 Crore in 2008-09. With growing internet penetration and IT awareness, uses of plastic money, increased work hours leaves no or little time for working population to watch the TV which has complete access to internet, online advertisement may prove to be the advertisement medium of the future. Further, it allows the marketer to track the view and downloads of marketing message, which actually helps in calculating the cost per impression as well as it’s impact.
Mobile Advertisement: Mobile advertisement is also making it’s presence felt. According to market estimates, it has already crossed $500 Million mark this year and projected to reach to $10 Billion by 2015. India has around 40 crore mobile users and must be having lions chunk in the same. With 3G or 3rd generation mobile technology (services include wide area wireless voice telephone, video calls, and wireless data in mobile environment. It allows simultaneous use of speech and data services and higher data rate-up to 14 Mbit/s on the downlink 5.8 Mbit/s on the uplink with High Speed Pocket Access+) on it’s way for Indian consumers(BSNL has already launched it), it will increase the mobile commerce as well as mobile advertisement.
Going back to the reference of words of my favourite Management Guru, Mr. Prahlad, with one or two medium of advertisement, one can not reach to all the consumers (read audience). So, there can be many mode medium to communicate marketing message to target audience but bottom line will always be the cost-benefit analysis.
I must say that I am not questioning the importance of TV media, but it will have to do a lot of soul searching for the benefit of consumers, for the benefit of industry.
Note: Numbers in the write up is collected from various websites.
ABOUT THE AUTHOR
Mr. Mukul Bhartiya is currently working as National Category Manager with Aditya Birla Retail Ltd, looking after pulses category. He has 10+ years of experience in the field of Sales and Marketing in Food FMCG, Food Retail and Commodity Futures.
He is a MBA from Center of Management Education, VAMNICOM, Pune run by Ministry of Agriculture, Government of India.
He has shaped up and established the business of different organization in different geographical locations, i.e., Staples business of ABRL in Mumbai, Staples business of Reliance Retail in Rest of Maharashtra, Commodity Futures business of MCX in Bihar/Jharkhand and Retail & Consumer marketing business of NAFED in all over India. He has also worked on formulating business strategy of agriculture commodity marketing for NAFED for 2 years and designed strategy for procurement and disposal of oilseeds under Price Support Scheme during the period of 2002 to 2005.
He has been given appreciation letter for presentation and review of business activities of NAFED by Estimates Committee of Parliament, which reviews the non-plan expenditure of Government of India.
He has done a project of International Trade Development among cooperatives in India, Iran, Kuwait and Sri Lanka for International Cooperative Alliance. This project was presented in different meetings of ICA at Thailand and China during 2004-05.
He has published an article titled “Edible Oil Market Scenario” in market outlook segment of May-June 2003 issue of Oils & Fats Today.
