The broadcast potboiler

Didn't advertisers see it coming? The signs had been flashing red for more than four years now. If advertisers had sensed trouble, then the current face-off with broadcasters over whether TAM Media Research should report viewership figures weekly or monthly wouldn't have happened - and some of India's largest advertisers wouldn't be pulling out their advertisements from television screens midway through campaigns.

This skirmish is one of the clearest signs that consolidation and digitisation are well underway in the Rs 39,000-crore television industry. As broadcasters flex their muscles for the first time in two decades, such flashpoints are becoming a regular thing. The gross versus net billing battle, which broadcasters won, was one. Now comes the ratings battle. Another one, on cost per thousand (CPT) versus cost per rating point (CPRP), is waiting to happen. As television shifts from being a "dream market for buyers and advertisers" to one where power is more equitably distributed, these flashpoints reflect the jostling that follows any shift in power. It will take time for everyone - broadcasters, advertisers and agencies - to figure their limits and settle in.

For more than a decade now, broadcasters have had a poor negotiating hand on both pay and advertising revenues. On pay revenues, price regulation and a hyper-fragmented distribution set-up meant they had no power to price their signals. In more than two decades, the real price of cable television in India has fallen. The average has remained Rs 150-200 in the last 10 years. Of this, broadcasters got only 15 to 20 per cent as against the global norm of 60 to 70 per cent.

On advertising revenues, extreme fragmentation meant little power to price airtime. Everyone and their uncle was willing to sell airtime at a lower price than what the other guy was offering. On the other hand, more than 60 per cent of all organised media buying in India is controlled by five big marketing services groups - GroupM, Publicis et al. Add to this the fact that the Indian television advertisement market is based on cost per rating point instead of cost per thousand. This means that even as the number of people watching television has increased, the airtime is still pegged to the percentage of people watching a show, and not the absolute number. But no broadcaster had the courage to demand a CPT rate.

Between 2000 and 2010, yields, or returns on every 10 seconds of advertising, have actually fallen. Almost every media agency chief will tell you off the record that India is one of the cheapest television markets in the world given the audience it offers. Going by data from Media Partners Asia, for 765 million viewers the Indian television industry got more than Rs 14,000 crore ($2.8 billion) in advertising revenue. For 1.2 billion people, the Chinese television industry got Rs 56,000 crore ($11.2 billion) in 2012. That is three times more advertising dollars per viewer compared to India. The ratios for Brazil and Russia show India in an even worse light.

Over the last four years, much has changed. Digitisation - through direct to home (DTH) and mandatory cable - is pushing operators to share more revenues with broadcasters. On the other hand, more than 70 per cent of the total viewing time in 153 million homes now goes to seven networks - Star, Sony, Zee, Sun, Viacom (including Eenadu), Disney-UTV and Turner. They control a chunk of the audience and, therefore, the direction of that Rs 14,000 crore. (Note these are networks with 12 to 35 channels each, not channels.)

Now add a couple of things.

One, TAM Media Research, the firm that releases TV ratings data, earns more than 80 per cent of its estimated Rs 55-crore revenue from broadcasters subscribing to its data. Media buying agencies bring the remaining 20 per cent. Advertisers, largely, do not buy TAM data. They simply use it to beat broadcasters on rates.

Two, ever since complaints about inadequate sampling got louder and TAM started increasing meters, the skew in the weekly data has become more prominent. A monthly look irons out statistical inconsistencies, so broadcasters insisted on it. And since they are TAM's biggest customers, the firm has little choice in the matter. Advertisers, however, want the weekly data, faults and all, because it is a great negotiating tool.

TAM has been providing weekly data for over a decade - why should things change?

The big difference between then and now is how powerful broadcasters have become as custodians of audiences. While the market is too competitive for anyone to be called a monopoly, there is now a bit of arrogance in the big seven. It comes from knowing that you have the audience and revenue flexibility that rising pay revenue gives. These embolden them to stand up to advertisers.

The best way for advertisers to react is by becoming more vocal and involved in the ratings process through the Broadcast Audience Research Council. The Council, which is a joint body of agencies, advertisers and broadcasters, is putting together the framework for a new ratings mechanism. So far advertisers have shown little interest in improving the currency (ratings) that determines how they spend roughly half their advertisement budget.

As their "buyer is supreme" mindset tackles a broadcast industry that is discovering new muscle, watch out for more skirmishes.

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