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ShareMUMBAI: Marketing communications company Dentsu India is planning an auction-based website for buying and selling TV ad time and last-minute inventory. In this web-based pilot, broadcasters and advertisers could make direct connections and bid for the ad time available, with Dentsu playing intermediary.
The plan has raised hackles, especially as Dentsu recently entered into a Rs 500 crore deal with Sony to pick up a huge chunk of its ad-time inventory for the cricket World Cup and Champions Trophy. The media buying industry is worried that it may get cut out of the action if Dentsu starts selling some of its cricket ad inventory through online auctions. Dentsu may also start selling pieces of the inventory directly to advertisers across the table.
If Dentsu succeeds, it could create confusion among broadcasters and media buyers on the whole media buying process. The latter could see margins slimming if bulk-buyers of ad time start selling directly to advertisers.
The Dentsu plan is to primarily target broadcasters stuck with inventory surpluses on their hands, say sources. Dentsu's chief Sandeep Goyal did not comment.
The Dentsu website could work as a forward or reverse auction, or both. In a forward auction, advertisers or media specialists would bid for ad time which would ultimately go to the highest bidder.
In reverse auctions, the price would already be set for a property and buyers can then vie for this, or the first-mover would win.
If this model works, though, it would mark a first in India's media-buying business, which is opaque at best about specific air-time deals struck between advertisers and media owners/ broadcasters, with ad rates based often on bulk-buying and advertiser clout.
Meanwhile, senior representatives of the IBF (Indian Broadcasting Federation) and the AAAI (Advertising Agencies Association of India) are meeting with Sony and Dentsu on Tuesday to understand the real nature of the deal and its implications.
Says a media observer: "The Dentsu-Sony deal may have a clause that in case Sony is not able to sell cricket inventory for Rs 500 crore, Dentsu will have to cough up the money to make up the difference.
However, since Dentsu seems to have got this ad inventory at a discount, they could well make a good profit by retailing this ad time to advertisers.
In the future, Dentsu could well strike such deals for coveted properties with other broadcasters, too. In fact it's even pitched its case to broadcasters like Star."
Remarks an ad chief:"Dentsu has successfully bulk-bought ad-time of coveted TV properties in other markets like Tokyo and they could bring such experiences to the India experiment along with funding from their foreign parent. Dentsu has a singular high command as opposed to WPP's decentralised structure - so it's easier for Dentsu to get a green signal from the top as opposed to a WPP."
Online auctions could step into this bulk-buying scenario as a devise to sell what's unsold - in this case, for Sony.
Denstu will also gain power by forging relationships with advertisers outside its clients list via the auction route, say some. Incidentally, online selling of ad inventory has been experimented with here in the past, by a trade website. It failed to take off since media buying is very much an opaque process here, with neither buyers nor sellers wishing to publicly divulge the actual ad rates negotiated for a property. In effect, that would reveal the real demand-supply ad position of a channel or its property.
Broadcasters and particularly media specialists are naturally perturbed about any Sony-Zee deal.
They see it creating a decimation or confusion of their own roles in the media buying process. Media buyers and their margins would be cut out of such deals, with the bulk-buyer of the ad time selling directly to advertisers.
Joy Chakraborty, executive vice president, network sales, Zee, said the development marks a dangerous precedent in the industry, where agencies will carve out exclusive deals with broadcasters over prized properties and a chosen few will monopolise the game.
"Not that it's not happening already, but this would give the situation complete legitimacy. Ad rates will no longer be uniform and client specific. Broadcasters will come up with different rates and deals for different agencies, leading to complete mayhem in the media industry."
Lynn de Souza, director, Lintas Media Group, however queries the bulk nature of the Sony-Dentsu deal: "Since the deal only covers spot buys, as we understand, the interest of sponsors who have already committed their buys will be fully protected.
Further, since Sony will also continue to sell spots, it is not clear what advantage Dentsu will obtain for the underwriting - if indeed they have underwritten anything. Sony has already sold over 80% of the inventory to 8 sponsors and their related categories. If there is a deal between Sony and Dentsu, the inventory left is not much," she says.
Meanwhile, a joint AAAI-IBF joint committee has asked both stakeholders Sony, and Dentsu, to 'come clean' with the financial clauses behind the cricket deal.
The committee, comprising industry luminaries like Sundar Swamy, Arvind Sharma, Vikram Sakhuja and Sam Balsara will meet with both parties on Tuesday. Says Sam Balsara, chairman, Madison Group: "Members of the fraternity have expressed deep concern over the nature of the deal, struck by Sony & Denstu. We need to understand the true nature of the clauses, behind the deal since it conflicts with established practices."
When asked if the IBF-AAAI joint committee has the authority or the intent to put the brakes on such a deal, he says: "We seek to use our persuasive powers at best. Its an informal meeting."
Says Rohit Gupta, executive vice-president, Sony, "Well, I don't have much of an idea about the agenda for the meeting. But as I understand it, it's just an attempt to get a clearer picture about the financials of the deal. I do not foresee any problems ahead."
Finally, the media market will see various evolvements and within this churn, ad auctions could step in as a way to sell ad-time of both coveted and hard-to-sell properties. Expect a debate as to what's likely to be seen as the more dangerous creature: media specialists bulk-buying coveted properties, or selling ad time of bulk-bought and other properties via auctions.
