Channels seized by the fear of unknown

MUMBAI: What’s the common currency shared by eBay’s e-Media Exchange, Google’s d’Marc, Enerva, and an international media agency in India? Well, all are pilot-testing online auctions to buy and sell TV ad time.

Electronic media transactions will have to log-in later, if not sooner, agree most media specialists. For now, though, scepticism reigns. Says Sam Balsara, managing director, Madison Group: “I think TV channels will not participate or encourage this, as of now, because of the “fear of the unknown”. They are so dependent on the ad revenue; it is too much of a risk for them.

“If and when ad revenue becomes less than 50% of the total revenue, the rest being contributed by the viewer for the pleasure of watching the programme, they may be more open to it.”

There are other reasons hobbling its feasibility here, he lists:

*Each channel feels that it is selling a very unique product, very different from what their competitor is offering. This would work well when channels feel they are offering a parity product.

*Media agencies and advertisers do all kinds of segmentation to buy a certain “kind” or “quality” of the GRP.

Expect walls of resistance from many advertisers, who ink out private deals with media owners, adds Balsara. Across the beam, broadcasters are even more skittish. Their contention: that different inventory have different value attached to them.

That the labyrinth of media negotiations are based on a myriad intangibles such as annual deals, advance rates, which can’t be nuanced in a sterile, trading system.
Sameer Nair, Star TV India, for one, is in wait-n-watch mode: “I don’t see auctions working well, because both sides don’t have those sophisticated computer systems.”
Prices to go up and down

Online auctions are seen as a bid by frustrated advertisers to reverse control from broadcasters back to them. When ad-time rates shoot beyond sanity will be the tipping point for auctions’ acceptance here, say some.

Kiran’s viewpoint: “It is true that this new initiative in the US has been started at least partly as a result of frustration and anger of some marketers against rising TV ad prices and also as a resistance to the US upfront market, which feeds nearly 75% of the annual inventory needs of advertisers. That said, I don’t think big media owners are wary yet.

However, if the early testing of the system against the US cable and scatter market is successful, networks will need to recognise that reality and come up with a strategy to adapt to it.”

Balsara reckons that from the supply side the market is controlled by a few and they will fear that this move will drive prices down or more importantly control would move away from them.

“But if this is to take place, then the creation of the perfect market place will push prices up and definitely for the top-end coveted properties, high TRP programmes and low-end products. In many highly advertised categories there are at least 2-3 competing advertisers and the fear of losing out will drive prices up (see what happened to cricket, also telecom licence fees, radio license fees!). This is even more so in current times when every advertiser is optimistic and wants to grow at 20 to 30% a year.”

Says Sameer Nair: “It is an erroneous assumption that ad prices will deflate since there are inherent flaws in our systems where we undersell our own products. And even if the product is the same (as a rival’s), its value perception will differ depending on branding efforts and spends, etc.”

Shrouded ad prices will also get unwrapped. Based on a piece of inventory available at that point, one could discern its supply-demand skew. Pricing becomes more understandable at that point. Let the bids roll.