INMA 2009: Intelligent collaboration and association are the keys to cutting costs

By Sangeeta Tanwar , afaqs!, New Delhi | In Media | August 31, 2009
Mid-Day Infomedia's experience proves that instead of tinkering with fixed costs, it's far more economical to make adjustments to variable costs

An overview of past, present and future outlooks for the entertainment and marketing (E&M) industry by Timmy S Kandhari, leader, entertainment and media practice, PricewaterhouseCoopers India (PwC), on the second day of the Annual South Asia Conference 2009 held by the International Newsmedia Marketing Association (INMA) at Le Meridien, New Delhi gave way to an address on collaboration and cost cutting by Manajit Ghoshal, managing director and chief executive officer, Mid-Day Infomedia.

Ghoshal began by admitting that in a business where one cannot dictate, one has to be good at what one can control and that is cost. With tough quarters this year the top line being down for almost everyone the bottom line has become the top agenda for organisations.

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He revealed that the cost cutting reactions have a learning curve. Mid-Day Infomedia learnt that any cost that turns out be 5 per cent and higher calls for a leader. People with an ownership of cost help spread and rationalise it. More than often, it's easier to look inwards to cut costs. However, the ideal way to tackle the situation would be to look outwards instead of shrinking oneself.

"The choice is between tinkering with fixed and variable costs but touching fixed cost could sound trouble as it can have large ramifications in the long term," remarked Ghoshal. So, the path adopted by Mid-Day Infomedia to manage costs was to make changes in the supply chain management and collaboration covering inter company, clients, vendors and suppliers.

The products, the afternoon newspaper, Mid-Day and the radio venture, Radio One, cater to YUMPI (young urban mobile professionals of India). He shared the company's experience with the launch of two business operations, Mid-Day and Radio One, in Pune. Despite trying different synergies, things were not working out for the organisation. So, in July 2008, it chose to lower its cost by opting for single infrastructure, single leadership and single management structures in Pune.

Ghoshal admitted that there were issues such as certain people not seeing eye to eye and creating problems in the reporting structure. However, such initial hiccups were tackled and the results were for all to see.

The measures led to lowering of real estate and salary costs and as a result, the business' fixed costs came down by half.

A second way of reducing cost for the organisation came through client associations, where Mid-Day tied up with likeminded brands, with definite benefits for both the parties while sharing costs. The challenge that Ghoshal tossed to the marketing team was to devise ways of making marketing cash positive. Mid-Day's brand philosophy of making 'Work Fun' shared great resonance with brands eager to reach out to the YUMPI crowd. Thus, the company forged associations with young brands, including Foster's for Happy Hours@Office, as part of which the brand got access to the office crowd and the whole exercise proved to be a great brand connect for Mid-Day as well.

Foster achieved great reach as it connected with its consumers and Mid-Day, with no extra cost for the party, won brand visibility and connect.

For business to business connection, the brand ventured in an association with Hard Rock Cafe, which wanted to access media professionals. Mid-Day branding and hoardings donned Hard Rock Cafe, which could drive media traffic by offering free drinks to people answering a few questions related to music/films either in the tabloid or on radio.

Event association also got a lot of mileage for the company without having to spend crores on media buying to achieve visibility and coverage. Print and radio association with Royal Western India Turf for racing resulted in branding opportunities and editorial coverage by major newspapers, websites and news channels. Presence of Bollywood stars such as John Abraham and others ensured that the media covered it extensively to get its hand on entertaining content.

Ghoshal added that an association with a vendor or service provider such as Netcore for SMS services fetches the organisation additional revenue without additional capital investment. Since there is no fixed cost, it shares the revenue with Netcore. Barter-marketing tie ups, such as one with SpiceJet, have literally eliminated domestic travel costs for the company.

Ghoshal further shared that sweating assets is another judicious way of cutting costs. The organisation shares its printing press in the evening hours with newspapers such as Business Standard since it has no use for it after using it in the morning hours for its afternoon product, Mid-Day. It also earns by syndicating urban content to various vernacular players.

All the examples shared by Ghoshal proved that intelligent collaboration indeed results in saving costs and curtailing spiralling expenditure.

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