True to his promise, Ashok Das, president, ORG-Marg, took out time yesterday to share the reason that led to his company deciding to resign from the Indian Readership Survey (IRS) after four remarkable years. The earlier story on agencyfaqs! (July 9) reported that ORG-Marg had sent a letter last week to the IRS' governing body, the Media Research User's Council (MRUC), informing it of its intention to part ways with the IRS. While Das had admitted last Saturday that his agency was in talks with the MRUC on the issue, he refused to divulge details. He confirmed the news and gave his reasons yesterday. "We have resigned from the next contract beginning July 1, 2001 and ending June 30, 2002," he said. "We have written to the MRUC saying we cannot carry the burden further."
Das used the term "burden" for the IRS in the context of the money-losing proposition that he claimed it had become for the country's largest research agency. "We have never made money on the IRS in any single year," he said. "We did quite well on sales this year, for instance, but we still made losses." This, he stressed, was given the 100-per cent repeat purchase rate for his clients. There are two things to blame here. One, the nature of the IRS contract. Two, the size of the market, limited by competition between two large surveys.
A senior IRS source had informed last Friday that "agencies involved in IRS and NRS are paid to the tune of Rs 3-3.5 crore annually", thus minimising chances of financial losses to researchers. But Das clarifies that the IRS contract, unlike the NRS, puts a bigger risk on the research agency. "The NRSC gives certain fixed sum to its agencies," stated Das, "but in case of the IRS, it is on us to sell the report and earn money. We sell it to agencies to recover our costs, and some percentage is passed on to the MRUC." He added that the MRUC helps in sales, but the risk is solely on ORG-Marg.
We ran a check with a senior NRS executive at AC Nielsen, one of the three research agencies participating in the NRS. "The NRSC (National Readership Studies Council, governing body for the NRS) pays the three agencies certain out-of-pocket expenses to take care of costs," he said. "But we do overshoot payments at times." The NRSC also undertakes sale of the basic NRS data (which is being made available free to agencies from this year) while the three research agencies sell the media-planning Optimiser and the product profile data on their own initiative.
In such a scenario therefore, it does not seem logical for a research agency to sign a contract like the one cited by Das. "The contract was worked out before we (Das, the MR agency head Titoo Ahluwalia, and some others) came on board," he says. "ORG had signed the contract and this was a continuation of it (referring to the time when ORG and Marg merged in India)."
So why didn't ORG-Marg raise the issue before? A cost issue does not lead to an immediate walkout, for sure. "We did talk about MRUC partnering in the selling process or sharing some risk but we never seriously examined that option. They do not have any collection mechanisms," replies Das. Additionally, the IRS was never a huge portion of ORG-Marg's overall business. Which is perhaps why it may not have bothered in the years when it wanted to establish its own credibility with the IRS.
But surely a loss-making proposition from day one, requiring annual investments to the tune of Rs 3.5 crore, ought to be a bit scary? "We have always been worried," he says. "But now with VNU assuming total ownership, they want to see the bottomline much more than we did."
And the bottomline is that given the potential universe, Das and his team cannot figure out how they can make money on it. "We have sold it continuously for four years (from the year when continuous reporting was incorporated) and know that it will be difficult making money on it," points out Das. That raises a bigger question then: are studies like the IRS and the NRS unviable from the sales perspective? "It is difficult for this market to support two large surveys," he answers.
Which is why one of the things that ORG-Marg has suggested the MRUC is "they can talk to the NRSC and get together for a single survey," in Das' words. For now, this seems unlikely. As reported yesterday, the MRUC is already in talks with some agencies, Francis Kanoi being one.
The challenge before the prospective agency isn't mild by any measure. While both the MRUC and ORG-Marg own patents to the research design, Das clarifies that it is the "field facilities" that will count. His company employed a total of 200 people on the IRS, of which about 150-odd attended to the field on a given day.
While MRUC's hunt continues, ORG-Marg says it will report the findings of the second round of 2001 on time. agencyfaqs! had reported yesterday that "findings of the second phase of IRS 2001 will be delayed beyond December. And it may not be conducted by ORG-MARG after all." Das has clarified that according to the last contract signed with the MRUC, ORG-Marg completed the fieldwork last month and will be ready to announce the findings by November-December 2001. We stand corrected.
© 2001 agencyfaqs!