"National brands are now fighting local brands": Baskar Subramanian, Amagi

Picture this: Three guys, who don't belong to the television or media business, who say they hail from a 'wireless tech' background, approach a brand marketing team about how they can help them buy TV spots on a national broadcasting network, but only in a single state in India. The advertiser immediately calls the TV channel and says, 'Hey, who are these guys selling your spots? Is it legal?' Fair enough. It was always the TV sales guys who spoke to them about spots. There was never any intermediary.

That was eight years back. Today, the aforementioned techies enable geo-targeted ad placements for brands from marketing companies like HUL, Nestlé, Dabur, Mondelēz, Parle, P&G, Britannia, GlaxoSmithKline and Wipro, across 24 TV channels that belong to networks like Zee and Times. They call themselves Amagi. And they do this by buying inventory from TV channels and then slicing the satellite beam. Consequently, during the same ad spot on a single channel, a Dove ad can be aired in City X while a Santoor ad can be aired in City Y, at the same time. They can do this across 18 markets, simultaneously. A 'market', in this context, could mean a single city, a district, a state or an entire region comprising several states.

Positioned as a television advertising network - an entity that buys ad inventory from TV channels, matches it to the needs of advertisers, and then sells it to them at a premium - Amagi was co-founded by three proverbial outsiders, namely, Baskar Subramanian, Srinivasan KA and Srividhya Srinivasan, in 2008. Amagi is present in 25 countries, including India, UK, USA, Japan, Singapore and Hong Kong. Of its 265 employees, around seven are posted overseas. Amagi employs technology and former media sales (radio, TV ad sales, for instance) professionals.

Amagi is backed by three investors - Nadathur, MayField Fund and PremjiInvest. So far, ad spends worth 100s of crore - but less than Rs 1,000 crore - have gone through Amagi's network.

Talking about the genesis of Amagi, and the reason to infiltrate a strange industry, Baskar says, "We were looking for large businesses in India to disrupt. We had around 40-50 plans, of which TV was right on top, because of its laggard-ishness when it came to adopting technology. When you're looking at business models, ignorance is bliss. Not being part of the industry helps you look at things from a new perspective."

It wasn't an easy start. Recalling his initial marketing challenges, Baskar says, "It was hard initially. Most of the TV channels laughed at us. They said things like, 'It's not doable', 'There's no market for this', 'Why are you guys wasting your time?', 'You guys are talking about an industry you know nothing about', 'It's interesting but won't work in India'..."

However, the CEOs of some channels saw potential and were willing to "risk it." He defends his choice of words with, "It's important to understand the context here - these are channels with 100s of crore worth of revenue. We were three people in a garage in Bangalore, a city that was never considered to be a 'media place'."

It took the trio almost 18 months to convince the first channel - Aaj Tak - to try Amagi out. "They said it was interesting, but didn't want to try it in their major markets," shares Baskar, "So our first test market was Hyderabad. It is not a Hindi-speaking market and didn't impact the channel much, but yet there was Hindi speaking population that we could go after." Today, all 'Amagi markets' overlap with BARC's markets.

Both media agencies and TV channels seem to be uneasy about a player like Amagi. "Media agencies are more about better planning and driving efficiency; they don't need to invest in this technology. This is something a broadcaster would need to do," says a senior planner at Madison.

Dheeraj Gupta, founder, Jumboking, a Mumbai-based vada pav chain that has around 100 outlets (including in towns like Raipur, Amravati, Ujjain, Vadodara and Secunderabad), says, "Amagi helps us advertise on mainstream channels without having to go national. It makes sense for city-specific brands looking to communicate on electronic channels. Starcom (media agency) gives me options for city-specific bus shelters, hoardings, radio and print."

About the process, he says, "We deal with Amagi directly. There is no point going to Amagi via Starcom," adding as an aside, "Agencies like Starcom won't entertain brands with small budgets, say, Rs 3 crore, annually. Then you have no choice but go to Amagi or local media agencies."

Edited Excerpts.

Edited Excerpts

We are like an intermediary between the media agency and the broadcaster. Broadcasters look at us as buyers of media. They look at us as agencies. Agencies and advertisers look at us as broadcasters.

When I go to an advertiser or an agency, the first question is - 'Which regions? What can I buy?' It's almost like an alternative to regional television. On TV, no one had heard of an 'ad network' model. So it took a long time for people to get comfortable with the concept. 'Who are you in this whole business?' they asked.

Even today, this impacts us in a lot of ways. I mean, we're neither part of the IBF (Indian Broadcasting Foundation), nor are we part of the AAAI (Advertising Agencies Association of India). That's a conundrum. As a market and as an economy we have to be accommodating of multiple business models, of intermediaries that can potentially come into the game.

We work with every media agency in the country. Agencies are our customers in some sense; they buy from us on behalf of the advertisers. They treat us like yet another TV option.

We don't cater to the complete demands of an advertiser. I cannot go to an advertiser directly today; our spread of TV channels wouldn't allow advertisers to say, 'I'm going to use only Amagi and nothing else.' Today it doesn't make sense. For a small advertiser, sitting in a Tier II town like Bareilly or Jalna, without access to agencies, maybe Amagi could become an 'agency of choice'. But for a large advertiser with deeper needs - no.

We always work in tandem with media agencies. Working without the media agency is not the objective for us.

From the perspective of the number of people who advertise with us, 60 per cent of our advertisers are SMEs and 40 per cent are national advertisers. But from a revenue perspective, the skew, today, is towards national. In fact, eventually, we'd like 60 per cent of our revenues to come from national advertisers. We're not there yet.

While categories that advertise on our network include F&B, education, auto, telecom, etc. it's really the FMCG brands that drive the business.

India is very 'regional' in its competition... even when it comes to large advertisers. Every advertiser in the country, including a Lifebuoy, is actually a regional brand. Today, every brand, in every market, faces competition from local brands. For example, in Hindi-speaking markets like UP, there's a vibrant SME wave coming up. Be it soaps, detergents, toothpastes... there are so many local brands. So competition is no longer between two large national brands; competition is starting to become local. The Unilevers, P&Gs and Glaxos of the world need to win regional turf wars, not one big national war. That is going to be the fundamental problem facing brands, going forward.

Every product has heterogeneity in terms of market demand. No product sells uniformly everywhere. For example, Horlicks is an East and South Indian brand. Dove is more of an urban, Tier I brand. For one of the washing machine brands I work with, 70 per cent of its market is Punjab. This heterogeneity is one the biggest challenges for brands.

Yes. Bihar, for example, is becoming a battle ground for biscuit brands, both national and local. So large biscuit brands may want to use Amagi to boost sales in that region. Most large biscuit brands advertise on TV across India but, typically, increase their media spends disproportionately in Bihar. Instead of doing another round of pan-India TVCs, Amagi lets them isolate this particular market and advertise on TV only in Bihar.

So previously, national brands, for such 'top ups', would use print or radio advertising. Now, the conversations happening are - 'Should I do out of home or Amagi?', 'Should I do BTL or Amagi?', 'Should I do print or Amagi?...' Regional TV was never very successful in UP, Punjab, Rajasthan, Bihar... we create a bouquet that enables brands to advertise on TV in those markets.

Similarly, the North East region (including Sikkim, Manipur, etc.) is the largest market for dairy cream and milk supplements because there are very few cows there. So a dairy brand that distributes its products nationally has reason to boost communication and viewership in these markets.

Large and small advertisers perceive ROI very differently. SMEs look at the instant response they get, like store footfalls and sales, as these are a lot more tightly linked to their advertising. The moment they release an ad, their distributers communicate back to them. So for them it's fairly 'real time'. What we could provide them with is a real time SMS model that alerts them to a new ad; they, in turn, can alert their distributers.

Large advertisers need to be auditable, so they look at GRPs. Yes, measurability is a problem that we need to solve over time. The number of meters BARC has put is not enough.

We are a platform that needs to be neutral when it comes to advertisers and broadcasters. If we're part of any one agency, then other agencies might not work with us. If we're part of a TV channel, other TV channels may not work with us. It is critical, from a principle perspective, for us to be neutral.

Having said that, will it be attractive? Potentially, yes. Have conversations taken place? I wouldn't say no. Are we looking at it? No. It's a longer term play. We're not there yet. We're still in the process of creating value. Is it good for us to be part of another company right now? I don't know. We're creating a market right now. And we need to have that entrepreneurial spirit to do that.

India is what I would call a textbook case study, because of the number of cultures in it. For targeting to work, you need a large geography (Singapore, for instance, is too small), heterogeneous 'market uptake' (that is, purchasing power and consumer habits), and homogenous TV viewing behaviour. India fits into that, as do markets like China, Russia, Brazil, Indonesia, Eastern Europe, and the USA. They all have heterogeneity in terms of market uptake and homogeneity in terms of TV viewing behaviour.

An advertiser is interested in buying viewership. 24 months from now, in India, advertisers won't care whether the ad is being watched on TV or on the internet. So online video is like television, in some sense. But the missing piece in this puzzle is - advertisers don't know their unique reach across TV and digital video. This problem will be solved if the individual can be tracked across screens. As TV moves into IP-based platforms (mobile, iPad, etc.), advertisers will be able to have a TV-like experience on digital platforms.

TV folks have done a great job of storytelling, by inserting ads at the right moment, say, just before the climax. We want to bring this and other graphics-led inventory like L-bands and tickers from the TV world into the online world. These ads will be personalised down to the individual. In April we announced the completion of the product (Thunderstorm) that enables this. We've finished integrations with multiple TV networks for this.

With inputs from Suraj Ramnath

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