<B><FONT COLOR="#FF0033">GoaFest 2007:</FONT></B> How can Indian advertising achieve quantum growth?

At the GoaFest 2007, the panel discussion on achieving quantum growth for the Indian advertising industry saw contributions from panellists Vikram Sakhuja, chief operating officer, Group M, South Asia; Raj Nayak, chief executive officer, NDTV Media; Shashi Sinha, chief executive officer, Lodestar Universal; and Uday Shankar, chief executive officer, STAR News.

Vikram Sakhuja, chief operating officer, Group M, South Asia, questioned whether advertising was really providing growth for clients. According to him, the biggest problem was that advertisers consider advertising expenditure and not an investment.

He suggested that the cost per thousand (CPT) model be followed even in the television industry, instead of the currently prevalent cost per rating points (CPRP). According to him, if one checked the CPTs that an average channel delivers, the results would yield double digit growth for the industry.

Shashi Sinha, chief executive officer, Lodestar Universal, said that the advertising industry has grown since he joined it in 1981, and it is slated to grow further. He said that in 1981, the size of the advertising industry was only Rs 400 crore; since then, it has grown to Rs 15,000 crore.

He seemed confident that the next leap, to an industry size of Rs 50,000 crore, was quite attainable. He talked of the time some years ago, when ‘The Times of India’ (‘TOI’) increased its media rates for advertisers. As a result, the ad agencies got together and planned to not advertise at all with ‘TOI’. Within days, ‘TOI’ had to reduce its rates. According to Sinha, if the media companies got together, they could fuel further growth in the industry.

Uday Shankar, chief executive officer, STAR News, said that to achieve quantum growth, the advertising industry should create real value for society. He said that advertising should be such that it is able to partner its clients in growth. According to him, society encourages only that advertising in which it sees some value. He cited the example of categories such as ‘saria’ (iron rods), which didn’t advertise traditionally on television, but are now considered an important category on Indian television. Similar is the case with the wooden board category.

In another example, he stated the case of a Bihari ghee manufacturer whose sales had gone up tremendously in his local area because he had advertised on a cable scroll on a local channel.

Raj Nayak, chief executive officer, NDTV Media, felt that advertising agencies do not have a structured business model and are willing to work for commissions as low as 1-2 per cent. According to him, the advertising industry has reached the mark of Rs 15,000 crore, not because it has created value for the client, but because of the launch of several advertising media. He said that if today there had been only one Doordarshan channel, advertising would not have been able to cross even Rs 1,000 crore.

The most shameful scenario, he said, is when despite the client having a creative agency, the creatives for the product are designed by the media agency because they understand the client’s market better. There is a desperate need for a well-built business model to be set in place so that the services of an agency are suitably paid by the client. The intention here is not to make the client pay more, but to create value for the services provided to the client.

Postcards from GoaFest

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