Srinivasan K A., co-founder of Bangalore-based Amagi Media Labs, talks about the concept of targeted advertising on TV and how it can benefit regional retailers who lack an all-India footprint
Q. What is targeted advertising? How does it work?
Targeted advertising means reaching out to only those people who you actually want to reach, and pay for only that reach. The reach could be defined by either demographics or geography or both. For example, when you advertise on a radio station, your message reaches all kinds of people – old and young, poor and rich, men and women – while your target group might only be high-spending youth. In this case, you end up paying for every audience that the media outlet reaches to, even when you don’t want to.
Q Where does TV stand as a communication medium in terms of targeting advertising?
Targeting the right audience has always been the elusive Holy Grail for advertisers. TV, given the proliferation of channels, allows some level of demographic segmenting. However, since it is also a “broadcast media,” there is a lot of spillage from a geographic perspective. For example, think that there is a youth-focused apparel-retail outlet in Pune. Advertising on TV in the current scenario would just mean wastage of money for it. It would end up spending significantly more money as they have only two options on TV.
One is to advertise in a regional channel. In this case, the Pune outlet would end up paying advertising charges for all of Maharashtra across all demographics (as there isn’t any regional channel focused specifically on the youth. The second option for it is to advertise nationally in a youth-focused channel. In this case, there is a huge wastage because the advertisement would reach all over India while the outlet is present only in Pune. Either way, the advertising ends up with high spillage.
Q. What advertising solution does Amagi provide?
At Amagi, we enable advertisers to choose a specific city or region and focus their advertisements across TV channels. It is just like print. You pick a city edition and advertise only in that, paying for coverage only in that particular city. Taking the previous example further, Amagi has technology that would the Pune retail outlet to advertise only in the city, with a youth-focused channel such as UTV Bindass. This was it can reach the right geography and demographic at the lowest cost.
We have developed a unique, patent-pending technology that enables different advertisements to be run in different cities at the same time on the same TV channel. Using this, we have built an infrastructure across 22 cities in India, and growing, to do targeted advertising on TV. Amagi partners with TV networks, cable MSOs and DTH operators to enable targeted TV advertising
Q. Why does the concept focus on advertising in limited geographies and not the entire country?
Today, more than 450 TV channels provide options to businesses to advertise nationally across India. This is good for large brands which have a pan-India presence. For regional brands and businesses without a national footprint, especially in the Hindi-speaking markets, there is hardly any credible TV option available for advertising. We are focused on addressing this need.
Q. How does targeted advertising reduce the cost for retailers?
The advertising cost is drastically reduced because with our technology retailers pay only for the audience that they need to reach. They can pay only a fraction of the national rate of any popular TV channel and get their advertisement broadcast in their target city or region.
Q. What is the percentage of savings retailers can expect from targeted advertising?
Cost saving from targeted TV advertising compared to pan-India advertising using the same medium would vary from region to region, depending on the popularity of the TV. Savings can go as high as 80-90 per cent compared to the national rate.
Q. How would this impact the bottom line of regional retailers?
We believe that with our targeted advertising option, regional retailers can better compete with national retailers by claiming the same share of national media as them. The best thing is that regional retailers can do this by spending only a fraction of the money they would otherwise have spent on advertising.
This technology is a big boon to city- or state-specific retailers whose brands requires presence on premium TV channels yet who cannot afford to spend nationally as they do not have an all-India footprint.
TV currently has the largest reach in India and it continues to be the dominant medium to build brand awareness and recall among potential customers. With Amagi’s targeted advertising option, regional retailers get to leverage TV’s reach and emotional connect with people to build their brands inexpensively.
Q. What is the international market like for targeted advertising?
Targeted advertising on TV is a $6–strong market in the US, which is larger than the entire advertising spend in India. It is an extremely popular option for local businesses. It is also prevalent in parts of Europe and Asia.
Q. Is TV advertising losing share to online advertising?
No. These two media will coexist and grow. TV viewing is growing across the world. Even in advanced markets like the US and the UK that have high Internet penetration, the time spent watching traditional TV is increasing year-on-year. TV ad spends in these markets are the highest ever and growing further. People are spending more time in front of television than any time in the past. So not just TV viewing is growing across the world, the share of TV in total ad spends is growing too.
As far as India in concerned, here too TV advertising and TV viewing both are growing rapidly. Interestingly, TV ad spend in India in 2011 is expected to grow past print advertising. TV is the second fastest growing media in the country beyond online on a much larger base. So you can judge its potential as an advertising potential.
Q. Can targeted advertising be useful for big national brands too?
Big retailers can leverage targeted advertising to promote the right brands and products in the right regions. India is a diverse country with people’s preferences regarding brand, color, food and product differing dramatically across regions.
Targeted advertising now offers an opportunity to large retailers to promote the right products, brands and brand variants according to regional requirements. In addition, if there are region- or city-specific sales promotions happening, these can be promoted only in that city or region.
For example, promoting store launches and events locally, having the right TVC in each region (think of an ad with Hindi movie star in the north and a southern star in the south on the same spot), having the local address for the retail store in each city along with the brand ad and having the local promotions aired only locally.
Q. In which cities do you provide your services currently?
We are present in 22 cities across India covering 16 states, and expanding rapidly. All major metros (except Chennai) and all key tier one cities outside Tamil Nadu and Kerala are covered by us currently.
Q. What are your expansion plans?
We are looking to touch 50 cities before the end of 2011. Our intent is to carpet India, reaching all major towns and cities with the right channels in each location.
Q. Do you help regional retailers create advertisements as well?
Yes. A number of clients who have advertised with us never advertised on TV earlier considering the expense and lack of options. We help these clients by making advertisements for them. We also ensure that their communication and branding are of the highest quality at the lowest cost.
Q. Finally, what do you aim to achieve by introducing this concept in India?
Our hope is to democratize TV advertising by making it affordable to even the smallest of the retailers to appear on India’s most premium TV channels. We hope to help retailers build strong regional brands leveraging the power of TV.
