Entertainment - Channels outsource ad sales

Rohit Vohra quit Star India four months ago after a 15-year stint to set up Funtime Films & Marketing, an advertising sales company for television channels and FM radio stations. He has names like Zoom, Big FM and 9X on his list of clients.

Last year, marketing agency Pearl Media changed its name to Integrid Media and also tweaked its business model a bit. From selling ad space for private producers on the Sun network, it switched to advertising sales for niche channels.

“It may not be the norm yet but more and more channels are outsourcing their ad sales and marketing function. There is a huge opportunity, especially in the niche and regional channels segment,” says Sanjay Dhar, chief operating officer, Integrid Media. The company is selling the coming Bhojpuri channel, Mahuaa TV.

Leading the trend, however, is NDTV Media that was set up by Raj Nayak in a joint venture with NDTV in 2002. Starting with NDTV’s news channels, the company has gradually signed up a host of non-competing channels as clients: Sahara One, Filmy, Firangi and Mi Marathi from the Sri Adhikari Brothers’ stable. It also manages advertising sales for some websites.

It’s true: TV channels are now appointing external agencies to manage their most critical function of revenue generation. Worldwide, selling units take a commission of between 8 and 15 per cent from broadcasters. The weaker channels pay15 per cent, while the stronger players pay closer to 8 per cent.

Peter Mukerjea, chief strategy officer, INX Media, says: “Outsourcing does not require justification any more. It’s worked very well in other industries such as IT.”

Agrees NDTV Media CEO Raj Nayak: “Note the level of outsourcing already prevalent in the media industry. Content is almost entirely outsourced and, in the last few years, channels have farmed out their distribution to companies such as Zee-Turner, One Alliance and DEN. Now marketing and sales, the holy grail of broadcast companies, are also seeing the entry of specialists.”

Proliferation in both TV and radio seems to be driving the development. “Smaller regional players have neither the access nor the wherewithal to reach major advertisers or even the agencies,” says Barun Das, CEO, Zee News.

Talent crunch is the other reason. “There aren’t that many high-quality sharp-edged sales people in the media,” says Mukerjea. Emerging media such as Internet, FM radio and Out-of-home has dipped into the talent pool, making matters worse.

Mukerjea says the bigger reason for the trend is consolidation in media buying. In the last four to five years, agencies have aggregated their buying power. Media sellers are now emerging to take on the buyers, h believes.

Nayak quotes numbers from a Lintas study that explains media inflation: Television was the only media where indexed rates have grown just 3.5 times in more than 10 years. Print grew 13 times, he says. Clearly, the challenge can be best met through consolidation at the seller’s end. “The dynamics of the business could change as big buying bullies meet sales bullies,” says Mukerjea.

So, is Mukerjea ready to outsource INX’s (9X, NewsX) sale function? He’s given it out partly to Funtime Marketing; for the rest, “economics will drive that decision”.

Critics argue that conflict of interest among competing clients could mar the growth of this business model. Says Das: “Personally, I would advise against it, as I am not in favour of being dependent on an outsider for your existence.”