The Economist - Mktg & Advtg Strategy

Running Period: 1Year and still counting.
Advertising agency: O&M, India
Key Person: Sumanto Chattopadhyay


Critical Elements of the Campaign:

1.)Iconic Campaign with a sharp departure from earlier tried and tested campaigns.
2.)The entire campaign sported the colours that The Economist ‘owned.’
3.)No Special price offered in conjunction with the campaign
4.)Cost-effective communication.

What did The Economist expect to achieve through their advertising and marketing strategy?

The primary objective: raise the awareness levels in Mumbai, Bangalore and New Delhi and the National Capital Region.

The secondary objectives:

1.)Increase sampling
2.)Increase subscriptions and
3.)To reduce the cost per acquisition of the subscriptions.

Focus on: Subscription sales, newsstand sales and advertising sales.
Broad definition of The Economist’s reader: Age 35+, male, living in a metro – and not restricted, as one might feel, to corporate top management. We have fashion designers, copywriters, project managers, MBA students. All Ideas people

Nature of Campaign: The awareness was created largely through their disruptive A-Z campaign.

Step1: Mobile updates channel - A first in The Economist world.

Objective: Sampling of content

Methodology: Everyday a message is sent out at 11:00 am to the channel members. The message is either a summary of the Leaders in the current week’s issue, or a snippet of a couple of interesting stories. Directing the person to read the entire story by picking up a copy from the newsstand, or visiting www.economist.com or even m.economist.com (which has been launched recently).

Launched: 4 months back

Result: 35,000 members registered on it. These members were potential people who would try/sample the product.

Barriers to Trial: High Price Point.

Single most effective source of subscriptions: was through www.economist.com.

Insight: People who sampled content online were most likely to subscribe to the newspaper. Hence, a lot of our subscription effort was needed to get people to sample and in generating trials.

The Way Ahead:

Step2: Driving traffic to www.economist.com through online campaigns and previously established mobile channel
Step 3: Introducing a trial pack @ Rs. 1100 for 12 weeks
Step 4: Partnerships such as Jet Airways, ICICI Bank Credit Cards, Deutsche Bank, etc. In all these partnerships, exclusive offers to their customers, with benefits which were linked back to the partner brand (for example, a Jet Privilege member who bought a subscription to The Economist was given Jet Miles).
Step 5: Using the Internet as a sales channel- Online databases and sending out Electronic DMs to them. (CPAs being much lower than other channels)

The Number Game: (Refer to Graphs)

Advertising growth: Impressive 73%.(The South Asia pages have seen as many as 25 new advertisers, including Oberoi Hotels, Kotak, Coca Cola and Edelweiss)

Average monthly Sale: In February 2008, the average monthly sale was 16620 and, in February 2009 the figure submitted to the ABC is 23183!

The growth is despite the fact that, unlike a lot of publications targeting the same reader, The Economist has an audited circulation figure that pales in comparison to those of Indian publications.
It is the area of growth in subscription and newsstand sales which is a final testament to the effectiveness of the marketing strategy.
(The projected 2008-09 average circulation is 19% higher than the corresponding figure for 2007-08).

February 09 figures:

Circulation when compared to February 08 show a growth of 39%
Subscriptions show a growth of 26% and
News stand sales show a healthy 15% increase.

Not a bad end-of-the-year report card.

Launch of TVCs: The 6 TVCs created and produced by O&M cost merely Rs. 14 lakhs.

Bravo!

Costs per acquisition down
Healthy increase in advertising sales
Newsstand sales and subscriptions
Absolute budget that is almost miserly.

With uncertainty being the only certainty in this year, The Economist should be high on every decision maker’s reading list.

With the foundation for growth in place, The Economist’s financials for India should be an interesting to follow.

Media for Equity Business

Action Advertisement Construction Equipment Ltd (ACE) is a Faridabad based company, which manufactures the mobile cranes used in construction. In its decade-long existence, the company has never really had a budget for advertising. Like most B2B companies, it never felt the need for advertising its ware. Business expansion was already taking place by winning competitive bids and tenders. Other possibilities were not in the frame of necessities. In recent years, though, ACE has been advertising itself aggressively. Is this because of a change in its marketing approach or a change in its equity structure? Or is it both? The truth lies somewhere in between. ACE is one of more than 200 – often little-known – companies that have taken to advertising in the last three to four years thanks to a most unusual initiative by India’s largest media company,
Bennett, Coleman & Co. Ltd (BCCL).

Begun about three years ago, the initiative, which is called Times Private Treaties (TPT), has been gathering ever greater momentum. TPT tries to identify and tempt promising advertising-shy companies to take media space in BCCL publications and media platforms in return for equity in those firms. BCCL believes that the Indian market is commodity rather than brand driven, which explains why only around 14,000 brands are actively advertised here as compared to about eight lakh in the US, for example. The media company’s broader objective is to increase the advertising pie by drawing in companies which have chosen to stay away from mass media for one reason or the other. Some of these companies would possibly have turned to advertising in a few years, after they reached a certain size. The TPT initiative accelerates the process by convincing the entrepreneurs that advertising would hasten their growth. Considering the spate of deals that TPT has signed, it apparently has.

However, TPT won’t comment on the value of its investments, which have been variously estimated at between Rs.1800 crore and Rs 3,000 crore (though some suspect that it is lower than this price band). The ambiguity of the figure notwithstanding, it is certainly a huge sum of money that is under consideration, especially by the standards of the fragmented Indian media business, in which only a few companies have true financial scale. The list of investee companies includes big, mid-sized and small entities. At one end, one would find companies such as Kabirdas Motor Co. and Raja Rani Travels, while on the other, one would see a handful of giants such as Pantaloon Retail and General Motors Corp.

Even more interestingly, other media companies have been adequately intrigued by the TPT initiative to dip their toes into the media-for-equity business. HT Media, NDTV, Dainik Bhaskar, Dainik Jagran and Mid-Day have all launched their own private treaties division, though with differing degrees of seriousness. Many of them have signed a few deals, but perhaps not much more than that. For instance, NDTV has signed a deal to invest about Rs 25 crore of media in the infrastructure company, EMAAR MGF. Mid-Day, too, has clinched a deal with a software company. However, barring one, none of the other companies was forthcoming, possibly because it is still early days.

Fund of inventory

What has brought the media-for-equity business into sharper focus is a recent attempt to get publishers together on
this via the Rs 900 crore Morpheus Media Fund (MMF). The MMF is being promoted in partnership with Ozone
Capital Advisors (o3 Capital). Media agency Maxus is the media advisor.
The MMF intends to procure inventory from leading media owners across the country and buy equity in mid-sized
companies across sectors that need advertising for growth. The media inventories will be provided to these midsized
companies and, in return, media companies will get units in the MMF in proportion to the inventory utilised.
The MMF wants to help the creation and growth of new Indian brands in the consumption sectors – primarily FMCG, but also consumer services, including education, health care, telecom and financial services. The MMF expects to make about three dozen investments, with a couple of them at about Rs 90 crore each and about half of the total at under Rs 10 crore.

The Morpheus Media Fund aims to garner 48 per cent of its media inventory from print companies, 38 per cent from television, 10 per cent from outdoor media owners, and 4 per cent from radio players. When a person invests in the stock market, he has two options. He can either take the direct route and buy stakes in different companies himself or decide on a mutual fund, which offers a number of advantages such as diversification, professional management, cost-efficiency and liquidity. The MMF is like any other fund and comes with the risks and advantages that are attached to any mutual fund on offer.

Are we looking at a passing financial fashion? Or, with some of India’s largest media companies exploring the media-for-equity business, are we witnessing the beginning of something truly significant? Suppose the MMF does find takers, could there be other funds – bigger funds – that will mop up significant chunks of available inventory? Like the airline business with its empty seats, the media business worries perennially about liquidating excess media inventory. Firms have tried to create media exchanges as well as platforms to get rid of last-minute inventory.While the idea seems desirable in principle, publishers are reluctant to be associated with anything which even
suggests discounting, or which would compromise their brand with clients in the long run. Some publishers have used media barter, either with another publisher, or to acquire the odd asset. The approach has been opportunistic, not strategic. Is equity in return for media the answer that the business has been looking for all these years?

There are no lessons from abroad because, peculiarly, India is the only market in the world where media-equity swaps are being practised. TPT thinks that’s because in the West, there is a plethora of opportunities and avenues to fund various activities, including brand building. The Indian market, on the other hand, is relatively nascent.

Executives familiar with the business emphasize that the publisher who harbours a short-term objective of merely cashing in on excess inventory in return for shares is bound to come to grief. For it to work, the play has to be long term. It may also be more complicated – and expensive – than it first appears.

One of the perils of playing long term is evident even in TPT’s own portfolio of companies. The bulk of the investments were made in 2007 and 2008, during which the BSE stock index climbed steadily from 14,000 points to 23,000 points – only to settle later at around 10,000 points.

What’s happened to companies worldwide will hold true for the TPT investments, too – they will be valued far lower now than at the time of entry. BCCL will presumably ride it out because of its size and sheer pile of cash, but any other media company would have been reduced to making a desperate exit for its investments. Even when the markets are stable, there is the question of working capital. The media business is geared around receiving payment within 60-90 days. How much inventory can a company commit when it knows that the payback –assuming things go well – will happen only in three to five years? TPT concedes that it is a working capital intensive
business in which the money is blocked for a long period of time “since realisation is contingent on the liquidity event of the underlying investment” – in other words, an exit.

While there is an unstated notion that media inventory is free, when committed on a sustained basis, it costs money.Listed media companies tend to have an operational profit of about 20 per cent. This relatively low margin, coupled
with cash-flow requirements, means that a media company can’t put aside a lot of inventory for equity swap deals.Senior executives and analysts think that even a determined media company could not set aside more than 5 per
cent of its ad revenue towards equity. Going by that broad logic, the most that media companies could invest in,say, 2009, in equity through inventory would be about Rs 1,250 crore (assuming advertising spends at about Rs 25,000 crore, going by media agency GroupM’s estimates). And mind you, this is only potential – it assumes that every single publisher would want to get into it. Naturally, the real sum would be much smaller.

The other aspect publishers tend to overlook is that the investee companies have to be given media as agreed upon, according to that company’s need – not just in the lean advertising season, when it suits the publisher. In fact, it is more than likely that most companies will want ad space when cash-paying advertisers want space, so the creation of the inventory will cost real money.

Because BCCL is not publicly listed, it has the freedom to invest in smaller, less known ventures and it can also take a greater degree of risk. A listed company such as NDTV, on the other hand, limits itself to investing in well established and profitable companies because it wouldn’t like a notional loss reflected on its balance sheet. In any case, finding small companies with high-growth possibilities isn’t easy. TPT has more than a hundred employees scouring the market for potential investments. In the absence of a full-fledged team, says an investment
banker, it would be difficult for a media company to identify lesser known players in low-profile businesses.

The flip side

Finally, there is the issue of how target companies might perceive an offer such as this from a media company. A top TPT executive says that while banks and financial institutions are happy to fund physical, tangible assets, the funding of intangibles has always been a challenge. The advantage to an entrepreneur, he says, is that “he is using the future balance sheet to fund today’s advertising need”. While most entrepreneurs would rather have cash, there are few avenues to raise this, especially if they are in traditional businesses. Going by the TPT experience, they are clearly happy to accept the opportunity. Would a Morpheus have the same acceptability factor? It is early days yet, but the scheduling of ads across media, as the fund proposes to do, involving a large number of companies, could prove to be a complicated business. Each media company has its own bundle of processes. Therefore, ensuring that a few dozen investee companies can avail of the media in the best possible way could prove quite challenging.

A media fund is a truly original concept and while publishers are intrigued because it gives them a relatively risk-free way of exploring the media-for-equity business, they also have concerns. One prominent publisher, for example, wanted an assurance that the MMF wouldn’t target his cash paying advertisers.
That, indeed, is one major issue that makes publishers frown: Could this new initiative persuade cash paying advertisers to try equity instead? How does BCCL deal with this conflict, which surely exists? TPT argues that the two options between them “aid the overall expansion of the advertising pie rather than cannibalising it”. The choice made from among the two avenues depends on the “business compulsions and growth drivers”. The BCCL ad sales tam may not share that view.

The other point of conflict is editorial. BCCL has been repeatedly attacked in the media for compromising its editorial independence in favour of private treaty clients – favouring them in print without revealing to its readers that it holds
a stake. While the company denies that this is the case, there is no doubt that its editorial reputation has taken a ammering. The media business routinely deals with the issue of editorial independence vis-à-vis the advertiser – it is in the nature of the beast. So, it is not clear why the media-for-equity business should lead to any greater conflict than what already exists by accepting advertising.

In fact, the MMF presentation categorically states that editorial support is not expected; advertising support is good enough. So, one can only surmise that BCCL mishandled the issue – either by going out of its way to favour TPT clients or by not dealing with the matter transparently enough. In fact, the TPT executive refused to address theissue when it was raised by afaqs! The issue of conflict – either with editorial or with sales – does not change the fact that the media-for-equity idea is full of possibilities. However, like all new concepts, it may prove to be an expensive one to develop.

(The article was published in Agency FAQs and is based on interviews with dozens of industry professionals, who include S Sivakumar, principal secretary and chief executive officer-designate, Times Private Treaties; Lynn De Souza, director, Lintas
Media Group; Manajit Ghoshal, chief executive officer, Mid-Day Multimedia; Salil Pitale, head, media and telecom,Enam Securities; and Balu Nayar, managing director, Morpheus Capital Advisors.)

Consumer is Queen

Following Essay was submitted by me to Council for Fair Business Practice's Annual Essay Competition.

"If you understand women's consumer DNA and implement strategies that ring with authenticity, you will improve all of your marketing efforts. If you make it women-friendly, you make it everybody-friendly!"
- Joanne Yaccato (Gender Intelligence Expert & Founder of Toronto-based consulting firm The Thomas Yaccato Group)

Origin of Concept: Women Consumers
A consumer is a person who uses any product or service. Typically when business people and economists talk of consumers they are talking about person as consumer, an aggregated commodity item with little individuality other than that expressed in the buy/not-buy decision. However there is a trend in marketing to individualize the concept. Here is where the modern marketers distinctly segregated the concept of Women Consumers and saw them in a different light as to how they can be better reached and influenced. Women Consumers are presumed to dictate what goods are purchased and are generally considered the center of economic activity.

Women: Centre of Choice, Therefore Centre of Economic Activity
One of the major contributions that we all make to the economy is through buying things. Women's role as care givers has meant that women play an especially prominent role in buying things that provide sustenance for home and family. Women have been ignored in the past because they're in plain sight, but not anymore. It's standard marketing wisdom that women control 80% of all household purchases (Consulting firm A.T. Kearney estimates). As a result women have to face a number of decisions related to products/services & brands. This insight proves why marketers of household supplies, kids' gear, food, cosmetics and clothes are good at reaching women. But women buy gender-neutral stuff, too: cars, auto services, technology--the list includes everything but Viagra! Increasingly, women take responsibility for buying larger items such as houses and cars. And women are also often responsible for buying gifts on behalf of their families. When kids go to birthday parties, it is usually the mother who purchases and wraps the gift. It often works the same way when a couple attends a wedding or anniversary. Women are faced with endless choices and decisions in their lives as consumers. These facts make them centre of economic activities.



Women-O-Nomics: Underestimation of Economic Contribution of Women
Even the non-monetary part of consumption is part of the economy. Shopping for the goods that we need to survive takes time and attention. Buying food and clothes and school supplies and home furnishings often means watching out for sales and discounts. Comparison shopping, searching for offers, and finding the best deal, is also time-consuming. Shopping is work and is part of the unpaid labour not counted in the formal economy. But whether or not it's recognized as work, shopping is an activity fraught with dichotomy.

Women-O-Nomics: Escalating Economic Power of Women
Younger generations of Indian women have been profound. Whereas Indian women traditionally have been submissive to parents and husbands and valued frugality and modesty, a number of sociological studies show that young Indian females now prize financial independence, freedom to decide when to marry and have children, and glamorous careers. TOMORROW'S BUYERS. A generation back, women would sacrifice themselves and believed in saving, today, it is spend, spend, and spend. It is O.K. for a woman to want something for herself, and people will accept it if she goes out into a man's world making a statement. Because today's young women are the key consumer group of tomorrow, these shifts have big implications for marketing companies.

Women- The Evolved Consumers
Freud famously wondered, "What does a woman want?" He never figured it out, but many business owners have and are making money in the process. What women want right now is attention to detail in product design and service; the right choices, not endless choices; and a nuanced, longer selling process that respects their desire to understand what they're buying before they take it home. This prevailing wisdom doesn't just apply to the obvious categories like clothes, kids' stuff and cosmetics but too many more product categories. Apart from this, women tend to be far more evolved with respect to the kind of data that is assimilated from them through marketing research; they are excellent feedback providers and come up with ingenious insights. Also women are in the forefront to advocate ethical marketing practices and often take up action against fraudulent practitioners. Marketers of any product or service can adopt a service philosophy that delivers what women want. Once you translate these expectations to your market niche, you'll win the hearts and of women which directly translates into a loyal following.

Caselets

1.)A survey carried out in USA (in year 2006) states that 60 percent of women 16 and older are working. In nearly two-thirds of households, women are the primary shoppers, but 72 percent of married women who work full time are the primary shoppers. This reinforces the fact that women are the key decision makers and keeping focus on them is the key.

2.)Recent studies by Grey Global Group (In Year 2005) examined 3,400 unmarried women aged 19-22 of different income and social levels. Altogether, the project involved 40 focus groups in five large metro areas and five smaller cities in India. In some cases, the researchers lived with the women for a while to study them more closely. The researchers supplemented this data with interviews of journalists, teachers, and psychologists. The important trends recorded were as follows:

1.)Guilt-free materialism- 51% of young single women in major metro areas say it's necessary to have a big house and big car to be happy. In smaller cities, 86% agreed with this statement.

2.)Parental ties-67% say they plan to take care of their parents into their old age -- and that means they need money.


3.)Marital freedom- 65% say dating is essential, and they also want to become financially independent before they marry. More than three-quarters -- 76% -- say they want to maintain that independence afterward. Sixty percent say they'll decide how to spend their own salaries


4.)Individualism- Female role models in Indian culture used to personify perfection, Now, 62% of girls say it's O.K. if they have faults and that people see them.


5.)Careerism- 45% of young single females say they would like to be journalists. 39% say they would like to be managers, 38% are interested in design, and 20% think they want to be teachers. Interestingly, 13% say they would like to be in the military. The percentage of those saying they want to be a full-time housewife was minuscule.

6.)Modern husbands- The traditional role donned by husbands is changing and they are more involved with household chores.

Grey Global Group is of the opinion that For Indian society, the changes in young women's outlook on life is revolutionary. For marketers, they offer interesting new opportunities to exploit.

Queen Rules
Women are not just passive recipients of products & services. Women are powerful and have a powerful role to play. Working together as consumers and producers, women can make the world a more just place for all people and for our earth.


"No business owner can afford to ignore The Queen- women, and few would admit to doing so. But not ignoring them is not the same as attracting them, and attracting them is not the same as winning their loyalty. Try hard to woo the Queen, for you are sure to succeed with her!"
- Namita Parekh (Marketing Student & a Women Consumer)