IIPM - MEDIA: December 2011

Tuesday, December 27, 2011

The road ahead for media planners

With the emergence of nomadic audience and the rise of personal portable medium, media agencies now require a new type of measurement system

Future is always complex. Predicting future is fraught with danger. Chances of getting future wrong are bright. However, future is always built on contexts that are current. Future is always shaped by the challenges faced in present.

There is a lot happening in our world at this time. Technology is progressing at a pace that is hard to keep track of. For example, in the last three years, the mobile penetration has doubled, homes with digital TV subscription have gone up exponentially; the FM stations have moved from metros to tier 1 & tier 2 towns. And the changes are not just tech driven. Even the demographic changes are re-crafting the entire society. The rapid urbanisation is throwing up challenges not faced before. There are no indicators suggesting that the speed of change will slow down or the transformation is eased off.

Here are three challenges that we are likely to face in coming years. First is the challenge of nomadic audiences. Second, the challenge of contexts. Last is the challenge of measurement.

Challenge of Nomadic Audiences

Media planning and buying is dependent on a set of audience being available to receive the message. The process of enumeration assumes that the audience is stationary, and once counted is always available. In today’s technology empowered scenario, the audience is not stationary. Rapid adoption of Net-enabled personal devices like Tablets is making media portable. This has serious implications. It means that mass media will get empowered by personal media. It means that the notion of fixed audience will have to be shelved. It means that media buyers will have to find a way of synthesising the broadcast media with new-age portable media. Nomadic audiences and personal portable media are forces that will permanently change the media landscape.

Challenge of contexts

Let’s take this rise of portable personal media and the possible stagnation of traditional mass media forward. Till now the media planning was built on increasing salience, so that it impacted interest in brand, in turn leading to a positive action on retail point. This is straight forward and linear in approach. This has delivered great results for brands. Today, the entire context of brand consumption is changing. Salience matters and salience impacts the interest in a brand, but from here on two new forces come into play. The personal portable media is the transformational force. It makes search and share more important than mere action of the traditional AIDA (Attention, Interest, Desire, Action) theory. Today everything is searchable, and people share everything. We know that this peer-to-peer network has an amazing power to influence brand choices. This change in context is already a reality and will only grow in future.

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Source : IIPM Editorial, 2011.

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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Tuesday, December 13, 2011

Will the property market perk up?

Buyer sentiment has not exactly been rousing for the real estate sector, which is counting on the festival season to bring the effervescence back again

The festive season in India, which begins around September and culminates with Holi in March, is considered as one of the auspicious periods for property purchase with builders looking to score decent sales. As many people start their process of home buying around this time, enquiries and bookings start touching a new peak, increasing by about 40-50% during this period. Real estate observers say it’s the time when the industry comes up with new offers and newer marketing & sales strategies to cater to the upsurge during this phase.

If the festive season is able to spur demand, it will spell good news for the real estate sector in India, which has been witnessing a dip in general demand and uncertainty over timely completion of projects in recent months. According to data compiled by research firm Venture Intelligence, private equity investment in India’s real estate sector declined by around 20.2% to $831 million (about Rs.3,740 crore) in the first five months of this fiscal due to sluggish demand. In comparison, PE players had pumped $1,041 million (around Rs.4,685 crore) into realty in the same period last fiscal.

According to industry experts, home registrations are down 30-35% in major markets like Mumbai compared with the previous year, which show that investors and homebuyers have been putting off their investing decisions. Rising interest rates on home loans and unbridled inflation across all sectors of the economy have forced prospective home buyers to hunker down and wait out the current economic uncertainty. Since March 2010, the Reserve Bank of India has raised interest rates 12 times by a total of 350 basis points, the fastest round of increases in RBI’s 76-year history. As a result, mortgage rates have gone up from around 8.5%-9.5% two years ago, to 11.5%-12.5% now and home loans that once took 15 years to pay back are now taking over 20 years to service. Even otherwise, the general economic health, which had been looking ruddy until a few months ago, has taken a turn for the worse. India’s gross domestic product declined to 7.7% in the April-June period, the slowest in six quarters while industrial output slumped to 3.3% in July, the slowest in 21 months.

With such economic clouds hovering above the real estate industry, it is uncertain whether sales during the festival season will pick up. Although historically property purchases especially on the residential front see a surge during the festive period, the wide disconnect between the expectations of buyers and sellers this time around may act as party pooper. Industry experts opine that in the current scenario characterised by high prices of homes and higher cost of home loans, buying a home has become a matter of choice and most home seekers are opting to wait and watch in the hope that prices might correct to more acceptable levels. According to Anuj Puri, Chairman & Country Head, Jones Lang LaSalle India,“This has resulted in a rather prolonged period of vacillation among home buyers in India. The fall in sales has impacted the capital availability of developers, and we are going to witness widespread delays in the construction of the residential projects across segments.”