The Hindu Business Line : A strategy of monopoly

Last month when Hindustan Unilever Ltd (HUL) decided to monopolise airtime across the Star and Zee network for a single day, it was reinforcing the roadblock strategy used by Hutch when it changed its name to Vodafone through a similar strategy. HUL’s case may be different from that of Vodafone (a name change), but as competition increases across industries, advertising roadblocks are all set to become the trend.

While in HUL’s case it may be the situation of falling market shares, the trend of creating roadblocks has been gathering momentum. Big spenders such as HUL and Vodafone are willing to pay a premium for such an exercise and are luring others towards it. According to Kevin Vaz, Executive Vice-President (Ad & Sales), Star India, “It is obviously more expensive and the client ends up paying a huge premium considering the scale and the impact the deal would make. In the case of the Star network, it would reach out to 100 million people in a single day. In fact, after HUL we are in discussions with some other clients as well who have been analysing the impact of such an exercise. Big spenders, especially from the telecom industry, have evinced interest as this is certainly not going to be a unique deal with any client.”

Calling it a “milestone in the history of advertising”, Star India blocked all advertising airtime across the network for HUL brands on September 17 splashing them (with Lifebuoy leading the pack) across 10 channels. Vaz says, “At Star, we have always gone that extra mile to provide our customers with exclusive campaigns that create a high impact for their brands. The first time this was done as a network roadblock was in 2007, when Hutch changed to Vodafone. We are confident that this roadblock with HUL brands, primarily Lifebuoy, will create a huge impression in the minds of the customers as it did for Vodafone.”

Of late, HUL has been feeling the heat, especially from regional brands, and lost share for leading brands, including its largest selling soap brand Lifebuoy. According to AC Nielsen, Lifebuoy has lost value market share and was down 176 basis points year on year. “HUL is obviously under pressure to get market share across categories. At the same time, its margins may have improved across certain categories and this has given the company additional money to splurge on such extravagant media strategies,” observes T. Gangadhar, Managing Director, Mediaedge:cia (MEC).

The opportunity cost of losing out to other advertisers with big spends would obviously prove expensive for HUL but the FMCG company did not stop with the Star network alone. Within a week, it decided to do a similar deal with the Zee Network’s 24 channels (on September 24). In fact, a similar statement was issued by HUL on both the occasions while creating this single-day roadblock. In a press release, Srikanth Srinivasamadhavan, General Manager (Media Services), stated, “We are pleased to be part of an idea that will exclusively reach us to more than 100 million viewers in India at the same time throughout the day. It is innovative and is expected to bring stronger engagement with consumers.” Media planners for HUL who did not want to be named found it an effective exercise but not as easy compared to the earlier roadblock when a name change was involved.

“Changing the name of Hutch to Vodafone was possibly an easier one as it was expected to be done only once and was treated as a short-term media strategy. In the case of HUL, it is a plethora of brands and the company is still figuring out whether such an exercise will translate into gains in sales and mindshare with an ROI model built into it. For a company like HUL, it is a well thought-out, concentrated effort and is unlikely to be a one-off thing. So what if it is paying a huge premium for that kind of attention for its brands?” a media planner for HUL says.

However, it may take a while to figure out the reach of such tactics. As Gangadhar says, “For a normal viewer it would be like any other day when ads are being shown and few will be able to figure out that all the brands belong to HUL.”

Meanwhile, the network owners have been busy trying to innovate to please their big advertisers with the hope of repeating a similar exercise. “It’s great to have co-created an innovative value proposition with a high net worth client like HUL, which is not only well conceived and knit together on a common theme but also exploits the full potential of all our channels through seamless execution. Innovation in leveraging the scale and width of our reach plus a well thought-out communication is sure to result in a holistic and engaging communication solution,” said Joy Chakraborty, Chief Revenue Officer, Zee Entertainment Enterprises. Just like Star India, Zee too claims there are other advertisers waiting to try out a similar feat with their brands. As Chakraborty adds, “There are advertisers apart from HUL who are facing intense competition in their categories, like telecom, who have also approached us.”

And the roadblocks do not stop at the broadcasting networks alone. Star India has kept its options open across other channels such as its Web site Startv.in. All the video clips available played Tata Photon Plus animated video as a pre-roll and a static banner ad at the end of the video clips as part of an online video ad roadblock deal between the Star network and Tata Teleservices. In fact, this is the first time that the Star network will execute an ad roadblock on its online video property. However, unlike those created on the TV channels, the Star network will not charge a premium from Tata Teleservices for the online video ad roadblock and the deal is based on a pay-per-view model. HUL and certain telecom advertisers have shown the way for advertising roadblocks but it is a matter of time before others followed suit and made it a growing trend.

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