For efficient TV ads

Baskar, co-founder of Amagi, gesticulates to a picture on his laptop, of a slice of watermelon and a whole one, to emphasise his point, “We looked at local businesses; they need a slice of a watermelon, but needed to buy the whole package. There was a clear inefficiency in the broadcasting system. Everything was like in a bundle, all or not, that's the way it is today.”

    Today, everything, whether a newspaper, magazine, radio, can do an ‘unbundling' from a location or demographic perspective. But, this had eluded television so far. “We wanted to change the anomaly where we can bring TV to a point where it can be unbundled. We call it smart advertising. We enable a platform,” says Baskar. Amagi has for now tackled only analogue distribution as that is the major chunk of the pie with 70 million homes; DTH will come later. Says Vikram Kaushik, former Tata Sky MD, and now strategic advisor to Amagi: “It's been running for 18 months now.

It's not just a concept, but been taken to market. So we are now at the stage where for the last eight weeks we are taking it to end users. We have met the major advertisers because they are the ones who are spending all the money.”

    Amagi has been working with a few national channels such as Zoom, Headlines Today and Aaj Tak, UTV and regional channels such as Udaya in Karnataka. The business model so far has been to buy advertising time on these channels and Amagi's media team sells the spots to a host of local advertisers; so, it will be different ones in Bangalore from what Zoom would telecast in a Mumbai or Delhi market.

While Amagi operates from 16 centres around the country, selling local spots, typically it serves up 10 different region-specific ad spots.

    Says Baskar: “Local brands cannot get on to national TV because of price, and second, wastage. In the northern markets, regional channels are weak; their viewership is low compared to say, a Star Plus. TN is a great example of a huge regional channel in Sun. National channels do have regional channels but which are not big enough. For example, in Maharashtra or Bengal, there is only 50 per cent viewership for regional channels.”

Benefits all-round

   In the Amagi model, for a channel such as Zoom, it's incremental revenues for it as advertisers such as a Toyota dealer in Bangalore would never consider advertising on a national channel because of the costs. Now, he pays only for the Bangalore market. “We believe there's a whole tail of small, emerging brands, local businesses which are evolving,” says Baskar. Adds Kaushik: “You can do regional ads or by pop strata or do only metro brands or one can have brands only for the mass market; brands are doing that today but media does not segment the markets as of now.”

  While one part of Amagi's business model is to market time for local advertisers on national channels (it expects to break even in 18 months), the other is to pitch the proposition to large advertisers with a national footprint. The Amagi box, made in Korea with software written in Bangalore and loaded on to it, can enable national advertisers to have regional variations of ads (pitching, for example, no-onion-no-garlic chips for the Gujarat market) or even ads with different creatives.

    “And, brands do get a sheen or rub-off effect of advertising on a national channel. But, you need to fine-tune it so that wastage is reduced and ad spends become more effective and can be targeted better. You can still have brands that choose to advertise on national channels because they believe that 70 per cent of the market is covered, but spending 100 per cent of the ad spend need not happen, if 70 is what they will get then it is 70 they should pay for. It will improve efficiency and metrics like cost per rating point,” elaborates Kaushik.

    The Amagi model could well be “disruptive” and game-changing for both media buyers and broadcasters. When advertisers begin to ask for it broadcasters would willy-nilly have to do it.

Says Kaushik: “From a benefits perspective, it's 30 per cent more effective. Broadcasters get more ad spots and they can have more value add to ad spots; second, you bring in more advertisers who are out of the ad pool. Obviously for audiences, it's more relevant advertising, for operators they get a new revenue stream, so, it's a win-win model across.” While Amagi's revenues come from the media spots it sells, once large advertisers come on board, it will receive a service fee for the technology.

  Isha Sapra, Marketing Services Manager at Titan Industries, acknowledges as much. “This could be a game-changer but only if broadcasters and MSOs (multi-channel satellite operators) come on the same plate. There's a proliferation of brands and advertisers want more focused ads.” And, it could happen, she says, giving the example of DTH television which has changed the way media is being bought.

Sapra says an Amagi model will benefit regional advertisers as national TV media has become expensive. Titan itself is evaluating Amagi for Tanishq which uses regional advertising extensively; “today, only print give us the leeway,” she adds. More focused advertising could be the next big thing, and broadcasters, she says, can't ignore it.

  Bala Iyengar, Vice-President, and business head, Zoom Entertainment Network Ltd, says it's been an interesting experience working with Amagi.

He says Amagi has pulled in a lot more local advertisers in different regions and in that sense it has been incremental revenues for Zoom. “We have not been interfacing with clients for smaller, regional advertisers; Amagi has been working as a quasi media planner for us for close to a year now,” he says.

  Now, it has reached a stage where Zoom can market the proposition to large, country-wide advertisers. For example, a telecom company with 3G services in the metros only would want targeted ads for these cities. Now, their ad footprint can be split to offer other services in the smaller cities rather than waste ad budgets in regions where 3G services are not available.

Media buying firms seem enthused by the concept of Amagi. VivaKi Exchange - the consolidated media buying arm of Starcom MediaVest Group, Zenith Optimedia and Solutions Digitas - has not bought slots through the new offering so far, but is keen to explore the option.

Says Mona Jain, COO, VivaKi Exchange, “As a concept it's got tremendous potential as it helps targeting on national channels eliminating the spillover. A separate capsule for local markets will help address client needs in specific markets.

Having said that, something like this needs the first buy-ins to happen. There is a lot that needs to be done in terms of awareness generation; that has not really happened so far.”

With a second round of funding from N.S. Raghavan finalised recently, Amagi is all set to leapfrog to the next level with its now tried and tested concept.

How Amagi works

Amagi has tied up with around 35 multiple system operators (MSOs) around the country. Amagi's boxes are at the cable headends and local ads are pushed through the internet to these boxes. The signal to homes goes through an Amagi box, intercepting and feeding the commercial relevant to the area. The ad is watermarked and the process is seamless. you won't know the difference. As Srividya explains, “For example, if there's a Dhoni Pepsi ad which is playing, our box can identify that ad and our software refers back to a playlist which says if a Dhoni-Pepsi ad comes at 9 am, then replace it with another Pepsi ad. Nobody needs to touch it. Every ad is watermarked, like a bar code, and our software can read that.” Both ads served up at different cities need to have the same duration.

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