TAM irrelevant, the real war is between Broadcasters and Advertisers

On the surface of it, the enemies in the current standoff in the broadcast industry seem to be the broadcasters on one side and TAM on the other. "If the rupee's downward slide was a worry for all of us, the news that another currency - TAM, the viewership data that advertisers use to efficiently target consumers through television - is under siege," Firstpost had written a few days ago.

As this is being written, broadcasters Network 18, Viacom 18, STAR India, NDTV, Multiscreen Media, Times Television Network and Shri Adhikari Brothers have all either not renewed their contracts with TAM or have written to TAM stating their intent to unsubscribe from the service, making the Zee network and Sun network the only large broadcasters to continue with TAM (though it is understood that both would unsubscribe shortly).

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What about the advertisers - the other critical component in the ecosystem? Advertisers rely on TAM data to evaluate their media placements and spends. Arvind Sharma, president of the Advertising Agencies Association of India (AAAI), and chairman and CEO of India subcontinent, Leo Burnett, said in an official release, "The move by broadcasters to discontinue with ratings is ill-advised and not in the interest of advertisers, advertising agencies or broadcasters. It will lead to overpaying and underpaying of advertising time, both of which will lead to a collapse of TV as an advertising medium. The ratings from Broadcast Audience Research Council (BARC) are yet some time away and until they are released it is critical to continue with the current system.Most broadcasters all over the world have some issue with media measurement systems but that does not mean that the system must be abandoned. Instead it must be improved and identified gaps must be plugged."

TAM is becoming irrelevant. AFP[/caption]

The AAAI includes, asmembers, all major media buying and planning agencies agencies.The Indian Society ofAdvertisers (ISA) spoke in the same language. "ISA has read with concern recent reports that some broadcasters have decided to stop subscription to television measurement service. This is a matter of immense importance as the measurement system is integral to the health of the industry. The rating system needs to continue for the smooth functioning of the industry as it's the very foundation of the commercial process, media planning and pricing."

So the players in the war seem to change: It's now Broadcasters Vs TAM, advertisers and advertising agencies.What advertisers and agencies seem to have overlooked is that, since the end of May, the financial relationship between agencies and broadcasters ceased to exist with the emergence of the 'net billing' resolution. While, before this development, broadcasters were deemed to pay an 'agency commission' to agencies, they no longer do so, making the compensation to the agencies an outcome of negotiations between advertisers and their media agencies.

These two recent developments - the net billing and the current collapse of the TAM-broadcaster relationship - point to a war where TAM is hardly a player.

The war is Advertisers Vs Broadcasters.Why should there be war?Last Friday, we spoke to Uday Shankar, CEO, STAR India and asked him for his views on the imbroglio. In essence, Shankar complained about the 'volatility' and 'fluctuation' of the data TAM measures, analyses and disseminates. You can see the conversation here.

The beneficiaries of volatile, inconsistent and unreliable data and of the reported shrinking of the TV universe (by TAM) are the advertisers, who, through their media agencies, interpret the data in a manner that helps them to beat down rates for advertising. Volatile and inconsistent data should have the entire ecosystem worried and complaining, but, as we see, it is only the broadcasters who seem to be bothered -- and they are sticking to their guns and pulling out of TAM. Worse, some of them are reported to be getting legal opinion on prevented TAM from publishing data related to their channels (TAM could continue measuring the channels that have pulled out).

If the stand-off continues, TAM stands to lose as much as Rs 20 crore in revenue. The loss in revenue will make the task of improving the reliability of the data that much more difficult.

What makes the broadcaster brave enough to walk out of TAM?

What if advertisers decide not to buy commercial time unless channel viewership information is available?

The answer is in the growing contribution of subscription revenue to the overall revenue pie. Most large networks now have crossed the magical 50 percent mark, which decreases their dependence on advertising revenue.With the smooth progress of digitisation across the country, broadcasters not only see higher subscription revenues, but also a reduction in the 'carriage fee' paid to cable operators. Each month sees a healthier contribution by distribution to the bottom-line of broadcasters.

In parallel, the government has reitereated the resolve to stick to the 10 + 2 advertising minutage regulationwhich will see saleable inventory reduced significantly.

The danger to broadcasters is, if in addition to a shrinkage in inventory, their yields do not move north.And with the volatility and fluctuation of TAM data that broadcsters allege, there is no hope of an increase in yields.

That's what this battle is about. It's about yields. Which makes it Braodcasters Vs Advertisers, and not Broadcsters Vs TAM.

Disclaimer: Firstpost is owned by Network18, that has significant interests in the broadcast business.