Advertising is still considered a big company’s game: Uday Shankar

Q) You are the first media professional to lead FICCI. What do you think media & advertising’s role can be in shaping entire commerce and industry?
M&E has punched below its weight as far as the larger role in making an economic contribution to the country is concerned. Also, in terms of playing a role in building Brand India, M&E can play a big role. I am not blaming the media. The country, as a whole, needs to understand how to leverage the power of that.  If you look at Brand US, just imagine the role that Hollywood has played. It will be tough to describe what went first – the American way of life or the Hollywood way of life and content. Without Hollywood, it is anybody’s guess whether we would have internalised as much of America and accepted it as much as we have today across the world. From developed to underdeveloped parts of the world and from democracy to totalitarian regimes, one thing that everyone has internalised is the American way. I think that is the role that M&E can play in building Brand India. That comes with massive economic upside for the sector and for the consumer because very few countries have the potential strengths that we have in India in terms of our heritage of storytelling, rich cultural tapestry, diversity, and nuances of our culture, and our ability to tell great stories. We also have one of the strongest and broad-based technological infrastructures in the country--our engineering talent, our ability to visualise. Globally, Indian engineering talent is what is powering technological advances. We should be able to do it here unfortunately we haven’t done it so far. But I think there is a huge opportunity for us there.

Q) The advertising and marketing sector for the longest time has been hovering at around 0.3% of the GDP. Purely from an advertising standpoint, why do you think that has been the case out here and what does it take to stimulate AdEx as a share of GDP?
First and foremost, we are still in the early days of building the culture of advertising and building advertising as an intrinsic part of business enterprise. It is still considered a big company’s game. There is a little bit of understanding in traditional entrepreneur’s minds that it is a bit of vanity. Barring the big corporates, many businesses don’t see advertising as an essential tool for business. Building a brand is a strategic lever of creating value, getting market share, and getting a premium share of the segment. Those things are not widely established and we as media professionals across the buy and sell side have not done a great job of evangelizing. If you look at the number of brands that advertise in India, it is really small. It has grown dramatically because of digital penetration but if you look at traditional media that number is really small for a country of the size and diversity of India. Just selling and buying inventory is not the best way to participate in economic value creation. Media can play a much bigger and deeper role.

As a community, we have been short-sighted. We have undersold ourselves. We are extremely competitive within our own narrow set even to the extent of destroying value for one another but we haven’t gone ahead and painted a larger vision for the world and created essential space for the community of media and entertainment in that larger vision. That is where the big problem is.

Q) Currently, the growth momentum is with TV and digital. At this point, do you believe that this sort of momentum or trend is going to continue, and will some of these other mediums like Print and Radio die out as we have seen in other markets?
These are tough days ahead for a lot of segments like print, OOH, and radio. They have been devastated during COVid-19. I don’t read too much into that devastation. I have always believed that each crisis manifests itself on individuals and businesses and only brings out the latent strengths and weaknesses during the crisis. The crisis is just the spotlight for it. If you see print, of course, distribution of papers was disrupted and there was no advertising happening so you see those contractions. But it was already a trend that just got amplified dramatically and if you don’t see the bounce back as dramatic as something like TV. It is primarily because newspaper business in this country has been built entirely on the back of advertising. That’s a suicidal way to build a business. If you have two streams of revenue why would you go and kill one stream of revenue? A three-year-old will tell you that it is not an act of genius and for 30 years in this country we hailed those entrepreneurs and managers who pushed that line of strategy as amazing visionaries because in the short-term it worked for them. In the long-term everybody is dead.

Q) What is your view on TV?
In the last 20 years, TV has done better than most other segments and has created a national market for content and more than that for advertising. That is pretty commendable. Star played a key role in that but so did other TV networks the bigger ones in particular and some of the stronger regional networks. However, TV has two problems. The first problem is that television creativity has a lot of ground to catch-up. If shows that premiered 20 years ago are still the leading shows for a network then there is a problem. It’s a simple problem of inadequate creativity. TV still does good content. We all complain about regulation, FDI restrictions, and foreigners not being welcome but a lot of those segments have been kept alive due to those restrictions. If it was a full-fledged global competition that we see in many other sectors many sectors of media would have died. I don’t even understand what happens on the radio. There are literally times when the same song is playing across multiple stations. You keep switching. It’s not because it is probably the best song or a song that the whole nation wants to listen to. It is because that is the song available cheapest if not free.

There is a serious content problem in media in general whether it is TV, Print, Radio, etc. The other problem is that we are not building brands. There is not enough distinction that we are creating between Channel A and Channel B. There are sectors where it is automatically happening like sports where properties are exclusively available on the channel. The third thing is that the world of content has moved from being just a creative business to a world of creativity and technology.

No offense meant but by and large media companies think that changing a bulb is the climax of technological skills. We have set-up our business that is the last time we want to see a technician or an engineer. Come set-up my set, put the lights on, make sure that the teleprompter works, the rotary machine works, and get the hell out of my life. That’s not working. A complete creative experience requires you to leverage the power of technology. Look at the amount of technology that goes into visual content it can scale-up a great deal. If you do that it’s a great business model. It will open new markets. Smaller countries like Korea and Turkey are exporting content globally and creating a sustainable economic model through that. Our content generally does not travel from one state to another.

Q) Today, let’s say 880 million people are watching TV, 450 million people watching YouTube, and then 120 million watching other OTT platforms. Assuming that there is more tech and creativity happening in YouTube and OTTs, are you saying that this number will dwindle in favour of other platforms?
One of the great advantages that TV has is that it is also supplying a lot of content to streaming services. Because you are creating that content and monetising it across two screens creates a certain advantage. Another advantage that TV has is that it is cheap. To get a whole suite of GEC, movies, sports, and news for anything from Rs 150 to Rs 250 in this country is still possible. That gets you the basic content and that is a huge advantage. That also keeps the pressure artificially high on streaming services because when you are pricing content for subscribers you keep in mind the competitive environment and if TV is so cheap then streaming services can only be so expensive. I don’t see how it will be sustainable forever. We will have a problem unless we change the creative game and bring in high-quality talent and make the right investments and create content that travels beyond the immediate geography that we create content for. Then there is this issue of building brands whether it is a production house as a brand. Hollywood is known as much for its celebrities as it is known for its top production studios. We have an opportunity to do all that and if we don’t we will struggle.

Q) You spoke about advertising vs subscription. You know consumers pretty well. How much are they willing to pay for content? What is the best way to monetise subscription?
We are in mass media and both words are equally important. You need to have a proposition that allows you to be attractive to the largest sections of people. However, everything doesn’t need to be sold to everyone. By definition, Mercedes sells lesser than Maruti Suzuki but a Mercedes makes money on each car that it sells and so does Maruti. Some people play volume game and some people play the premium game. We should be able to do that well and I think not doing that is a mistake. Different people have different paying capacities. I totally understand that some people with limited income and exposure are just coming into the formal media consumer groups from small towns and rural areas. You should create cheaper products for them that they can afford. But there has to be an agenda to get everybody up the value cycle. This is how everybody succeeds in business. You bring in new consumers and you continuously upgrade that consumer in terms of their ability to pay. Consumers are willing to pay a great deal. In my experience, consumers go an inch more to pay for what they originally set out to pay provided they see a value proposition. But the content that you see across our TV channels or newspapers or Radio has a lot of sameness to them. During my time at Fox as APAC head, I found Asian consumers to be value-conscious but that doesn’t mean that they are reluctant to pay. They want value for money and we have not done enough in doing that.

Q) The regional play in media has taken hold, in fact, you started the regionalisation of Star. If tomorrow you are going to come out with a platform which language would you bet on?
I am a big believer in local languages. While we were ruled for 200 years by the British I don't understand this fascination to create a business model that is dependent on English. Those days are gone. I came to Star and I did my bit in driving it into the regional markets. News Corp’s philosophy then was very clear that they came in as a premium English content provider but very quickly pivoted and went into Hindi because that was the most attractive language by the size.

You are in that position in India wherein you can go pick-up any language and create a massive business but the question is can you go and disrupt the status quo in that business. That is a major problem. If you are going to be offering the same kind of content, the same proposition that six other players have had then what’s the point.
My first acquisition in Star was a small channel in a small market in Kerala and the channel was called Asianet. Everyone at that time thought I was stupid but that stupidity has really worked brilliantly for us because that channel has created so much value for the whole market and it has given us an ability to compete and win in most markets in South India. It’s not about which market you go to. The joy of the 135-crore population is that you could find enough people interested in any business that you create. The question is can you create a great business in the area that you have chosen to.

Q) Measurement was a big challenge in 2020. We moved two steps back in TV measurement. There was a complete halt in print measurement. Digital doesn’t have an industry-backed body. What would be your demand on this whole aspect of measurement?
A sample-based measurement was always a sub-optimal solution and it was limited by the technology available at the time. Today if it is possible to measure the whole universe accurately and not just a sample why would you not do that? If you are not doing that then you are leaving yourself exposed to all kinds of distortions.

There was a time when you could not get real-time data so you picked up some sample and collected data manually from there. That was fine as the world was a different place at that time. Today, you should be able to measure the whole universe. The second thing that I have is and it is a controversial point. Why do we need a community-based rating system? This tribal behaviour of measuring content is a legacy of the past when it was complicated to measure data etc that we went to somebody and said that you measure data for us and we will pay you some money. Why do we need to do it today?

If none of the digital services are subscribing to third-party data and they are telling you that they have as many subscribers. If I come and tell you I have as many subscribers at Hotstar and you would believe that and if I gave you the data about their behaviour and you would believe that and buy advertising and inventory based on that why would I not do that for TV?

Q) In digital we have three different data sources. They give different numbers for the same reading. An OTT platform will give me a certain number. A Moat will give me a certain number and a third party will give the third number. Which number should I go by?
You should go by my number because it is my proprietary information. If you can accept the number that you get from others why would you not accept the number that I give you? I am not in favour of this third-party measurement structure because look at the kind of distortion and anomalies that we have created in this country. It is almost alarming if not dangerous if you see what is happening in the name of data.
This whole current controversy (TRP scam) without going too far into that, the whole degradation that we are seeing whether it is in the news or other controversy is on account of our unhealthy obsession with ratings.

Ratings are an important tool but they are a business tool for engagement between Uday Shankar as a media executive and Vikram Sakhuja as a media buyer. You and I need a currency so that you and I know what you are getting for what I am selling. Over the years, we have turned this into a measurement of our machismo and success. The rating success became a be-all and end-all, not of your business existence but your entire existence and that is unhealthy and that has led to too much focus on tactical and sometimes distorted and sometimes corrupt practices and inadequate focus on long-term health and strategy of the business.

Q) Wouldn’t the measurement be healthier if media owners or broadcasters are kept out of it and it is managed by advertisers and agencies and funded as a percentage of billings?
I am indifferent to that. The basic assumption that you are making here and I disagree with that assumption is that if broadcasters are involved in that they will corrupt it and advertisers and agencies will not corrupt it. The proclivity to distort the measurement system will remain the same irrespective of who owns it. Who owns it I am totally indifferent to that. You know that I played a key role in bringing down TAM and setting up BARC and I think BARC has been a huge letdown but I don't think it has been a letdown because broadcasters, agencies, and advertisers were stakeholders in this. It has been a letdown because we did not have a vision that was in tune with the possibilities in 21st Century.

Q) Do you think we should re-privatise audience measurement rather than have a joint industry body manage it?
Just for the controversy that involvement in BARC has created for broadcasters, they should just get out of that. It's not worth it. It is not worth it for all the suggestions of impropriety that broadcasters have faced. By and large, broadcasters are clean business people and they have done a good job of serving the consumer interest well and to tar them with the same brush just because there are some issues with BARC is unfortunate. The issues with BARC are intrinsic to the structure, management, and capabilities within BARC. It is not that there was this grand conspiracy of broadcasters coming in to say that ‘let’s just do this'. The unsavoury fall-out is one good reason for broadcasters to get out of it.

Q) The TV AdEx is Rs 25000 crore with another Rs 5000 crore coming from the video (YouTube and OTTs). There has been a call for having audio-visual ratings also coming from the same rating system. There has been an impasse on this issue. How should we tackle this same issue because it is at the same place where it was when you were debating it?
It is very much there and I have no reason to believe that now that I don’t have any authority, I would be able to make a difference. My view is clear on that. If everybody is participating only then Star will participate simply because we were the only company that had a substantial stake in streaming and a substantial share of TV and if some of the big streaming giants were not participating in that Star should not participate. Just because of Star’s origins in TV, Star should not do what the TV people do. If it’s a streaming service it is not competing with TV it is competing with its streaming peers. If Netflix and Amazon Prime Video are not participating why should Hotstar participate. That position has remained the same.

The world is moving towards disintermediation and I am against the creation of any intermediary because intermediaries are brought with good intentions and then the intermediaries only start serving themselves, they don’t serve any of the two parties they are supposed to intermediate with. BARC is a great example of that.

Q) Tell us about your partnership with James Murdoch and what can we look forward to in 2021?
I take a long time to think about things and then I figure out something and then I stick with it until I make it work. I am in the first phase. I am still taking a lot of time to think about things. Broadly, both James and I are really excited about the potential of technology. I have a high-level thesis that I will share with the audience today. My whole thesis is that all the mass consumption services and products were not designed to meet the aspirations of 135 crore people. Why did private media come up not because somebody invited them or it was part of government policy? Private media came up because there was an unmet need that the official providers were not able to meet whether it is DAVP (Directorate of Audio-Visual Publicity), Doordarshan, or AIR (All India Radio). So, entrepreneurs came to bridge the gap and today we have a massive industry. That aspiration is growing. Today with more people owning mobile handsets, the desire to consume more content is growing and current structures are grossly inadequate. You can only serve this by using technology in a very deep fundamental way because that is the only way you can consistent outcomes which are satisfying and which are at scale without breaking the bank. Similarly, areas like education and health. Formal education was created by Macaulay, not for the benefit of this country but to create a small class of clerks for the British empire. After independence, the successive political establishments have built on that but the foundation has remained the same. Today one thing is common that everyone in this country including a beggar wants his child to be educated because they are very convinced that if the child has to have a better destiny education is one essential tool. Same for healthcare. Hospitals weren’t built with the agenda that everyone can go there and get treated. So, there is this widening gap between aspirations and possibility of supply. The one thing we have with us is technology. Not everybody needs to go to a school to learn not everybody needs to go to a hospital. COVID-19 has taught us that you can be at home and get a lot of things done including getting yourself treated. Most doctors were not available but we got ourselves treated using technology and even though we were not ready for it. Just imagine the power of technology if you have a strategy, you are ready for it and you build that. For the rest of my life, I want to give it a shot. You harness the power of technology to meet the needs of the people who are being underserved. I come from Bihar and I have some exposure to what the aspirations of underserved populations are and what are the challenges that they are facing. Hopefully, I will be able to do something about that.