This is the equivalent of walking barefoot into a citadel of the filthy rich. A little known start-up has barged into the big boys club of TV advertising, and is threatening to break open the door to the masses of micro, small and medium enterprises. The four-year-old outfit, named Amagi Media Lab, already does half a million seconds of advertising a month on various TV channels, and is the largest customer of many broadcasters, ahead of the likes of a Hindustan Unilever or a P&G.
Not just that. Even global broadcasters are talking to Amagi for a piece of action, not of course for India?s MSME ads, but for using its patent-pending technology in various geographies across the planet.
To understand Amagi and its technology, first we have to know a key handicap of TV channels. Unlike newspapers, TV channels do not have the luxury of multiple local editions, because of the limits of bandwidth and technology. They just cannot alter a programme beamed up from TV studios to the satellite. This meant that a national channel cannot air different programmes for different regions in a given time slot. Channels now cover this disability by starting separate local channels, in different languages.
But companies that advertise on a national channel faces a unique problem. Their ads will be beamed all over India even if their product is available only in one city. They end up paying a huge price for the precious few seconds of national beaming. This, situation, according to Amagi?s co-founder KA Srinivasan (pictured), is like ?telling a customer who wants a coffee that to have a coffee, you have to buy the coffee shop.? But the customer has no option, so he pays for the coffee shop and sips a coffee.
Here is where Srini and his team come in. They intercept the satellite signals, and insert their own local ads during a commercial break. Their business works like this. First they buy advertising slots in bulk from the channel, say, 30 seconds in a two-minute commercial break. It will then divide these 30 seconds into, say, 10-second slots of local ads in different cities and towns. Today they operate from 95 places?30 cities and 65 towns. That means the 30 seconds it bought have become 2850 seconds (95×30) for Amagi. This sharply brings down the telecast cost for ads. That?s why Srini claims he can sell a ten-second ad slot for just R100-200, depending on the locality.
There is another reason for such low pricing. Ads are automatically placed by the software, with precision (even if there are thousands), and no human intervention is needed.
(Here is the official version of it all: Amagi?s cloud-based transmission infrastructure intelligently leverages a secure IP cloud to push and store content ahead of time in Amagi devices at each affiliate headend. The workflow for Localisation seamlessly integrates with existing broadcast workflows by leveraging Amagi?s barcoding technology to uniquely identify content played on the satellite feed and replace it with localised programs and advertisements.)
To make advertising highly affordable for emerging enterprises, Amagi makes ads (video spots) in-house free for its frugal clients?just like Google makes free websites for SME advertisers?and does the media planning as well. Clients wanting more sophisticated ads, of course, have the option of getting it done outside, or going for paid production. But Srini is sure of his goal: ?Eventually people should be able to say ?here is my credit card, advertise me on TV.??
Apart from low-cost advertising, the biggest plus for an MSME client is the brand equity his product gets (for free) from being seen along national brands on television.
Large companies also gain. They can plan targetted promotional schemes for geographic segments (instead of announcing nationwide discounts, like now) on national channels and curtail adspend on regional TVs.
Even political parties find the Amagi medium convenient to reach their target voters in poll times. The BJP has used Amagi in the UP assembly elections. Srini says Amagi can telecast programmes even constituency-wise.
Srini shrugs off suggestions that big advertisers could pressure TV channels to keep Amagi at bay, since they wouldn’t like a small brand rubbing shoulders with their reputed brands. Amagi pays a premium to the channels for its right to split and splice commercial breaks. It also pays the cable operators. Moreover since TV airtime rates are dipping, with more than 700 channels vying for ad revenue, it is for the channels to keep Amagi in good humour than the other way round. Srini believes in the future, the biggest ?growth? in adspend will come from emerging enterprises than from large players.
Amagi?s, he says, is a win-win proposition for the entire eco-system of advertisers (lower cost), channels (more revenue, new clients) and cable operators (gets paid for nothing).
Multinational broadcasters have recognised the potential of Amagi tech. Some have taken Amagi?s help to telecast local programmes in geographies where they do not have the right to air a programme or where a programme is irrelevant or politically incorrect. Going forward, in India, national channels can think of dubbing popular soaps in regional languages.
Srini is also dismissive about the prospects of various mobile and online platforms eating into TV ad revenue. US surveys, he says, have found that people now spend more time watching TV than before because work-lifestyle changes, like working from home, online shopping, and flexi working hours, are keeping people home. The other hope is the emergence of smartTV, which has moved the Internet to the television screen.
Amagi is now eyeing ?catchup TV? (television episodes anytime on demand) for its next venture. ?You will see that happening in India within a year?, he says.
Bangalore-based Amagi?founded by techies Bhaskar S, Srividya S and Srini and funded by NS Raghavan (remember the Infosys co-founder who left early to incubate start-ups?) and his Nadathur Holdings?has grown five-fold every year in the last three years, and is targeting a revenue of R200 crore in the next two years. It now has as partners 15 TV channels?including Times Now, CNBC, IBN-7 and UTV Movies?and close to 100 cable operators. DTH-provider Tata Sky too could join in.
Amagi?s technology is powered by a team of 20 engineers and marketing by about 78 people. So far, it has worked with about 1,500 advertisers and sold over 10 million ad seconds. Still, it?s early days at Amagi.
The Amagi website has a tagline running across: ?TV advertising now at radio rates, or less.? But, shouldn?t it be: ?the power to shake up consumer markets and the media world??