How to waste money, bankrupt channels and drive audiences crazy?

(The article was first published in Nov-Dec 2014 edition of Aurora.)

Recently, a bunch of friends and I got together for dinner at a colleague’s place. The dinner was absolutely exquisite and while I could dedicate the entire word limit allotted to me by my editor to the appetisers alone, I will (sadly), for the purpose of this article focus instead on something that took place post dinner.

Post dinner we settled into small groups. The group I joined seemed to be excited about a play that was about to air on a local entertainment channel. However, no sooner had the titles appeared that a commercial break came on – and a long break it was at that. I mean come on! They had not even started the story. During the play, the commercial breaks were so long that people actually got up to do other stuff, someone even went online to pay a bill; as for me, I went for a second helping of nihari .

During one break our host went out to buy dessert from the neighbourhood patisserie; he made it back just in time for the play to resume. A lady sitting next to me turned and asked, “How much money do these greedy channel walas want to make at the cost of boring us to death?”

She had a valid point.

We seem to be getting dangerously close to the point where during the course of an hour we will be viewing more commercials than content. So why can’t the TV networks see that the quality of their content is being compromised? Indeed, why can’t the media agencies see that these breaks are now so long that realistically no one is going to sit through the entire length and watch their carefully placed ads? And the biggest question is why don’t clients understand that a considerable portion of their money is going to waste?

These questions add up to a strong argument in favour of bringing a reality check to these long commercial breaks. India has done exactly that. The Telecom Regulatory Authority of India (TRAI) had made it mandatory that channels limit their advertising to 12 minutes in any given hour. Why can’t we do the same?

As with most things in life, problems and their solutions do not always come in black and white; there is always a lot of grey.

First of all, even TRAI is struggling to implement its ruling because the 12-minute ceiling is driving Indian free-to-air channels bankrupt. On average, free-to-air channels in India generate one tenth of the advertising revenue DTH subscription networks do. This means that even if free-to-air channels manage to sell all 12 minutes, they would barely make any money. The situation is so dire that the government has stepped in and ordered a review of the ceiling, at least for the free-to-air channels.

In Pakistan, as long ago as 2009, the Ministry of Information and Broadcasting empowered the Pakistan Electronic Media Regulatory Authority (PEMRA) to enforce the following rule on ad capping – “…during a regular programme a continuous break for advertising shall not exceed three minutes and the duration between two such successive breaks shall not be less than 15 minutes.”

A solution would be for media agencies and clients to agree to pay higher rates during shorter duration commercial breaks; in this way rather than running their ad over and over again during a break, they would multiply their chances of gaining exposure, which under present circumstances is pretty low.

Therefore, according to this rule a channel cannot air more than nine minutes of advertising in a given hour. This scenario is so removed from reality that should this rule be implemented, it would drive all the channels to bankruptcy. Good thing PEMRA has not got around to enforcing it.

As for clients, it seems most do not understand how their media agencies are going about placing their advertising. I pointed out to a brand manager at a multinational company how obvious it was that only a very small minority of people would be exposed to the advertising appearing in the middle of a long break, and that at best only the tail end commercials would generate recall. After a moment of silence, he honestly confessed that all he cared about were the final KPIs that his media agency delivered and furthermore, neither he nor his company fully understood or cared how the agency went about achieving them. A sad state of affairs indeed.

But surely the media agencies are fighting to bring some sanity during the break?

By reducing the inventory (hourly commercial airtime), the cost per minute may go up, but given that clients are footing the bill, the media agencies will hardly be affected. So why don’t they intervene in the interests of a better viewing experience? Again, in real life there are more grey than black and white areas. Media agencies have indeed been pressing for shorter breaks but this, in a barrel full of wishes, lies somewhere at the bottom of the priority pile, along with educating clients about the lack of impact in placing ads in the middle of a 10-minute long break.

In fact, media agencies are under so much pressure by their clients to deliver more inventory for lesser rates that CPM has become their prime focus. Unwittingly, by asking for such huge discounts on airtime (due to client pressure), media agencies are squeezing the revenues of the channels to the extent that to survive, the channels are forced to increase the duration of their commercial breaks. This has become a vicious cycle that will not end any time soon.

A solution would be for media agencies and clients to agree to pay higher rates during shorter duration commercial breaks; in this way rather than running their ad over and over again during a break (along with a bunch of other ads from other companies), they would multiply their chances of gaining exposure, which under present circumstances is pretty low. However, this concept is proving difficult for the Pakistani client to grasp. Quantity apparently matters.

In PEMRA’s Alice in Wonderland world, where revenues apparently flow like rivers of honey, programming is managed by fairies and sales are driven by gold conjuring leprechauns, the average hourly wheel is divided as follows: 45 minutes of content, nine minutes of ad inventory (in three equal breaks) and six minutes of channel promo time (again in three equal breaks of two minutes.)

So going back to the lady who was sitting next to me at that dinner party and wondering at the greed of the channel owners... the fact is that the bigger networks are making a living but they are definitely not rolling cigars made out of dollar bills.

In this equation, no one is fighting for a better consumer experience. Yet the people in the content department who are producing material for the channels should be doing just that. As producers of content, they should know how these long breaks affect viewer experience.

According to Farhan Shahzad [Business Head and Director Marketing] at Express Media Group, the average cost of producing content ranges from 800,000 to a million rupees. As a result, the sales division have the enormous task of not only recovering this through commercial airtime, they also have to generate further revenue so that operational costs can be met every month.

Every channel follows what is called an ‘hourly programming wheel’. In PEMRA’s Alice in Wonderland world, where revenues apparently flow like rivers of honey, programming is managed by fairies and sales are driven by gold conjuring leprechauns, the average hourly wheel is divided as follows: 45 minutes of content, nine minutes of ad inventory (in three equal breaks) and six minutes of channel promo time (again in three equal breaks of two minutes.) However, in the real world of Pakistani television, the hourly wheel looks very different: 38 minutes of content, 20 minutes of advertising and two minutes of channel promo time. And this in an ideal situation; when things get tough the first thing channels do is to give up their two-minute of promo time. Then as things get more ‘interesting’ the content department is asked to re-edit the content. Needless to say that from the director and producer’s point of view the storyline is now compromised.

India was able to impose a 12-minute commercial break limit on the entertainment channels because unlike Pakistan where there are only free to air channels, India also has DTH-based networks which are in a position to generate additional revenue from subscriptions.

To summarise, unless PEMRA comes out of its Alice in Wonderland world; clients realise they are pouring significant amounts of their money down the drain; media agencies stop asking for crazy discounts that force channels to run even longer commercial breaks and the networks stop forcing their content departments to compromise, audiences in Pakistan will have to continue to endure long commercial breaks.

Syed Amir Haleem is CEO, KueBall Digital. syedamirhaleem@kueball.com