Accountability in Advertising?

There is an ad that shows a kid being fussy over normal food (veggies, rice, roti and dal). The mother then pulls out a powder that is mixed in milk and the kid is happy. The ad says that this product gives all nutrients of a food to children.

Really? One tablespoon of the powder and one tbsp of sugar and a cup of milk? I just have one thing to say....Get the executives of this company give a written commitment that they and their children live on this mixture. Nothing else. Breakfast, lunch and dinner - this mixture. Lets measure their "growth" with this.

I bet if this is raised, the only thing that will come will be a font-6 note in the last 3 seconds of the ad that basically means "Don't take this ad too seriously.".

Are such ads not too much to digest? They are misleading to the point that they can affect the health of children. In fact, I am ok with those fairness creams which you know need to shout so much to sell. But things that you consume...

Such ads need to be regulated. They better prove what they say. No irresponsible claims. Just like pharma cos. need to go through stringent approvals before their medicines can be sold, certain advertisements should go through approval. One cannot have such ads gone unnoticed .

Or perhaps there is scope for US like litigations where companies are forced to pay through nose when people take the ads a little too seriously and then file suits.

To avoid both above, the players would do well to be rational and self-regulate what they do and what they publicize. Reasonable claims are the way to go.

Enticing the market - IPO Advertising

As recession has started showing signs of giving way to better times, the IPOs have started coming back. While there is the discussion on IPO valuation, company prospects and other such aspects, I am particularly amused by their TV advertisements.

It is one thing to make a cricketer wax eloquent about an insurance product or a movie star speak about a soap or a phone network. But it certainly needs creativity to make advertisements for things like a power plant or a shipyard or even oil drilling.

And what exactly is the objective of these advertisements? Imagine this scene...

"The board room is in complete silence - pin-drop silence.

The Chief Investment Officer of the big investment company has sweat on his brow. His heart is racing. 2 of his last 6 decisions had failed to enthuse the Chairman. This might be a make or break decision for him. He was not sure what went wrong. He genuinely thought they would have been correct. 

They are watching the top business news channel. They are impatient as the news about current market goes on. They are waiting for the moment. The much awaited break comes and the chairman says "Shhhh".

The entire board room turns to the TV as the first images come of a desert. Then the huge windmills across the landscape. Finally the hero - the CEO of the wind-mill generators climbs atop the windmill and sings ...

"I have got the wind power, 

So I climbed on the tower,

Our IPO is on the market,

Apply and earn $$ by the hour!" 

And the chairman shrieks in ecstasy, "Yes! Yes! We will invest in this company. I love this guy with exactly 4 strands of grey hair. His red tie and the redness of his eyes tell how many nights he has been awake busy assessing the value of his own company. His suit is from Paris and shoes from  Milan. We will invest!"

The Chief Investment Officer heaves a sigh of relief. The board has concurred with his decision. Thank God for the wonderfully towery ad...."

Or perhaps the retail investor chooses IPOs just like he chooses the paint for his home or the next bottle of shampoo. "No, I don't like that this company chose to have 2 kids instead of 20 in their ad for hotels. I will not invest in this one."

Are there any Return-on-IPO-Marketing numbers that prove that IPO advertising has led to more applications? In general, when almost every IPO has subscriptions in multiples of the floated share, does it matter if it is advertised or not?

As long as it is discussed in the business news, I think the interested investors (institutional or retail) will decide yes or no. Of course, there is the question of valuations and order books but that is a fundamental need.

Endpiece - The best part of any IPO (or NFO) ad is the last 0.5seconds when the narrator reads at supersonic speed..."Investments are subject to market risks. Please read the red herring prospectus...".

That is like those 2.5 font asterisk notes by the humongous million rupee assured prize offer ads*

* Conditions Apply. The prize is assured to 1 in million customers. :D

Telecom stocks hammered - Why the haste?

Indian telecom stocks have been heavily hammered in the last few days. I was surprised.

Further to the pay-per-call, there was the 50 paise call and the discussion about possibility of mandate for per-call pulse that caused almost panic selling in the markets. It seems a hasty conclusion that all telecom is going to lose overall...

Following points need to be thought of in the context of Indian telecom scenario:
1. The ARPUs are falling but they still seem to be a function of the demand-supply equilibrium. Consider this, which markets are still untapped in India? Rural markets. The teledensity of rural ndia is far behind the urban. So the rural market is probably stimulated at a lower price and the industry is probably responding to that.

2. Commoditization is natural but this rural market would still allow the business to be a good business because of the volumes.

3. Now, in the recent times, operators have adopted several measures that are cutting costs like Infrastructure sharing, outsourcing their network operations etc.

If the operators are willing to pass this cost savings to customers, then that is actually good news for customers. Perhaps the demand generated by this will more than compensate the reduction in revenues.

4. The 3G scenario has still not even started. I am sure every operator definitely would have a strategy for 3G. They will find new ways to generate interest in 3G apps in the urban market. Particularly, business customers and the youth segment.

5. Operators are also trying to unlock value by spinning off businesses like tower business etc.

Considering this, I thought it was a little premature to assume that telecom story is over. I would rather wait and watch.

Fifth P of Marketing - Psychology

Borrowing this "fifth P" term from my friend Paddy, some more thoughts. My flight to Mumbai was a lesson in this aspect.

The flight takes off, water bottles are distributed. After 30 minutes or so, the air hostesses announce opening of snacks counter. This is a low-cost pay-per-snack airline. The air hostesses quietly and efficiently ask with the nicest smile on their faces, "Sir would you like a sandwich or a cup of tea or coffee". Guys remain guys, many say yes.

One chap, who does not seem hungry, still buys the sandwich. He says his wallet is in the bag and with great difficulty (he is tall) tries to draw his wallet out of his bag which is in the overhead bin. From my seat, he looked more and more like a filmfare award trophy as he bent his elbow. After about 30 seconds, he gives up. The attendant, then tries the same, but in vain. Next, she climbs on the seat side, but is not able to draw the wallet.

Her colleague, with an even larger smile, says, "Its ok Sir, please pay after the snack." The passenger is on cloud nine. Such care, such friendliness.

Passengers on my adjacent seat were thinking of coffee, when suddenly one of them says, "I will have sandwich, I am hungry".

Then, suddenly, one of the passengers started feeling cold. He beeped for the attendant. The attendant comes along and shows the fellow how to reduce the fan on the top. Yeah, right, it is quite incredulous to see 40 something year old man not being able to turn down the speed of the AC wind. That was followed with another 2-3 beeps...someone wants water, someone has a question if he can turn on his laptop...Attendant responds, "Sure sir" , "Yes sir, but please turn it off when landing".

More sandwiches....not that it has any apparent connection to the politeness.

Amazing, how much we people want to behave like babies when allowed to. A flight is the best place to be a baby. I want water, sandwich, it is too cold, too warm, my bag does not fit, can i have aisle seat....sure sure sure...is the answer most of the times.

Well, the airlines thrive on such passengers who value-add to their services.

Coming to the mathematical part -

So the sandwich in focus here may be described as follows:
3 slices of bread = 3 Rs.
2 small cube of butter= 5 Rs.
Cheese slice (maybe , I don't know) = 5 Rs.
4 pieces of tomato and cucumber each = 4 Rs.
Ultra Clean kitchen = 10 Rs. (guesstimate)

Qualified chef doing what a 7th standard student can do = 40 Rs. (I am generously taking 10 minutes for assembly of this simple item and Rs. 240 per hour which is quite expensive for this job anyway)

Ketchup sachet = Rs. 5

So this adds up to Rs. 72 per sandwich without building economies of scale into this.

Folks pay upwards of Rs. 100 for this item... this is the magic of the fifth P - psychology.

The 5th P - Psychology is well understood by industries like aviation, hotels / tourism and these days even banking, real estate etc.

(Link to Paddy's article - Consumer Insight )

Marketing insights summary

My friend Paddy has been writing some very interesting marketing related articles. Easy reading and great summary of about all of our marketing subjects. And no exams at the end :D

Know your audience

Consumer Insight

Credit Cards

- Sid