Below TheLine (BTL)industry spendin India is onthe rise andconstitutesa major partof the Indian advertising industry. It is estimated that in 2009, BTL revenues stood at INR 200 billion and contributed 44 per cent of total advertising spend. Between 2006 and 2009, BTL expenditure grew at a CAGR of 15 per cent. In 2010, the BTL industry further grew by 10 per cent and is expected to grow between 10-20 per cent over the next three years.
BTL advertising refers to one-to-one communication — including on-ground and online activities — that is directly focused on the target audience. It consists of several events, some of which are as follows:
Marketing budget constraints during the recent economic slowdown led marketers to seek avenues apart from
the mass media to connect with their target markets. The importance of BTL marketing has grown because of its ability to reach the core target audience and the high degree of influence this channel offers through personal interaction and the customisation of engagement and product trials, which have a direct impact on sales as well as an indirect impact on brand perception.
Industries using BTL
An increasing number of brands have begun to engage masses one on one and are relying on this medium for effective marketing. The amount spent on BTL varies depending on the industry, the product life cycle and the product itself. The following are some ranges that are indicative of the percentage of total marketing spend on BTL activities:
FMCG — intended for the mass market — tends to spend up to 25 per cent of its total marketing on BTL activities, while luxury goods, which depend on word-of-mouth advertising and direct selling, spend much more. Consumer electronics companies such as Samsung, LG and Philips are increasingly exploring the possibility of directly engaging with their target audience. Telecom sector companies, which face intense competition, rely heavily on on-ground activities to create their own space and personality, as well as on BTL, as purchase decisions are influenced by the dealer and advertiser communication present at the point of sale. The financial services sector has been actively turning to retail over the past five years and spends heavily on BTL activities.
The auto sector is also very upbeat in terms of BTL marketing expenditure, for both new car launches and luxury brands. Further, education and health care services, retailers, food joints and TV shows are using BTL to influence and engage their target groups at prominent locations.
Advantages of BTLmarketing
The BTL advertising medium offers various advantages:
Low wastage and high effectiveness: BTL is a low-cost method of reaching out to niche target groups, preventing the overflow that is typically associated with mass media. Events and activations also serve as high-impact methods of advertising products, as compared to Above The Line (ATL), as they engage consumers through techniques such as product trials and brand experiences. Events involve relatively low absolute investments and increased flexibility to adjust scale.
Increased brand recall: BTL makes consumers integral to advertisements and drives the message home strongly. As such, it ensures high brand recall, since it acts as a frequency builder and enhances brand visibility. More effective than ATL in rural areas: BTL has the ability to penetrate rural markets, where the penetration of traditional mass media is low. BTL also offers a more effective way in which to communicate with emerging users from small cities and towns, as it helps educate first-time users.
Growth in modern retail formats: The rising penetration of modern retail formats such as malls, convenience stores and supermarkets is driving the uptake of BTL activities, as it increases the number of venues and audience catchment areas available.
Rise in integrated media campaigns:
The rise in the use of integrated campaigns by marketers, encompassing TV, print, OOH, radio, digital and on-ground activation, is driving the use of BTL campaigns. Print and radio are leaders I implementing BTL along, or in conjunction, with supporting media space.
Clutter in traditional media: Increasing clutter in, and saturation of, the traditional media is pushing brand managers to explore interactive forms of media that ensure personal engagement to reach the target audience.
Rise in requirements of experiential marketing: BTL activities are highly suited for product launches and concept testing for consumers, as well as for the increasing number of complex and luxury products, which need lengthy and skilled sales interaction.
Competitive advantage: BTL activities hold significant scope for innovation in brand communication and for unique positioning vis-à-vis competition. Vodafone’s man-of-the-match contest and the Dove Shampoo mall activation are some examples of innovative concepts used to differentiate brands.
Increasing number of advertisers usingthe medium: A growing number of advertisers are using BTL advertising and allocating increased budgets to connect with their consumers. Micromax allocated INR 1 billion for its brand-building initiative in 2010, with a 40:60 allocation for BTL and ATL advertising, respectively. Kaya Skin Clinic has significantly increased its BTL marketing activities including skincare workshops and events, especially in non-metros. Samsung has
held more than 170 Dream Home Road Shows in metros as well as small cities to enhance consumer awareness around its products and technologies. Under its Kranti initiative, the company has invested in refurbishing display stands at more than 3,500 outlets across the country. In 2010, Samsung’s ATL spend and BTL spend mix in larger cities with populations exceeding 100,000 was 80:20, respectively, whereas it was 60:40, respectively for other towns and cities.
Increasing number of agencies venturing into BTL services: Existing ad agencies are either launching or acquiring separate BTL units, as brands are hiring niche agencies to oversee their BTL marketing efforts. Gauging the growing importance of the activation and BTL business, Aegis Media has entered the activation and events sector. It has collaborated with Fresh IMCS to launch Carat Fresh Integrated to offer integrated marketing services, including BTL activations, events and rural marketing, to its clients. Zenith Optimedia has launched a new wing, Newscast, to design nontraditional media solutions for its clients in India. Amar Ujala Group plans to launch a dedicated BTL division called Touch Point. Buoyed by the prospects of BTL advertising, industry executives from major ad agencies are also launchingtheir independent agencies.
Radio companies launching BTL divisions:
Many radio companies have also ventured into the BTL and activations space, since radio works well with the BTL business by promoting both the client’s brand and the radio station’s connect with its audience. Red FM has an activation division called Red Active, which offers event management, celebrity management, brand communication and other services. Radio Mirchi set up Mirchi Activations in 2005, while Radio City entered an alliance with BTL agency Vibgyor Brand Services in 2007. Reliance MediaWorks Ltd (RMWL), which owns Big FM, has transitioned to an integrated platform offering media solutions in digital, OOH, BTL, radio, rural marketing and more. It has floated four new companies, including Big Live — the experiential marketing arm that offers services such as brand activations, events, rural brand initiatives and others — and plans to provide activations across 100 cities in India.
Digital media and technology spurring the growth of BTL media: With the growing penetration of the internet and the mobile platforms, marketers across industries and verticals are focusing on the digital media to drive brand engagement. In 2010, Pepsi Co. planned to spend 8 per cent of its overall advertising and promotional spend on BTL media such as digital and in-store activities. The company intends to increase this spend in the near future. Hindustan Petroleum (HPCL) launched its BTL initiative, HP Happy Wheels Offer, in 2009 and was accessible via the mobile and theinternet, engaging the audience and encouraging participation through SMS to a specific short code and a website. Participation from viewers in TV game shows and contests such as Kaun Banega Crorepati, X Factor and India’s Got Talent continues to increase with the growth of mobile phone penetration, with each half-hour show capable of generating up to 1 million SMSes.
Rise of BTL in small cities and rural markets: With the growth of the Indian economy, the affluent and middle classes are spreading beyond the metros to tier- II, tier-III and tier-IV cities. This has led to the rise of BTL advertising by companies to reach consumers in these cities. The key urban towns (KUTs*) and the rest of urban India (ROUI) accounts for more than 50 per cent of total BTL activity in the country, whereas rural India accounts for 25 per cent of total BTL activity. Media companies have launched upcountry activation arms to tap the growing and underpenetrated rural and semi-urban markets. This includes Reliance Media —which launched Big Rural — and Jagran Solutions.
Unorganised and fragmented industry: The BTL industry in India is highly fragmented and unorganised, with the presence of very few national players. Some estimates put the organized sector at just 30 per cent of the total industry. It consists of many players that focus on a certain aspect of the value chain such as loyalty and trade marketing or relationship marketing. It consists of players operating in specific geographies or industry verticals. As such, there is a need to recognise the sector as a separate industry and makeit more organised.
Low share of BTL: BTL is currently underutilised as an advertising medium. The share of BTL versus ATL in total marketing spend in India is estimated at 30:70, respectively. In the US, of all advertising expenditure, 75 per cent goes to BTL, while only 25 per cent goes to ATL advertising. Considering the relatively low share that BTL currently enjoys in India, there is a significant scope to develop this medium further as more and more Indian advertisers realise its potential.
Implementation: Execution and logistical constraints prevent the maintenance of uniformity in brand experience across towns and cities, particularly rural locations.
Difficulties in measuring effectiveness:
There is no common industry method to measure success. Each advertiser and agency has its own metric of success, some of which are highly subjective. There is a need to standardise measurement metrics and build increased linkage to returns on investment. This is imperative for the future growth of the industry.
Taxation: Entertainment, being a state subject, is exposed to different rules and taxes across states. Various permissions are required to conduct even the most minor activities.
People: Skilled professionals who can creatively and execute quality are scarce in the country. The industry is composed primarily of young people with tremendous drive but mentoring, developing focus on quality, and improving client servicing is the need of the hour.
Transparency: BTL companies have long since been plagued by a bad reputation with regard to margins earned. A few event companies have defined operating procedures, operating policies, or a satisfactory audit in the context of event costing and client invoicing. The need is to implement robust processes and MIS and instill a culture of transparency.
Competition: An unhealthy level of competition is making the managed events business increasingly commoditised in terms of event management fees.
In India, brands have mostly persisted with conventional forms of BTL, such as events and road shows, exhibitions, conferences and sampling. However, BTL opportunities extend to several other forms such as word-of-mouth, viral marketing, podcasting, field marketing and innovations within the conventional media. Going forward, the following can be expected:
Strategic agencies for brand activation are the need of the hour. Brands are seeking BTL marketing agencies and are looking to engage them as strategic partners in the business process rather than perceiving them as tactical executors.
Agencies need to conceptualise more for advertisers to empower them to invest more in the BTL medium.
Implementing a measurement metric for all events, which is linked to the return on investment, is critical.
The opportunity to develop IP around events and amplify them on the mass media can generate large valuations for IP owners.
The unorganised medium will continue to grow. Large BTL companies need to strengthen their creative ideas and client servicing skills to win customers and enhance the transparency of operations.
Advertisers will continue to look toward the BTL medium. It is for the industry to capitalize on the growth potential of the medium.
*The KUTs are the 22 cities immediately following the top six metros (Mumbai, Delhi, Bengaluru, Hyderabad,
Chennai and Kolkata) in their market potential, e.g., Amritsar, Surat and Ludhiana; cities in the ROUI, e.g., Kota, Jalandhar, Jabalpur and rural India.
Ashish Pherwani is an Associate Director with Ernst & Young’s Risk Advisory practise. He is the segment champion for print, outdoor media, radio