Celebrity Advertising...

Do you remember Lalita Ji who for years was the face of SURF on Indian Television scene or the memorable Hamara Bajaj or the gorgeous La-La-La-La Lah-Lah-Lah Liril girls or the Utterly Butterly Delicious Ads of Amul or in more recent times the Hutch Ad featuring the Pug or the Vodafone Ads featuring the adorable ZooZoos.

I am sure you do.

Now, switch off for a moment from those all time classic Ads and try recalling any ad featuring a Bollywood Star or a cricketing genius??  Trust me there have been thousands of such ads all these years. Need Examples?? I‘ll be rather generous.

Amitabh Bachan ( that fellow is anyway well past his Expiry Date..I don’t know if the younger generation still looks upto him when they are deciding what to buy but he is really an expensive alternative??) telling you to drink Pepsi, eat Chawanprash, use Navratana Oil, wear Reid & Taylor suits.

Shahrukh Khan (the hopelessly bad actor that he is I hate him in every single movie of his. That we will ponder over some other day!!)  asking you to drink Pepsi(he has now moved onto Coke (strange though it may sound but its true)), buy i10 and many more which I don’t recall.

Yuvraj Singh endorsing Rbk, Sachin endorsing Adidas and more.

But pause for a moment now and think if you have ever bought Pepsi because Sachin drinks the same or i10 because Shahrukh drives it or Chawanprash because Amitabh eats it religiously every morning???? I am sure you won’t have paused even for a second to make such utilitarian buys day in and day out. Does it matter to us  ?? Not at all. After all a cold drink is only that much, a cold drink, meant to cool in summers and add lots of unwanted calories in the process. A car’s choice is governed by far more factors than Shahrukh Khan and more so when the star himself earns enough to buy the Mercs, Bentleys and Audis of the world.

Then why do companies spend crores getting these celebrities to endorse their products if we, the consumers, just don’t care?? Over all these years why haven’t the advertisers learnt that it’s the storyline of the Ad and the benefits of a product that convince the buyers to prefer one product over the other and not the celebrities??

But, are the celebrity endorsements a total failure?

I don’t think so.

They do make sense in some cases as in ads of a successful sportsperson, say Yuvraj, who attributes his success to Rbk. Though still an exaggeration, it is not as difficult to believe as Sachin crediting Pepsi for his sparkling career!! If at all it has had any impact it must have been far from being positive J.

Or Roger Federer endorsing Rolex. That makes lot of sense because first, he is a Swiss endorsing a Swiss brand, he lends his own class and aura to Rolex (perfect fit) and he exemplifies Rolex’s association with success. Perfect way to attract high fliers, high achievers who can afford a Rolex and want to be seen in that light by society!!

For a utilitarian purchase like a cell phone connection or a soft drink, companies must try to build a storyline around their brand/product that stresses on benefits, differentiation and one that echoes the life and din of common man. That is and will remain the most effective way to achieve high brand recall because common man, who is the customer, sees himself in these ads and how small benefits add up to big gains.

Vodafone’s Zoozoo ads do precisely that by showing how each add-on service can make life easier and more fun for the common man who is not a star like Shahrukh Khan(Airtel) or MS Dhoni (Aircel).

Other good examples are Sprite ( Seedhi Baat, No bakwaas) and Mountain Dew ( Darr kea age jeet hai) both of which develop a storyline in their ads to justify their brand positioning and attract targeted customers. Surprisingly, one uses star-power other doesn’t. But that is a minor issue. It’s the storyine that makes them click, not the presence/absence of a star!!

Moving onto aspirational brands, the storyline is still important but here celebrities can make a much more positive impact. Examples are Dell using Raman Roy (founder of Quattro) to emphasize the role Dell played in his successful business venture or beauty queens used in soap ads (which may or may not add to their beauties, but it plays on the emotions of buyers) or Nadal endorsing Nike.

Its safe to conclude that celebrity advertising is not the cure for all the ailments/diseases. It works sparingly and should be used with discretion for the optimum ROI.

The Circus called IPL2!!

India seems to be totally smitten by the Indian Premier League – 2009 and why not? It is a fantastic mix of Cricket’s Excitement, Bollywood’s glamour and gyrating bellies of young cheerleaders. One positive out of IPL being held in South Africa and not in India is the unbridled joy one derives out of the dances for long deemed unfit for a country of high morals like ours!!

The cash registers are ringing and boy, it is one hell of a trick to make quick buck. Be it the Franchise owners, Players, the BCCI or Broadcasters the money flow doesn’t seem like its going to stop anytime soon for any of these entities. Hats off to all those who are marketing this event. They are definitely running a good show.

But who is paying?? WE THE PEOPLE!!

What are we paying for?

For those with a little grounding in probability, we are paying to see a tournament in which every team has a 50% chance of playing the semifinals. How I arrived at that number is easy. We have 8 teams in the fray and 4 spots in the semi-finals. So 4/8 makes it 50%. Now, imagine for a moment how difficult (or easy) it is for a team to make it to the semi-finals. Not too difficult I believe. 9 times out of 10 a common man when faced with a challenge where he has a 50% chance of success will back himself to come out with flying colors. And, more than often not people around him will dismiss it as just another thing.

In a country like India, success is when a youngster cracks IIT JEE competing with about 3 lakh others like him for one of the 3000 odd seats on offer. Or even better is an IAS hopeful who cracks the world’s toughest competition to be one of the chosen few who will run this country of a billion plus people as its IAS, IFS, ICS and IPS officers. The probability to crack an IIT exam is (3000/300000) 0.01 and for IAS even lesser!! Compare with 0.5 in case of IPL!!

I guess you know where we are heading. An IIT aspirant after years of hard work may pocket a million bucks as salary, if he is lucky enough to be cherry picked by one of those paymasters from the western world. An IAS earns far lesser than that. (Wait a minute – we are not talking about how much he can potentially earn but how much he legally gets).

Now figure this out. Kevin Pieterson and Andrew Flintoff got 1.55 Million dollars for their short stints at IPL2 and that too without any performance guarantees. No wonder both were dismal failures. Shahrukh Khan’s loss-machine KKR has the strongest brand value and the highest merchandise sales despite being at the bottom of the table.

I don’t have anything against IPL. It is a brilliant concept but I seriously think too much is being made of it when it is no more than another tournament like County Cricket in England, Sheffield in Australia and Ranji in India. Just that it involves more money because of the franchise format.

And, it is the money that is calling the shots. IPL’s Modi is hell bent on making the tournament stretch longer by not going for groups wherein the group leaders contest in the semi-finals. Instead he has gone for a format which has no groups and each team play every other team in the tournament. So, a tournament that could have finished with 19 matches now stretches to 59 matches simply because more matches mean more money for everybody.

(Number crunching)

2*4C2 + 4C2 + 1 = 19 in case of 2 groups format

2*8C2 + 2 + 1 = 59 in the existing format

Does it also mean more entertainment? I don’t think so purely because it brings down the intensity with which matches are played. Teams and players know they can very well lose half of the matches and still qualify to play for the finals. Otherwise how do you explain BRC and DC losing 7 out of 14 and still progressing? On the other side, runaway team like DD made it to the semifinals long before it played its last match and simply let the standards slip in the later part of the league stage.

A tournament as long as this borders on the line of being rejected by the masses because things move too slowly and teams just as have too many chances to make amends because of the number of matches that they play. This is not the way tournaments are played around the world. Think of EPL or the Football world cup or the EURO cup. They are all in the group format.

 

We are really rewarding MEDIOCRITY in IPL. It doesn’t deserve this amount of public’s attention because it is just not worth it. A shorter, a crisper, a more intense IPL is the need of the hour.

Date – Monday, 18th May, 2009
Venue - Dalal Street, Mumbai
Time - 9:50 PM

What the world witnessed at the Bombay Stock Exchange minutes after it opened on Monday wasn’t unexpected but the magnitude of the event was. The BSE SENSEX skyrocketed more than 2000 points minutes after the stock market opened to record two momentous events. First, this was the single biggest gain in a day in the history of BSE and second, it resulted in a never-before event of a Circuit Breaker kicking-in because of the upward movement. The Indian markets and its participants are more used to events like Manic Monday when the market crash wiped off 100000 crores (that is 1 lakh crores) of investor wealth.

The general public and market participants, in particular didn’t get tired beaming their close-up smiles for the TV cameras all day. The Brokers were seen taking pictures of the TV screens broadcasting the big news of the day just to show to their children and grandchildren that they lived to see this day. And guess what? Nobody actually gained anything.

Alrite agreed, the UPA is set to return to power and that too without the Left Support which will free the Govt. from the arm twisting techniques of the Left. A strong Government would be able to push through Economic and Social reforms much faster thus giving India a better chance on the world stage. But what has UPA Govt. done in the past 5 years to suggest that we are looking at brighter days ahead. Its governance record has in the past been, at best, scratchy and that can be attributed to the policies of the Left. But, not once in the last 5 years has Left did anything to mar any project related to Roads, Railways, Power, Airports, Urban Renewal etc.
A cursory glance at some of the stats available will put things into perspective:
Only 40% of roads targeted for completion are anywhere close to finalization.
Of the planned Power generation capacity addition only 32% achieved.
Only two green field airports, Bangalore and Hyderabad, have seen light of the day. Chennai and Kolkata airports are vintage WW-2 era styled and crying for attention.
Only 8000 KMs of new railway routes added since independence and majority of the last 62 years have been under Congress Rule.
Rampant corruption charges against Ministers.
Incoherent foreign policy in important events like Sri-Lankan Civil war and N.Korea, Iran Security Council Resolution.
Shabby record in internal security because of rising terrorism and all time low relations with Pakistan.

Moreover, bureaucracy and vested interests of political groups don’t let things move fast and nothing has changed in between 14th and 15th General Elections to suggest otherwise. Things will move like they have all these years and that is slow. Reforms might still take place but not at a speed at which you can justify the huge euphoria in the Dalal Street. More or less, things are the same and the only positive out of these elections is the fact that Govt. at the centre will be stable and decisive. Already the power tussle at the centre has shown that more the things change, the more they remain the same.

Now, getting back to the rocket Monday on BSE. The volumes were dismal at just Rs. 600 crore which means the Brokers didn’t earn much that day and investors were just left out of the rally because before they could buy stocks at a discount, the price had already spiraled. So investors also lost out. In a matter of minutes, stocks changed from PE multiple 10 to PE multiple 15.

Acronym Alert (Beep Beep)
(PE multiple = Market price of a stock / Earnings per share)

(And Earnings per share = Net Income / Number of outstanding shares)

The Earnings can not and didn’t change overnight rather it was the market price that had zoomed its way up for most large caps. But, there is hardly any justification for the rise barring the market sentiments.

Stock markets mostly play on investor sentiment and that is the only reason why markets went up in a jiffy. Millions of un-executed trade orders with buyers queuing up and no seller at all is a classic case of unmatched demand and supply. The demand exceeded the supply and thus prices went up. But, this euphoria won’t last long as markets today are global phenomena with the Wall Street playing the Big Boss. Retail investors are just another cog in the wheel but in the driver’s seat are the investment firms registered in tax heavens like Luxemburg and Mauritius. They push the market up and they pull it down on their whims and fantasies. Companies are the same, economy is the same, whatz more even the Government is the same. The inherent strength (or weakness) of a company’s balance sheet is what the markets look at and suddenly one fine day markets wont just find a new way to look at the bean counter’s work (the balance sheet).
What has changed is the sentiment and though it may sound illogical or weird to some, it is THE thing that matters in stock markets.

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Comments welcome!!