Slots on national television for local advertisements, via cable TV operators. In short, narrow-band TV. That's the niche in which K.A. Srinivasan, Baskar S. and Srividhya S. are focussing, five years after selling their first start-up, Impulsesoft. The three buddies from college say Impulsesoft was focussed on overseas markets and had limited scalability. On their latest venture, Amagi Media Labs, Srinivasan says: "This time, we focussed on three things: a disrupting, scalable and India-focussed business."
Unlike TV, newspapers and radio stations can carry advertising specific to a region or even part of a city, which is a boon for those who don't want or can't afford national coverage. Amagi's co-founder Baskar says: "Just like ads in cityspecific newspaper editions, there is an untapped opportunity in narrow band TV."
Amagi buys ad spots from TV stations and splits them up among advertisers. "The total of these ad rates from a handful of advertisers will be higher than selling to a single company," claims Srinivasan.
Says designer Lokesh Pandya of Tamanna, a fashion boutique in Bangalore and a customer of Amagi. "Print and online had limited visibility for me, whereas TV was the ideal medium," he says. Pandya got the footfalls he wanted for a fraction of the cost of a national slot.
Amagi's founders, all computer science engineers who had worked at Texas Instruments, Bangalore, build embedded system boxes that inject a local advertisement into the slot specified by the advertiser. Amagi is now present in four cities, where it has tied up with eight MSOs or multi-system operators, as cable TV players are also called.
"We not only want to make advertising more targeted, but also to bring new advertisers to TV," says Srinivasan. "A third of our advertisers are first-timers on TV."
By the end of the financial year Amagi-which is backed by a $3-million funding from N.S. Raghavan's Nadathur Holdings and is advised by media industry veteran Pradeep Guha-hopes to cover 15 cities and double its MSO coverage. Guha says most TV networks have a big advertising inventory lying unused or under-used (sold at a discount).
"What Amagi's business model offers is a path to narrow-casting, which is where the entire industry is headed," Guha says. "This is an experiment in splitting beams and seeking advertising opportunities in relevant markets."
The challenge is in the sheer scale: India has some 20,000 MSOs- some of them very small outfits-in a fragmented and highly competitive market. The company will also need to scale up its field sales force to reach them.
"It's going to take a while," admits Amagi's investor Raghavan. "However their model is disruptive and opens new advertising possibilities for dozens of companies." Next partners: the DTH or direct-tohome broadcasters.
FOCUS: Narrowcast TV ads
FUNDING: Nadathur Investments
COMPETITION: Local TV channels
ADDRESSABLE MARKET SIZE: Rs 9,400 crore
BIGGEST RISK: Global competitors entering India and unorganised players scaling up
THE BEST ADVICE WE GOT: To focus on the larger market of cable MSOs