Levelling the playing field

By Marylou Andrew

The ICC Cricket World Cup is in full swing – with an estimated eight million people tuning in to watch the action, NDTV India estimates that advertisers have spent US $265.4 million in on-air, and US $165.9 million in on-ground sponsorships.

Even beyond cricket and the World Cup, sports sponsorships involve enormous sums of money. In 2009, Barclays paid £82.55 million to renew its title sponsorship of the English Premier League (EPL); earlier this year, PepsiCo renewed its sponsorship of the National Football League (NFL) for $560 million; and according to the European Sponsorship Association, the total global sponsorship market – 90% of which is sport – was worth US $46 billion in 2010 and is forecast to hit US $49 billion in 2011.

The big bucks involved in these sponsorships are based on the fact that sports give brands the opportunity to reach hundreds and thousands of viewers and potential customers; they also rope in the otherwise elusive captive audience. Brands, on the other hand, pump in the much needed cash that sports use for infrastructure development, to hire world class coaches and to ensure that the players are well looked after. Thus if sports sponsorships are handled correctly, they can prove to be extremely symbiotic for the brands and sports involved.

The development of sports sponsorship in Pakistan:
In the 60s and 70s, sports sponsorship in Pakistan was mainly the domain of moneyed individuals – businessmen and land owners – who would offer cash and rewards to whichever sport they were most passionate about. Later, the responsibility for developing sports was taken on by public institutions such as Habib Bank, National Bank, PIA and others, which not only pumped money into the development of selected sports, but also employed many of the players as part of their in-house teams.

In the 80s, brands began to realise the potential of sports. Two brands spearheaded the movement: Pakistan Tobacco Company’s Wills (Wills and cricket go together); and Lakson Tobacco’s Red & White (with snooker). When state legislation applied restrictions on the advertising of tobacco, and cigarette brands withdrew their sponsorships, they were replaced by brands such as Pepsi who were willing to take a long-term interest in sports.

With the public institutions doing their bit, the brands pitching in and the visionaries at PTV encouraging the broadcast of various sporting tournaments and events, Pakistan had world class players and credentials in at least four sports: cricket, hockey, snooker and squash.

Unfortunately the situation has changed significantly since then and with the exception of cricket, Pakistani teams do not have world class status in any other sport. There have been a few recent instances of sporting brilliance – Aisam-ul-Haq’s rise to the finals of the US Open; Naseem Hameed’s win at the South Asian Games; and the national hockey team’s win at the Asian Games – but these are sporadic in nature and do not mean that these sports are on the ascendant in Pakistan.

The state’s commitment to sports:
According to all accounts, Pakistani sports are currently at an all time low. Part of the problem is that the government’s commitment to sports in monetary terms is abysmally low. An email interview with Syed Amir Hamza Gilani, Director General, Pakistan Sports Board (PSB) proved the point.

The government has allotted Rs 105.2 million as the sports development budget for 2010-11. This development budget is used to build, renovate and maintain stadia and other sporting facilities around the country. The development budget has seen a significant cut since 2009-10 when Rs 236.3 million were released for the same purpose. The government also provides a non-development budget which is meant to be distributed among 40 sports federations. The current non-development budget is set at Rs 505.5 million, and while this is a significant improvement over last year’s budget of Rs 390.4 million, it accounts for a little over one percent of the total national budget!

The insignificance of the sports budget is not surprising given the fact that the government is up to its eyeballs in national debt and sport is not really the top priority. What is surprising and somewhat confusing is the PSB’s inequitable distribution of funds to different sports. For example, the Pakistan Hockey Federation (PHF) recently received a grant of Rs 200 million, whereas the Pakistan Football Federation (PFF) receives only Rs 1.5 million annually. The PSB says that these allocations are “performance based” but sports journalists believe the reasons to be more political in nature – the president of the PHF is part of the current government whereas the president of the PFF is in the opposition.

However, the disparity between football and hockey is inconsequential compared to the national crowd pleaser, cricket!

Regulated by the Pakistan Cricket Board (PCB), cricket is a totally different ball game. Tariq Hakim, Marketing Head, PCB, boasts that his organisation receives no grant or monies from the government. Hakim refuses to divulge the PCB’s total revenue but explains that over 70% comes from selling airing rights to the media. For context, in 2009, the PCB signed a five-year contract with Ten Sports for a whopping $140.5 million. Apart from airing rights, the PCB also has four major long-term sponsors: Pepsi (official sponsor of the national team), Faysal Bank (official sponsor for local cricket), Mobilink (official telecom provider) and WorldCall; as well as several short-term sponsors.

The most popular sport in Pakistan:
The PCB is a cash rich organisation because cricket is an obsession in Pakistan. The Peoplemeter’s ratings agree.

Faraz Ansari, General Manager Pakistan, Ten Sports, says that cricket matches can get ratings as high as 15, whereas even the most popular dramas and news stories will only get a rating of two. With these kinds of audience numbers up for grabs, TV channels (particularly sports channels) are willing to pay an arm and a leg to secure cricket airing rights. As a sidebar to prove the point, Geo Super paid Rs 1.17 billion to secure web, TV and radio rights for the ICC Cricket World Cup.

When TV channels lay down this kind of investment, audience hungry sponsors automatically follow suit.

Ahsan Hameed Malik, Business Unit Head, Geo Super says that when it comes to cricket and particularly the international matches, advertisers will buy spots without considering the costs or the ratings.

“It may be difficult for them to justify the per minute rate – it is very high because of high acquisition costs – but they will buy the spots anyway because they know that if they don’t, they will have missed out on something big!”

An excellent example of advertisers’ desperation to be involved in cricket is Coca-Cola, which in spite of realising that it cannot be associated with cricket in the way that its rival Pepsi is, continues to keep trying.

And although cricket has recently been a breeding ground for corruption and scandal, sponsor support has not waned. However, this national obsession with cricket has come at the cost of other sports.

The others:
According to the Peoplemeter’s ratings, the other popularly watched sports in Pakistan are wrestling and soccer. However, they are popular mainly for their international content, i.e. the WWE and the EPL respectively.

Of the local sports, none figure prominently in the ratings, so sponsors are not interested in making a big investment. The problem, say experts, is that brands want to see returns in the short-term without realising that given the underdeveloped nature of sports in Pakistan, only a long- term view will enable them to reap the rewards they hope for.

The problem is somewhat chicken-and-egg in nature: without sponsorships sports don’t have the necessary resources to invest in the game and this leads to poor performance and low audience interest, whereas on the other hand, brands want to see audience interest and solid viewing numbers before they invest. So the question arises: who makes the first move?

Many experts believe that brands have to take the initiative. Sohaib Alvi, a marketing, advertising and media consultant suggests that advertisers should look at sponsorships of less developed sports as a CSR activity.

“Sports sponsorship is not just about getting your paisa’s worth. The advertiser can do something for the community and the game; slowly and surely they can help turn the sport into a national commodity.”

Other experts believe that as cricket becomes oversubscribed in terms of sponsors and advertising, taking ownership of another, albeit less popular, sport could be hugely advantageous for the concerned advertiser in the long run.

According to Malik, “Less popular sports have a low entry cost for advertisers, and if they make a concerted effort, in five years’ time they will have their value for money in terms of promotion and relationships with stars.”

Some advertisers have made a push in this direction, but their associations have been short- term; both the KESC and the KASB have recently collaborated with the PFF but have no plans to renew their commitment. Similarly HBL signed a three-year deal with the PHF but backed out by the end of the first year. This is the exact opposite of what the experts believe good sports sponsorship should be: a long- term commitment lasting at least five years.

While short-term brand goals and objectives may be one reason, a big part of the problem is that once advertisers enter an agreement with a sports board, they then realise that these bodies are prone to corruption and that the money invested in the sport very conveniently disappears under the head of ‘administrative expenses’.

Osman Samiuddin, Pakistan Editor, ESPNcricinfo says that sports boards shoot themselves in the foot because they are so corrupt and also because they are incapable of marketing themselves properly to corporate sponsors.

Sardar Naveed Haider Khan, Director Marketing & Events, PFF, who has held a number of marketing positions and has been with the PFF for two years now, disagrees. He questions how there can be any talk of corruption when the Board has no money. He says that the PFF has received almost US $150,000 in support from sponsors in the UK but local support is not widespread because Pakistani brands and advertisers are obsessed with cricket.

“The corporate sector prefers to support cricket because that is their comfort zone, they will support the game even when the players are involved in match fixing and other scandals. It is a very unfortunate state of affairs.”

The light at the end of the tunnel:
In spite of this situation, there is hope for Pakistani sports. The impetus to develop sports other than cricket is coming to a great extent from Geo Super, which by virtue of being the only sports channel in Pakistan needs more local content to secure its own financial sustainability.

Although Geo Super has recently spent an enormous amount of money on the ICC Cricket World Cup rights and hopes to secure other international properties in the future, Malik says that he wants to balance expensive international content with affordable domestic content in order to make Geo Super a more profitable proposition. Thus the channel has entered into long-term partnerships with sports boards to develop soccer, boxing, squash and snooker. Geo hopes that once people start watching these sports, advertiser response will also pick up, and eventually this will “benefit both the country and the channel,” says Malik.

The power of three:
In the final tally, all three parties in the sports triumvirate – sports boards, TV channels and brands – need to be equally committed to the growth and development of sports in Pakistan.

Alvi suggests that the sports boards need to use these lean times to take a good, hard inward look, and organise themselves even if only on paper, as well as weed out the corrupt elements that make brands shy away from them.

TV channels, such as PTV and Geo Super, need to reaffirm their commitment by continuing to support sports that do not currently have great ratings but have the potential to garner them. Both Ansari and Malik believe that if they had to choose one sport with the most potential, it would be football. As Ansari says:

“Like cricket, football transcends socio-economic boundaries; it gets as high an audience in Defence as it does in Lyari, and that is important for a sport to become popular.”

Most importantly, brands need to make a sustained effort to choose a sport, support it, stick with it and see it through good and bad times. Some may choose to view this as CSR, but for sports sponsorships to become a profitable and beneficial venture for the brand it needs to be more than CSR, it has to be fully incorporated into brand building strategy. After all, companies such as Barclays and PepsiCo International do not spend big bucks on sports in order to be good corporate citizens! They do it because it reaps real and useful dividends for the brand. If it can be done internationally, it can be done in Pakistan and if brands make a concerted push in this direction, Pakistani sports can and will return to their former glory.


Box item -
No support for women’s cricket
The Pakistani men’s cricket team may have enormous support from sponsors but the same is not the case for the women’s team. Although the women’s team comes under the aegis of the Women’s Wing of the cash rich Pakistan Cricket Board (PCB), and has recently clinched a gold medal at the Asian Games in Guangzhou, China, sponsor support has not been forthcoming.

According to sports journalists, the women’s cricket team is in as dire need of sponsorship as are other lesser sports in Pakistan. Some of the players are employed by the Zarai Taraqiati Bank and are paid by them, but this is hardly enough.

Shazia Hassan, a reporter at the DAWN sports desk says that many of the girls had hoped that they would be sponsored by Pepsi after they returned from China, but this was not to be. Part of the reason why sponsors will not touch women’s cricket is because most of the games are played in high-walled stadia, spectators are restricted to ‘families’ and broadcasting the matches is a big no-no.

“How can sponsors possibly be interested in a game where they will not be visible?”

Hassan adds that the women are often expected to make do with ill fitting uniforms, helmets and knee pads which are much too large for them and were clearly made for men! In addition, even when the players are approached for individual brand endorsements, these are discouraged by the president of the Women’s Wing who believes that girls from ‘good homes’ should not be involved in ‘modelling’.

Hassan sums it up by saying that it is “a pathetic situation”.

Are any of the PCB’s big four sponsors – Pepsi, Mobilink, Faysal Bank and WorldCall – listening? – MLA


Box item -
The king of games
“If we were given one-tenth of the funds spent on the promotion of cricket, you would see what heights the Pakistan polo team would be capable of reaching,” exclaims Irfan Ali Haider, President of the Lahore Polo Club.

In spite of Haider’s statement, Pakistani polo, particularly the Lahore Polo Club has done extremely well for itself and is a testament to how much of a win-win situation good sports sponsorship can be for brands and sports.

The Club receives no grant from the government but generates approximately 50% of its revenue from corporate sponsors which include Al-Raziq Group, Bank Alfalah, Nurpur, Seasons, Suzuki Township, Toyota and Treet Corporation. The remaining 50% of the money comes from club membership fees, the Club’s riding school and stable rent.

Haider says the sponsors have played a significant role in developing Pakistani polo.

“When we have sponsor support, we are able to engage better players, continuously work on upgrading the polo grounds, as well as ensure that we will deliver a good game which is enjoyed by the spectators.”

Haider also points out that his Club is the only one in the world that organises 30 polo tournaments per season and “we owe it all to our sponsors.” – MLA

First published in the March-April 2011 issue of Aurora.

Game on

Olivier Auroy on the symbiosis between sports and brands.

Let’s face it: sport remains one of the most powerful ways to attract audiences.

Numbers talk.

Every four years, the Olympic Games are watched by an average of four billion people and according to FIFA’s overblown figures, the World Cup finals of 1998, 2002 and 2006 respectively, attracted global audiences of 1.3 billion, 1.1 billion and 715.1 million people. Other competitions such as the Tour de France or the Super Bowl (111 million viewers in the 2011 edition) draw attention beyond their own national borders.

In this context, it is easy to understand why brands are interested in sports. It gives them fantastic exposure and maximises their chances of connecting with their key customers. Sports enable better media buying segmentation. Half time during a football match is the right time to promote cars and razors. Ice skating usually attracts retired couples. According to marketers, it is possible to define customer profiles according to their favourite sport – but with a caveat: the sports they like are not necessarily the sports they play.

Over time, sport has become a show. People go to the show, they see the brands at the show, and maybe they will buy the brands when they go back home. That is the equation. The better the show, the more they will enjoy it, and if they are entertained, the brands on show will benefit from their exhilarated state. This is why the show must go on.

High performances are expected and media space must be available. American football is a good example of how advertising and sports are intimately correlated; short and spectacular action on the field, short and catchy spots on the screen. They are formatted for each other. This applies to many other American sports, including basketball. One could say that the US provides the best example of how sports and marketing can benefit from each other.

The game has changed. Sports authorities and organisations have had to adapt to the expectations of brands and their sponsors. For example, the environment of the sports field is changing too. Thirty years ago the football field was surrounded by simple and plain fences. Nowadays, the field is surrounded by a digital screen promoting four to six brands every minute.

Brands need sports, and brands need sportspeople. Athletes can promote the key values of a brand. Accenture chose Tiger Woods because he embodies precision, foresight and strength. Accenture could not anticipate Mr Woods’ extramarital affairs. Gilette decided to put an end to Woods’ contract. The same thing happened to Thierry Henry, who gave an early tribute to the handballers against Ireland. Athletes are human beings. They have weaknesses. You cannot control them. When they appear humble and easy to manipulate, the public finds them boring. This is the ambiguity. Brands want extraordinary sportsmen but they fear their extraordinary behaviour and possible misconduct.

Like a marriage, there are ups and downs. When the French team won the World Cup in 1998, Adidas was associated with their success and the brand name proudly appeared on the Arc de Triomphe in Paris. Yet, when the French team miserably went on strike in South Africa, Adidas asked for their money back and finally terminated their contract.

It seems to me that sponsoring a sport or an event is less risky business than sponsoring a sportsperson. Peugeot has been the main partner of the Roland Garros (French Open) tennis tournament for the last 30 years. The French Open, symbol of elegance and performance, has successfully served Peugeot’s brand values. Rolex gives a lot of support to golf. Not to a single man or a team; it is the whole golf category that translates its key values, such as prestige and timelessness. Rolex has been on the market for more than a century. Golf is one of the oldest sports in the world; with similar mindsets and target audiences, they had to get along.

So yes, brands need sports to live. It is a symbiosis. Sports also need brands to survive.

What would the Football Premier League be without Barclays? Would Manchester City and Arsenal be the same without their Emirati sponsors (Emirates and Etihad respectively)? By the way, the Premier League is a formidable media for both Emirates (Dubai and Abu Dhabi) as they try to raise their awareness on the international scene.

Formula 1 races display the fastest cars in the world dressed with brand logos. They look like supermarket shelves on wheels. It is a win-win deal. F1 stables give the brand high visibility; brands enable the stables to finance and maintain their high cost machines.

Sport has become a marketing tool. Sport need sponsors to exist.

Like any relationship, co-existence is made of compromise and mutual acceptance. The judge is the public. For example, when it comes to football, over branded teams are rejected by their fans because the soul of their favourite club could be sold out. This has been the fear of all supporters when a big company approaches their club managers. In the modern era, sports brands have reached a high level of sophistication.

Today sports teams and clubs have become powerful brands themselves. The market value of football teams such as Manchester United or Real Madrid is impressive. Travelling to Asia, you understand how powerful these sports brands have become as they have invaded the media space. They have become so powerful that other brands or sponsors now queue in front of their headquarters to associate their names to their success. However, all this depends on the performance of the athletes and players. As long as they score and win, as long as the show goes on, the brand equity of the sport will rise and money will come in.

This is one reason why athletes and coaches are under more and more pressure. They are responsible for their team’s value. They have no right to fail, and this can explain the worrying trend of doping and cheating in all competitions, but this is a topic for another day. Hopefully, the coming ICC will put the beauty of sports first.

Olivier Auroy is Managing Director, Fitch Middle East. olivier.auroy@gsfitch.com

First published in the March-April 2011 issue of Aurora.

"Every time there is a need for new taxes we get hit because we abide by the law"

Rafiq Rangoonwala CEO, Cupola, talks to Aurora about the challenges of running a successful business by the book.

AURORA: What are Cupola’s business interests in Pakistan?
RAFIQ RANGOONWALA: Cupola is a holding company that runs various businesses. It is a multinational company owned by overseas Pakistanis. KFC is one of our franchises, then we have My Super Store, our supermarket chain; Indulge, our coffee shop; Casa, our upscale bakery and we also have the franchise for Lal Qila restaurants across Pakistan, except Karachi. We are building our first Lal Qila in Faisalabad and we are hoping to open in the next two to three months. We also own a security agency called 24/7 Security Services. In the UAE, Cupola has a plastic card manufacturing operation as well as one of the largest privately held call centres in the UAE, besides other small businesses; for example, we have shares in Spinneys. Cupola entered Pakistan in the mid 90s and we have been investing here aggressively ever since. KFC is our star brand. We have 64 restaurants across 19 cities; there is potential to open at least 100 restaurants and we are working towards reaching the 100 mark in the next three years.

A: Given the prevailing economic landscape, how much scope is there for expansion in the fast food segment?
RR: We have only scratched the surface. The growth should have been explosive. Many other international brands should have come in a lot earlier, but unfortunately due to various international and domestic developments they have stayed away from Pakistan. Furthermore, the franchises that are already operating here are struggling to grow at the pace they should be. KFC should have opened its 100th restaurant last year; the problem is that apart from circumstances beyond our control, there are a number of controllable factors that are not being implemented, with the result that the playing field is not level.

A: Factors such as?
RR: We pay our taxes honestly, we pay our employees at least the minimum wage, plus we give them all kinds of benefits: LFAs, provident fund, leave, overtime, bonuses and medical insurance, and we also invest in their training. Then we pay every one of the taxes due to the government on labour, but there are a lot of companies that do not pay their taxes, that do not pay their employees even the minimum wage, that do not maintain even the minimum standards of hygiene, yet they get away with it.

A: Are these companies international or local franchises?
RR: Unfortunately most of them are local, and the competitive environment is completely unfair to the international brands which are contributing to the national economy and to human resource development. Multinationals get the flack for being blood sucking monsters who come to Pakistan, take the money and run. Well, let me tell you that in the last 10 years or so that we have been in Pakistan, we have not taken away even a single dollar. We are reinvesting everything back into this economy. We are paying hundreds of millions of rupees in taxes through the GST collections alone; our payroll and supplier taxes are separate. Now, I would like anyone to prove that any of the national companies are contributing even a fraction of what we are. Because they are not, and every time there is a need for new taxes we get hit, because we abide by the law, while people who are not paying taxes are getting away with it and are laughing all the way to the bank.

A: Given these difficulties, how do you manage to remain competitive in terms of pricing?
RR: We do it in different ways. By smart sourcing; we have the volumes that allow us economies of scale and we have leveraged our infrastructure to the limit. We have taken a big hit on our margins; in fact, compared to the margins we had in 2002, in 2010 our margins were a fraction of those. So it’s a question of survival, hoping that things will improve and that one day the people concerned will realise that you cannot milk us to death; they have to expand the tax net. In Pakistan, about 1.75% of the population pays tax, of which the majority are salaried people.

A: Is KFC’s customer base expanding?
RR: The customer base has not increased in the last year and a half. Unlike western countries, in Pakistan fast food is not a convenience, it is a luxury and the frequency of visits has definitely gone down. Salaries are not going up, yet due to inflation, customers are being hit from all corners. Utility and food bills, transportation and education costs have all gone up, with the result that disposable incomes are being squeezed; customers, instead of going to a fast food outlet twice a month, will probably go once a month or less.

A: How will this trend affect your plans to go from 64 to 100 restaurants?
RR: It will take longer to achieve; we may even have to take a step or two back. Maybe, if things do not improve, we will have to close down some outlets that are not profitable enough.

A: From which segments do you draw the bulk of your customers?
RR: The fast food business in emerging markets like Pakistan is usually a weekend-dinner-family skewed business. In developed countries fast food is mainly a weekday-lunch business. The fast food business goes through different stages of maturity and in emerging markets it usually starts by targeting the upper income segments; however as you cannot survive on a niche market base, you have to go to the middle income segment and this is when you start rationalising your prices and penetrating into different trade areas.

A: Why does KFC pursue a very aggressive pro-women hiring policy?
RR: I firmly believe that God has given as much talent to women as to men, and that women are if not more, then, as hard working as men, and they are trustworthy as well. In Pakistan, because of our culture there are certain issues we have to respect, but that does not mean we should close our doors on our female population. They have the right to full and respectable employment and the right to succeed in life, as much as men. I strongly believe that in Pakistan, where the population growth is substantial and the opportunities are not, if our women do not enter the workforce, we will not be able to succeed as a nation. We will not be able to prosper, because 80% of our population is living off the income of the remaining 20%. We cannot carry on like this if the quality of life in this country is to improve, and this is why we need to encourage women to work. Our target is that by the end of June 2011 at least 40% of our front line staff should be women.

A: To what extent does inducting such a large female workforce bring forth its own set of challenges?
RR: Yes, there are challenges. For example they cannot work all the shifts; our restaurants are open until two or three in the morning and some 24/7, which is why it cannot have a 50-50 male to female ratio. In some areas families are more conservative and they don’t like their daughters going out to work. However, it is amazing how fast things are changing. Even in cities like Peshawar, there are women working in our restaurants. And we are very happy to support and facilitate them. We provide transportation after dark and we have to be careful about the kind of work we give them. Physically, most Pakistani women are not as strong as their counterparts in the US or in Europe. You won’t find many women in the kitchen; they work mainly at the front end. We enforce a very strict zero tolerance policy with regard to any kind of sexual harassment. If it is brought to my notice that a female member of staff has been harassed, that is want to create an environment that will make parents and family members comfortable about letting their female members go out and work.

A: All this surely adds to your overall operation costs?
RR: This is an investment we have to make as good corporate citizens of Pakistan. Everything cannot be measured in dollars and cents.

A: KFC is also known for some of its branches that are staffed by hearing and speech impaired people.
RR: Yes, we have two restaurants in Karachi, two in Lahore and one in Rawalpindi which are totally run by hearing and speech impaired people. The managers are the only ones with hearing and speech faculties, as they need to answer the phones or deal with suppliers and specific customer enquiries. The cashiers, cooks and lobby staff are all hearing and speech impaired.

A: How do your customers respond?
RR: My team was a little doubtful when I first came up with the idea. In 1986 I was stationed in Egypt and there was a restaurant on the ground floor of my office where this pleasant young man was in charge of the cleaning. Eventually I discovered that he was hearing and speech impaired. I thought that it was a shame that more such kids did not have these opportunities, because Egyptian society is very much like ours. I talked to the franchisee over there (at the time I was representing the franchisor) and I said we need to do something for these people, and that is how it began. We started spending time in the restaurant; we looked at every aspect of the operation and came up with certain modifications. We opened the first such restaurant in Egypt and it was a huge success and the same thing happened here. I already knew how to do this, because I had done one in Dubai as well. When we opened our first such restaurant in Gulshan-e-Iqbal we received overwhelming support. If you go there you will see how well the team work; with so much commitment and dedication, and these restaurants are as comfortable as any other.

A: Do you follow the same HR policies in all your other franchises, or are these policies restricted to the KFC brand?
RR: Absolutely yes, whether it’s a supermarket, a restaurant or a bakery, our policies are the same. We cannot be unfair to our other brands and we cannot treat one brand as the apple of our eye and others like stepchildren. They are all our businesses, they are all our family members, their pay scales are same, their benefits are same, everything is the same. There is no difference whatsoever.

A: What measures are in place to ensure that KFC complies with international food quality standards?
RR: We have a very strict supplier approval process, called the Star Audit System. This is an international system; it has the best audit protocols and every supplier has to go through them. If they do not qualify we do not source from them, and they tend to comply because our volumes are such that they cannot afford not to have business. Then we have our own quality assurance and enhancement department which continuously visits our suppliers unannounced to ensure there is no deviation from our procedures, standards and recipes. We do this religiously, because we are in the food business and we cannot take chances with peoples’ health.

A: Are you considering expanding into new operational areas in the near future?
RR: Because of the reasons I mentioned earlier, the growth of our existing operations has been slower than projected. The same thing goes for new brands. I have a couple of new brands for which I have signed on and paid the initial fees, but I can’t introduce them because the environment is not conducive.

A: Do you see the economy rebounding any time soon?
RR: Unless and until the government has a very clear trade policy and unless and until the government expands the tax net and provides a level playing field, it is going to be an uphill battle.

A: Yet despite the present economic setbacks, most companies are banking on the size of Pakistan’s population and the fact that people have to eat, buy, live…
RR: People have to eat, but they don’t have to go to a restaurant; they don’t have to go to a fast food or a proper table service restaurant, they can go to a cheaper place, disregarding the hygiene and the quality of the environment, or they can cook at home. Or they can cut down; instead of eating out eat twice a month they will do so once, or once in two months. This is how businesses are impacted. We are talking about businesses here, not about basic needs.

A: Nevertheless, a lot of businesses continue to remain upbeat.
RR: It depends on the nature of the business. As I said, our business model is different. It is the overheads and abiding by the law that kills you. I can’t think of any other country in the world where the utility costs are higher than the labour costs, and these costs are going up every month. A fast food business is registered as part of the tourism sector, but when it comes to utilities we pay commercial rates, we are not treated as an industry. Then, as I mentioned earlier, there are the taxes; we pay 17% GST to the government, yet the business next door doesn’t pay anything or at any rate not the total amount, so they have an advantage right there.

Rafiq Rangoonwala was talking to Mariam Ali Baig. For feedback, email aurora@dawn.com

First published in the March-April 2011 issue of Aurora.

Lather, rinse, repeat

By Muzaffar Manghi

I thought it would be easy. “Comment on a couple of prints ads,” they said. Be nice, they insinuated. Sure.

In a country where the imbalance between ‘haves’ and ‘have-nots’ is how it hits the fan, the dichotomy exists in more ways than it seems. You have got your ‘A’ crowd and your ‘B’ crowd. You have got your top channels and your okay channels. You have got your branded agencies and the desi variety.

Over the years, Pakistan has been both quick and lazy in catching up with global advertising trends and developments. The ‘have-not’ agencies have a junior copywriter who surfs the net and a production guy who watches YouTube. And both are key sources to find and share ‘ingenious’ advertising and the newest and bravest campaigns. On the other hand, the branded agencies have a default system to disseminate such information. Weekly newsletters, emails, goras visiting, cross-market case studies – an overall culture where emphasis is placed on staying in touch with the global buzz.

It’s easy to understand why some advertising is still so archaic, because it’s a simple matter of lack of ‘enough’ exposure within certain agencies (which naturally influences their clients). The same agencies who will allow clients to say everything they can on one billboard, or advise them to go digital by placing a banner on Facebook. But how do we rationalise the work coming out of the big players? I admit that it’s easier said than done. It’s easy to be well versed with what is going on in the world, to know what augmented reality is and also apply it to your brands. But actually pulling it off is another story. It’s not just about coming up with an idea that jumps off your writing pad and gives birth to an iPhone app that will have Mercedes and Energizer harassing your receptionist.

What I don’t understand is print advertising. Agencies as we know them and the best creatives, all grew up honing their skills on TV, print and outdoor, mainly because these three mediums have been our bread and butter for the first five decades of this business, and pretty much now too. What confuses me is why so few people manage to inculcate their vast experience with print advertising into the newbie writers and brand managers. This transference of knowledge seems to be a problem that plagues both big and small agencies. The top chef leaves, the dishwasher is left with big shoes to fill. Which he does. But without any of the lessons learnt by his predecessor. So the mistakes are made again. Lather, rinse, repeat.

Having said this, there are a few print campaigns I found, which fail miserably, and some that don’t. Print ads that do the job they are supposed to. Like good soldiers, with fast cars, surrounded by dry martinis and Swedish bikini models.

Brand: Pepsi

Campaign: World Cup
Message: Let’s kick ass.
Effectiveness: Ever since Coca-Cola decided to roll up its sleeves and grab a cricket bat to clobber Pepsi with, it seems that Pepsi has not understood what to do with a very expensive cricket team who is constantly in trouble. Coke got the right angle; they spoke to the junta, showed the game from the cricket fanatic’s eyes; the guy who will never meet his heroes, yet plays a night match in the middle of the street. Pepsi, entrenched in cricket stardom, could not even think of going there. But this time, they seem to have cracked the code. They are not talking about the aam junta. They are talking about the spirit of the junta. It humanises our players. Makes it easy to forgive their faults. Makes you forget that he is a star. And makes you feel that the guy on the pitch is just another guy, like you.
Verdict: Neat, clean, bold typography, dynamic photography that fully utilises a visual driven medium. No big promises, just a little hope, brought to you by Pepsi. Well done KK and Ali.

Brand: Warid

Campaign: Glow Gang
Message: Email me if you can figure it out.
Effectiveness: Here is a question. Do we need to create a bizarre world of action and adventure, filled with mystery and sex to sell 10 discounted friends and family numbers? Here is another... are we so naïve to think that by creating a flashy imaginary club of good looking men and women, people will sign up? The same target group who has more than one SIM in their wallet and change their number depending on the call they want to make, to whom and when. Is this our idea of incentivising a pre-paid package to the point that it wins someone’s loyalty? This campaign fails to create a relationship with the people it is speaking to, it also makes no sense. Who are these people standing on a rooftop? Are they about to jump? Must I endure another print ad that will make sense ONLY if I have seen the TV commercial first?
Verdict: This is getting ridiculous. I know you telcos have truckloads of cash, but must you spend it on this?

Brand: Sooper

Campaign: New thematic
Message: If Bakeri did it, so can we.
Effectiveness: Dude. This one’s a classic. All that song and dance to sell a biscuit? Couldn’t sell it, so you sang it? No, no, no. You are supposed to sing it ONLY if you can’t sell it. Sooper was doing great, so why the song and dance routine? This is obviously the brainchild of someone who saw the Bakeri TVC and decided to talk back. So fine, you made a bling film that will sell your biscuit as long as it is on-air. Your biscuits are bigger than Bakeri’s biscuits. If this is how you want to play, then so be it. But why this print ad? It is not even pretty to look at. It says absolutely nothing. All it possibly does is raise a little top of mind. The model looks miserable, the product doesn’t even look appetising.
Verdict: Epic fail. I had respect for Sooper when they decided to kick ass in 2003. They did it so well.

Brand: Cheetos

Message: 3D toy inside!
Effectiveness: Nope, not a typo. Both the campaign and the message are the same. And that is great. They use the medium to its fullest; energetic layout, in line with a sugar charged kid. It’s bright, the colour scheme adds to the packaging and is guaranteed to make a kid stop and stare. It tells me exactly what is in the bag (without help from the feeble caption), yet leaves enough to my imagination to anticipate the moment I get my hands on one. And it looks like it tastes good too.
Verdict: The caption is trying too hard to be cool. Clearly someone who assumes that ‘cool kids’ talk like that, wrote it. There is no ring or rhyme to it, no flow, not memorable, and a lost opportunity to say something usable. It’s just trying to be cool.

Brand: Ufone Ghanta

Message: Some kick ass package.
Effectiveness: Dear Ufone team, I love you. And it hurts me to ask you: what happened here? Ufone has made its mark by having the courage to be funny. And intelligent. But this ad seems to forget the house it’s coming from. If I had not seen the TVC, all I catch is two fuzzy blurs in the background with a surprised girl in front of them. Half the space on a valuable page has been filled by an image that doesn’t add any real value.
Verdict: Brutality aside, I suppose the brief was to communicate the Rs 3.5 per hour rate. Which it does. I suppose.

Muzaffar Manghi is an independent creative and strategic consultant. screw79@yahoo.com

PR in a virtual world

Omar Jamil on what PR companies need to digitise for effectiveness.

Most people today would agree that we are living in an increasingly digitised world. Over the past few years, we have seen an explosive evolution in the way we interact with digital media. The ‘net, originally a relatively static experience that merely broadcast information, has become a far more interactive medium. The birth of Web 2.0, the proliferation of user-generated content and the rise of social media (ranging from forums and blogs to real time search and social networking sites such as Twitter and Facebook) have all fundamentally changed how we interact with and respond to the online world.

At the same time, while the internet was undergoing dramatic changes, traditional media industries, including print and broadcast, were undergoing changes of their own. With the onset of the global recession, advertising budgets came under pressure and purse strings tightened; the inevitable result was a cutback in ad spend.

What was perhaps less anticipated by many was that a large portion of traditional marketing budgets was now being redirected or extended towards online campaigns. It seemed that clients were finally clocking on to the fact that online was by its very nature a more targetable and measurable medium – one that not only gave advertisers more bang for their marketing bucks, but was also incredibly comprehensive when it came to tracking ROI.

This increased interest meant increased investment in digital – which in turn resulted in further development, from the rise of online video as a marketing medium expected to soon eclipse even TV (most online pundits expect online video ad spend to overtake TV by the end of 2011 – if not sooner) to whispers of Web 3.0 or the Semantic Web – an online experience that is specifically geared around individual users.

With so much interest in online – and traditional media under pressure – it is therefore inevitable that PR professionals too turned to the internet to harness its burgeoning power. In fact, there is so much interest in the subject that it is almost impossible to sift the wheat from the chaff. While researching for this article, a quick search on Google for ‘online PR’ and ‘digital PR’ returned 122 million and 65.3 million results respectively. What this shows is, a) that the interest and development of digital PR – or Online Reputation Management (ORM) – is a real and tangible phenomenon, and b) that there is still no clear cohesion around what one means when talking about ORM or digital PR.

So let’s take a step back and take a quick look at the bigger picture – just to understand why it’s important for PR professionals to ensure that online PR is an essential part of any PR programme.

According to Hamadoun Toure, head of the UN’s telecommunications agency, the number of internet users worldwide has reached the two billion mark in January 2011. This means that nearly one in three people in the world surfs online. According to another report, put together by the Pew Research Centre and Nielsen, the average internet user spends 60 hours per month online – that is one entire month in a year spent on the internet. Of these hours, about 42% are spent in general browsing and consuming content (websites, online videos, images, articles, etc.), 22% is spent on social networking (Facebook, Twitter, etc.), and 36% is spent on search. To add some perspective, a comScore report revealed that Google saw ‘87 billion’ searches in 2009 – a figure that no doubt rose exponentially over 2010.

In Pakistan, there are currently about 22.9 million internet users; this figure is predicted to rise by about 11% to 25.5 million users in the current year. Given a population of approximately 190 million, this implies an internet penetration rate of around 13.5%. According to the Pew Research Centre’s Global Attitudes Project, about 44% of these internet users are also regular users of social networks. 

Okay, so we have established that one in three people globally – and at least one in 10 here in Pakistan – are connected to the internet. And that on average, these users spend 60 hours a month online. Now let me throw a few more stats your way (Courtesy, Datamonitor and Forrester): Eighty-seven percent of most online journeys begin with search; at least 84% of internet users use search engines; more than 50% do so daily; 39% of searchers perceive those results in the top ranks as top brands in their field and 97% of journalists go online daily to source information.

Research also shows us that 80% of consumers rate customer reviews as more important than any other information. In fact, more than half of all adult internet users refer to online reviews before making a buying decision. Seventy percent of consumers who read online reviews share them with friends, family and colleagues. Seventy-four percent of consumers agreed that they choose companies and brands based on what others say about them online. All these research and stats demonstrate the importance of search and social media when it comes to your reputation online.

With so much user attention focused online, it fast becomes clear why digital is an essential part of the PR mix. The challenge lies in deciding which parts to focus on. As it stands, digital PR is a vast subject, covering everything from how to use social media (blogs and forums, Flickr, YouTube, etc.) to building reputation, to leveraging the power of social networking sites to create word of mouth viral buzz around your brand, to using PR methodologies together with search engine optimisation (SEO) executions to help generate positive search results. 

Often, agencies will decide to separate social media from the overall PR campaign mix, and create a dedicated programme to focus entirely on targeting social media, as well as social networking sites. This leaves one with search focused strategies and tactics.

As with any marketing programme, the first step is to identify who you are trying to reach and what it is you want to communicate to them. The next step is to determine the keywords and phrases based on your audience demographic. Once you have completed these two steps, it is time to turn to the search results.

Traditional SEO often only looks at the first page of Google rankings; when it comes to ORM, you need to look at the entire SEO rankings. There are five main factors you need to look at here: sentiment (are the results negative or positive); volume (how many times is negative/positive coverage appearing); intensity (how positive or negative is the coverage); exposure (who is reading the coverage) and influence (who is talking makes a difference).

Basically you are looking at what is being said, how often and by whom, and how and who is influencing it. Having determined where your client stands in the search results (as well as the nature of those results) you can use search technology to optimise the positive results and push them up the rankings and push down the negative coverage.

If there is no positive content to push up the rankings, it is the PR job to create that content, and here you can use optimised digital press releases, or Wikipedia pages or LinkedIn profiles. Facebook is also a good tool to leverage, but bear in mind that search only indexes Facebook groups pages. Guest articles published in online publications and blogs with high readership and rankings also help. However, remember that the objective with ORM is not only to generate media and/or social media coverage, but to do so in a way that can influence search results.

In the end, the overall philosophy remains the same whether offline or online. Press releases still need to deliver news; guest articles must contain real insight and information; media pitches still need to be tailored to a reporter or blogger’s beat. What is different is the way you craft the messaging, and the prioritisation of your targets. Most of all, always remember it is not a question of offline versus online, but a clever combination of both that will deliver your clients the results they need.

Omar Jamil is CEO, Latitude. omar@latitudecrs.com

First published in the March-April 2011 issue of Aurora.

What’s your plan?

By Marylou Andrew

If you are one of those people who have had enough of mobile companies trying to sell you a new package plan, then you are totally out of luck. This particular well is not even close to drying out, a fact proven by the recent launches of Mobilink’s Jazz Jazba and China Mobile Pakistan’s (CMPak) M9.

Although Mobilink is no stranger to launching new brands and package plans, the same is not true for CMPak. Ever since the latter company entered the Pakistani market in 2008, it has consistently promoted Zong, making no attempt, unlike other companies, to bifurcate into pre and post-paid brands.

Tamseel Alvi, Brand Strategy Manager, Zong says this is in line with the strategy of global telecom giants such as Orange and Vodafone, which have put all their money and resources behind a single brand in order to avoid potential cannibalisation and market clutter.

However, January 2011 marked a shift in CMPak’s strategy with the launch of M9. Alvi gives no specific reason for this move, except to say that “Zong has been firmly established in the customer’s mind”.

However, he takes great pains to point out that in spite of having the look and feel of a brand, M9 is a package plan.

“M9 has been positioned as a package plan until it becomes big enough in the consumer’s mind. Ultimately the consumer will decide whether to treat it as a brand or a package.”

This response suggests that CMPak is hesitant to make a hoopla about M9 being a new brand in case it fails to attract the desired result. This strategy is not without merit; in the last few years plenty of so-called telecom brands and sub-brands have created very little impact in the market.

M9’s USP is personified in the ad campaign’s tagline, ‘What’s your plan?’ The idea is for customers to log on to the website or use a special menu on their phone to design a mobile usage plan that suits their specific needs. The starting point is a selection of 12 sub-packages, each one based on a per minute call rate (each plan has its own SMS and internet usage rate). Once users have selected one of the 12 plans, they can further select their benefits in terms of free minutes, SMSs and various value added services as add-ons.

Alvi says that the concept of being able to choose one’s own mobile plan is an industry first.

A telecom expert working for a rival company agrees, adding that M9 offers a level of customisation that has never been seen before in the Pakistani telecom industry.

However, considering the number of options available, M9 also makes choosing a ‘plan’ more complicated; this is particularly pertinent in a market where customers are already bamboozled with per minute, half minute and per second call rates.

Alvi, however, doesn’t think M9 is too complicated. He says that the package is targeted at a very mobile and internet savvy audience well able to navigate through the options without difficulty. In fact, he goes so far as to say that M9 brings greater clarity to mobile usage plans.

“Any mobile plan that you choose will have its own set of pros and cons. It is impossible to have a plan without a disadvantage. In M9, we tell you both the advantages and disadvantages of each plan, and then we let you choose for yourself.”

Telecom expert, Yasmin Malik believes that apart from bringing more clarity, M9 is CMPak’s attempt to rope in a younger and more up-market consumer. Alvi agrees that M9 is targeting premium consumers (compared to Zong which is more mass market), although he categorically states that M9 is not a ‘youth’ brand and should not be perceived as such.

“We expect a lot of young people to come on board because 70% of Pakistan is made up of the young, but we have not specifically created this as a lifestyle youth brand.”

And yet M9’s advertising campaign has certainly been targeted at young people. The pre-launch teaser campaign was based almost entirely on social media websites.

Fasi Zaka and the producers of Punjabi totas (spoofs) were brought on board to create short videos with viral properties based on the ‘What’s your plan?’ tagline, and according to Alvi, “the videos worked on two levels”.

“We launched in the new year, which is generally the time when people make their New Year’s resolutions and are asking each other, ‘what’s your plan?’; then there was the other, more obvious connection with your mobile plan.”

Although the launch campaign was centred on TV, M9’s ATL versus digital split is 70:30 which, according to Alvi is more than what any other brand has spent on digital so far.

The launch of M9 also raises the question of whether or not it will cannibalise Zong’s market share, as this is precisely the situation the company was trying to avoid with its single brand strategy.

Alvi explains that because M9 targets the premium customer, it will not be advertised on the same media channels as Zong. He believes that this media strategy will help to limit any cannibalisation.

Another important element in M9’s success involves dealing with the competition. Currently the company has the advantage of having the most up-to-date and sophisticated network (it is the newest network in Pakistan), which is why it is able to offer a level of customisation and choice that its competitors cannot. However, it is only a matter of time before the market catches up.

Although Alvi realises that M9 will need to be tweaked once the competition catches up, he remains secure in his first mover advantage.

“We believe that in future this will become the ace package out there. There is too much marketing gimmickry in our industry and M9 will change all that. We are giving the power back to the customer and when that happens, the artificial price wars we are seeing right now will end.”

First published in the March-April 2011 issue of Aurora.

Anne French stages a comeback

By FQ

Anne French recently launched a new advertising campaign after almost 10 years, raising the obvious question about why the company is choosing to advertise now.

The major reason is a global business decision which has had local implications. Anne French was previously owned by Wyeth Laboratories which was acquired by Pfizer in October 2009 for a sum of US $68 billion, making the latter the largest pharmaceutical company in the world (Source: Wikipedia). Although Pfizer has several global consumer brands (including Advil, Centrum and ChapStick), the acquisition of Wyeth made Anne French Pfizer’s first local consumer brand.

Unlike Wyeth, which had outsourced Anne French’s marketing and advertising to a third-party distributor, Pfizer believes in taking a more hands-on approach. According to Ahmer Ashraf, Head of Public Affairs & Policy, Pfizer Pakistan, “It is Pfizer’s policy to own every one of our brands and we also believe that consumer products have major growth potential.”

The first step in realising the brand’s potential was to conduct research to assess how it was perceived in the market. The research revealed that Anne French appealed mainly to an older segment which had been using the brand for the last 20-25 years, whereas younger people had gravitated towards others brands. Hardly surprising information considering that in the last 10 years due to Anne French’s marketing lethargy Veet has become the major contender in the depilatory market.

Bilal Habib, Brand Manager Anne French, Pfizer Pakistan explains that in the two billion rupee local depilatory market, Veet is the market leader with a 30% market share. This top spot was previously occupied by Anne French which has now slipped to the number two slot with a 25% share, followed by EU cream at 20%. Additionally, there are several smaller local and foreign brands including Care, Ispa, Nair and White Rose.

Another interesting aspect that came through in the research was that brand loyalty for depilatory creams is usually developed between the ages of 18 and 24. Taking this fact into consideration, the team at Pfizer thought it was essential to ‘get ’em young’; however they knew that this would take more than just an ad campaign.

Thus they began with rejuvenating the product which according to Habib “had not changed in almost 40 years”.

This included changing the formula to improve the texture; changing the fragrance to make its definite odour less pungent and revitalising the packaging to make it more contemporary and visually appealing (switching from an aluminium foil tube to a plastic one and colour changes).

In spite of these modifications, the product has not changed beyond recognition. For example, there is still a strong overtone of rose in the fragrance. Habib explains that the distinctive fragrance is what Anne French has always been known for, and Pfizer did not immediately want to change this, suggesting that major changes may be planned for the future once the brand’s image has been re-established.

The advertising campaign, however, has a decidedly different look and feel. Ten years ago, a typical Anne French ad showed a woman admiring the silkiness of her smooth skin. Although the message in the new campaign titled ‘Go Soft’ is essentially the same, the execution and approach is different.

Maria Patel, Creative Manager, Orientm McCann Erickson (Anne French’s AOR), explains that the campaign was developed around the idea of ‘skin deep confidence’ based on the insight that “girls lose their confidence if they have unwanted hair and find their femininity threatened”.

The TVC shows the transition from a ‘world without femininity’ in which the women take on a more masculine manner, to one where they are feminine, elegant and confident.

Ashraf says the idea was to differentiate from the competition.

“We did not want to focus primarily on the platform of beauty and glamour; we wanted to base our communication on ‘skin deep confidence’.”

The other important aspect that the team had to keep in mind was cultural taboos.

Nubain Ali, Account Director, Orientm McCann Erickson says that although advertising Anne French is easier than it used to be 10 years ago, it is still more difficult in Pakistan than in other markets. According to him in India, the brand’s largest market, the central message is ‘sexy skin’.

“We couldn’t do that in Pakistan; we had to show skin because this is a skin product but we had to do it in a way that was not considered offensive.”

Thus the ‘skin deep confidence’ platform makes sense on two levels; it is non-offensive, and it helps Anne French differentiate itself from Veet, which has already claimed full ownership of the glamour platform via Katrina Kaif. However, catching up with Veet will have to involve more than a differentiated advertising campaign; not only has Kaif’s endorsement of Veet been very lucrative, the brand has also invested a great deal in marketing over the last five years and has three variants for different skin types.

Habib says Anne French has a definite strategy on how to deal with competition. First, there are plans to launch new variants, which is a desperately needed step. There is also another, more long term plan.

“We want to offer an entire range of hair removal products; we are already covering depilatories with Anne French cream and lotion, and we want to move into epilators, such as wax.”

All these plans have one goal and that is to reclaim Anne French’s position as market leader. In Habib’s own words, “Although we realise this cannot happen immediately, it is definitely where we want to be.”
 
First published in the March-April 2011 issue of Aurora.

The movies get a boost

By Marylou Andrew

December 2010 saw the launch of Pakistan’s first digital 3D cinema – Atrium Cinemas. This is a huge boost for Pakistani cinema which has been experiencing a slow but steady revival since the Universal Cineplex opened in Karachi in 2002.

Atrium Cinemas is the brainchild of Nadeem Mandviwalla; Mandviwalla is the owner of Lahore’s DHA Cinema, his family owns Karachi’s famed Nishat Cinema and his company – Mandviwalla Entertainment – is one the country’s foremost film distributors. Armed with this background and experience, it made sense for him to be the one to bring the digital 3D format to Pakistan.

Speaking of the feasibility of opening a state-of-the-art cinema with fairly hefty ticket prices (Rs 500 for a 3D movie and Rs 300 for a 2D film), Mandviwalla says that despite the fact that conventional cinemas have been charging nominal prices for the last 20 years, there have been very few takers.

“Cinema-goers want quality content and a good environment, and that is what we aim to provide.”

Mandviwalla has not cut any corners in terms of design and décor. The three cinema halls with their spacious seats, the waiting areas and the refreshments and ticket counters all conform to international standards. It is, as Mandviwalla puts it, a five-star cinema.

Choosing a location for the five-star cinema was not an easy decision, so much so that Mandviwalla struggled with it for almost two years. He wanted Atrium to be centrally located but was uncertain whether SEC A and A+ buffs from Clifton and DHA would go to Saddar to watch a film. He finally opted for Saddar, taking inspiration from the fact that McDonald’s became an overnight success in Karachi, notwithstanding the fact its first branch was in North Nazimabad.

The decision has paid off as people are flocking to the cinema in droves. This is important as cinemas in Pakistan depend almost entirely on gate money for their revenue. This raises the important question of whether or not a cinema like Atrium can hope to make a profit considering that it shows the more recent movies, has just one source of revenue and must share this revenue with the film distributor.

Mandviwalla says this is not a problem because his company – Mandviwalla Entertainment – is the distributor.

“We import the movies and then sell them to five other cinemas in Karachi and Lahore in addition to playing them at Atrium. The success of Atrium cinemas can be gauged from the fact that we make more money off the ticket sales on any given film than the other five cinemas combined.”

Unfortunately, the money is peanuts compared to what Pakistani cinema is losing due to rampant piracy. Mandviwalla says that cinemas get only 10% of the total business whereas the rest goes to the piracy trade. For context, according to the International Federation of the Phonographic Industry (IFPI), the domestic piracy market was worth over $27 million in 2005, causing copyright holders an annual loss of $2.7 billion. These figures have only increased since then.

Mandviwalla says his company conducts some raids on outlets that sell pirated copies of his films, although these efforts are not enough unless they are backed by government policy and enforcement.

In the meantime, he is trying to increase revenues by attracting advertising but this also presents a challenge. Mandviwalla explains that in the 80s, cinema advertising was dirt cheap – a one-minute reel was displayed all week long for a paltry Rs 500. These rates did not change for 15 years. Taking advantage of the fact that his cinema provides top-notch content, Mandviwalla has set his rates at Rs 4,000 for a one-minute reel in a single show. So far there has been no advertising.

Is Mandviwalla willing to negotiate on the rates? His response is a categoric ‘no’.

“The corporate sector knows that if they accept our rate, this will change the advertising rate for the entire cinema industry. We are willing to wait until this happens.”

However, such a change can only come about when advertisers see real value in cinema advertising. Although the current crop of cinemas can boast of a captive audience and quality content, there are still too few cinemas to justify a widespread media placement strategy. Thus the real game changer will occur only when cinema expands in Pakistan.

Mandviwalla believes that Karachi alone is capable of supporting no less than 50 cineplexes and so can Lahore, but adds that large scale development can only happen when outside investors find it feasible to build cinemas in Pakistan.

“The Indian government offers a five-year tax free incentive to cinema; when that happens in Pakistan, our cinema industry will really flourish.”

First published in the March-April 2011 issue of Aurora.