Business News Isn’t News-ing 📺

Why does the news keep recommending stocks? Also in today’s edition: Indian e-commerce ads may be chipping away at Amazon, not Google-Meta

Feb 14, 2024

Good afternoon!

Welcome to The Impression, your weekly primer on the business of media, entertainment, and content.

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It’s still a mystery why news channels run 24x7. But because they do, they are under pressure to keep coming up with news (and content) that justifies being on air all day, all night. We have witnessed the nearly two-decade-long decline of general news channels. What of business news?

They’re in marginally more luck. There are stock exchanges and the currency and commodities markets to track all day. They also have meaty days to comment on, such as the recently concluded interim Budget on February 1. One would think business news channels can safely avoid the sort of daily debasement their general news counterparts have become accustomed to.

No such luck.

Forget Finfluencers, Fear The ‘Experts’

Photo by ThisisEngineering RAEng on Unsplash

Weekday mornings at the Hindi language news channel Zee Business often start with ‘Kiran ka Kamaal’, ‘Hitman Himanshu’, ‘Mudit Ke Munafe’, and ‘Simi Ke Non-Stop Shares’. They sound gimmicky, but Kiran Jadhav, Himanshu Gupta, Mudit Goyal, and Simi Bhaumik are wildly popular ‘guest experts’ who offer stock recommendations on Zee and other business news channels, apart from various social media platforms.

A hot stock tip, live on national TV, completely free? It was obviously too good to be true.

Last week, markets regulator Sebi released a 127-page order (pdf) against four such ‘experts’ who regularly appeared on Zee Business. They are also regulars on other business news channels such as CNBC-TV18, but the order is restricted to their stock recommendations on Zee’s news channel. Sebi accused the four of colluding with each other and a sprawling network of businesses and associates in a front-running scheme.

Their modus operandi was simple: an expert would pick a stock of the day for Zee Business’ viewers. They would let their associates know what they picked in advance and go on air and urge viewers to buy it, only for their collaborators to sell the scrip moments later after a surge in its price. TV news is still so powerful, that a recommendation from a known face in a (relatively less liquid) stock can send its price soaring. Besides, Zee Business is among India’s top news channels in the country. By its own claims, it corners 77% viewership (or in their words, ‘market share’) when the stock markets open on weekdays at 9:30 am.

Sebi’s detailed order shows how brazen the scheme was; the pages are full of screenshots of WhatsApp messages among the people involved openly discussing buying and selling shares and timing transactions to when recommendations air for maximum profit.

As drug kingpin Stringer Bell said in The Wire:

Sebi says all 15 accused collectively made over ₹7.41 crore (~$890,000) duping retail investors with their crappy, pump-and-dump stocks. They have two weeks to deposit this amount in escrow while Sebi investigates further and passes final orders.

But that’s just one news channel and one set of experts. Collectively, all four have hundreds of thousands of subscribers on YouTube, X (formerly Twitter), and Telegram channels. They’re also frequent guests on other business news channels.

This isn’t the first instance of TV news being used for a front-running scam. In 2021, Sebi fined CNBC Awaaz anchor Pradeep Pandya (and others) ₹8.4 crore (~$1 million) for recommending stocks on air they had positions in and then promptly selling them after the show. The next year, it fined another (former) anchor from the channel, Hemant Ghai, ₹3.9 crore (~$470,000) for the exact same scam. To be sure, Zee Business has said it was not involved whatsoever in the trading activity of these guest experts.

Why does this keep happening? Obviously, greedy so-called anchors and experts are to blame, and they have a swell in first-time individual investors to easily prey on. But let’s go back to Zee Business’ claim to success: of having the most ‘market share’ during market opening. Business news channels rely heavily on viewers hunting for stock tips to make a quick buck in a day’s trade. Besides, they’re competing with YouTubers, Telegram channels, WhatsApp groups, and potential online grifters to get the attention of this group of viewers.

Zee Media, owner of Zee Business and other news channels, is not doing well financially. Its revenues shrank in the December 2023 quarter (pdf), while advertising revenue fell 20% year on year. It has not even been operationally profitable this financial year. Add to this the pressure of a never-ending news cycle; there is certainly not enough business news in the country to fill every waking hour with something meaningful.

This is fertile ground for so-called ‘experts’ to make a bigger, quicker buck at the expense of ordinary viewers and investors.

How quick? Sebi’s investigation shows stocks were bought and sold within ~~hours~~ minutes of a recommendation airing on live TV.

Death By A Thousand Cuts?

In November, I wrote this note on Google and Meta’s duopoly in India’s digital advertising industry. No one has been able to break their chokehold on online ads here, and digital has surpassed TV to become the country’s largest medium for ads.

It is rare to call a multi-billion dollar multinational corporation an ‘upstart’ but in this case, Amazon is one. Its relatively newer ads business is perhaps the only serious contender to Google and Meta’s ads business in India and abroad. And as I told you in November, 14% of all digital ads in 2022 were e-commerce ads, led by Amazon.

At least as of FY23, the duopoly in India has held strong. Google India’s ad sales for the year were worth ₹28,000 crore (~$3.37 billion) while Meta’s were just over ₹18,000 crore (~$2.2 billion). No traditional or ‘new-age’ digital business comes close to this $5.5 billion advertising lead. Besides, despite a slowdown in ad spending in India, both companies grew at roughly 13% year on year.

In contrast, Amazon India’s ads business grew much faster—29%—but on a smaller base of just over ₹5,000 crore (~$600 million) as of FY23. Other e-commerce businesses have understood the opportunity. Beauty and personal care seller Nykaa made a modest ₹370 crore (~$45 million) in ad revenue that year. Its competitors including Zomato-Blinkit, BigBasket, Swiggy, and Zepto are all making money from ads now. But they don’t break out advertising revenue in their filings.

It’s safe to assume though that their ads business is less than Amazon India’s. Consider Zomato: in FY23, the company’s consolidated sales from services were worth over ₹5,500 crore (~$670 million), including warehousing, delivery, and advertising (on Blinkit and Zomato). That would make Zomato’s consolidated ad business far smaller than Amazon India’s. In its latest quarterly filings (pdf), the company said Blinkit made 2.2x more in ad revenue year on year in the December 2023 quarter and it had nearly 560 advertisers on board. Blinkit’s company filings show it made ₹159 crore (~$19 million) selling ads in FY23, more than double from the previous year.

Similarly, Swiggy’s sales from platform services was worth ₹4,400 crore (~$530 million) in FY23. In this story, The Ken estimated Swiggy’s ad sales will be worth 3-3.5% of its gross merchandise value this financial year, far less than Amazon’s FY23 number.

Meanwhile, BigBasket made ₹255 crore (~$30 million) from the sale of services in FY23; advertising revenue is one of the services it offers.

The conventional argument is that together, e-commerce ads can finally cut through Google’s and Meta’s chokehold on the digital ads business. Instead, are the e-commerce upstarts simply chipping away at the biggest upstart among them— Amazon?

“Most Indian [e-commerce ads] platforms, whether it is Flipkart, or Nykaa, or Blinkit, are fairly primitive on advertising,” Baqar Iftikhar Naqvi, founder and CEO of e-commerce consulting firm Upriver, tells The Impression. “Amazon Ads is at least 20 years ahead of what these platforms are offering.” Ankur Pujari, founder of immersive ad agency Heka World, agrees. “Meta, Google, and Amazon are extremely sophisticated in the data they provide,” he says. “Quick commerce is still growing up. Platforms like BigBasket, Blinkit, and Swiggy Instamart largely offer very simple banner ads, which are just display advertisements. They don’t have predictive analytics the way Amazon does.” Besides, Amazon is an entirely self-serve platform just like Google and Facebook, while others have an army of account managers who sell ad inventory to clients, run the ads, and mail reports on how they performed.

The gap between what you can get for your money on Amazon Ads versus its competitors is still large. Naqvi points out that an advertiser cannot monitor how an ad is performing in real-time on most e-commerce platforms, making it difficult to change a campaign. Most homegrown e-commerce platforms don’t even let advertisers accurately measure the return on their investments. And while Amazon keeps expanding the kind of ad inventory it offers—video, live shopping, audio, and store pages—others are still pushing old-timey banners and ‘sponsored product’ posts, hardly clutter-breaking stuff.

Yet, e-commerce advertising will continue to grow in India simply because it’s harder to get noticed in an online store with lakhs of products on offer. Besides, Amazon Ads are getting more expensive, and advertisers are keen to experiment with cheaper alternatives where they’re already selling their goods.

This is an important time to take stock of e-commerce advertising. This year, Google shut off third-party cookies for 1% of all Chrome users, the first step in its plan to kill third-party access to user data altogether. Apple cut this lifeblood of advertisers in 2022; that year, Facebook said the move cost the firm $10 billion in revenue. Advertisers are particularly vulnerable to platform risk when all their money is riding on two companies growing at a robust pace. Just this month, for example, Meta said it was killing third-party access to Facebook Groups. Several small businesses were built on those APIs that allowed brands to manage pages and private groups of customers, a crucial marketing skill. Meta hasn’t told developers why it is doing this.

This is yet another reminder that a duopoly is unreliable. We need competition, even if it comes from another BigTech firm.

Last Scroll Down📲

Scan the big media headlines from the week gone by

Wait, what?: Amazon Prime Video subscribers aren’t sure why they’re getting ads. Now, they’re suing. A class action lawsuit was filed in a California court this week, alleging a breach of terms of subscription. Amazon rolled out ads on its basic subscription plan earlier this year, offering an ad-free tier for an additional $2.99 a month. The plaintiffs are asking for $5 million in damages and no ads for anyone who subscribed before December 28 last year.

“Fellow kids”: Gen Z creators have become so important to the zeitgeist, that the government wants to start awarding them. India is considering giving national awards to “new-age influencers” across 20 categories, including for excellence in promoting Indian culture. Sounds like a strategy made for an election year.

Picking up the pieces: Zee Entertainment posted its first set of numbers since its merger with Sony collapsed. Its net profit for the December quarter fell 6.4% while operating revenue declined slightly. In an earnings call, CEO Punit Goenka promised to cut costs, reduce redundancies, and hit 18-20% Ebitda (earnings before interest, tax, depreciation, and amortisation) by FY26.

Sunset: The 2000s are considered the Golden Age of American TV. That’s over now. Cable networks and streaming platforms aired only 516 TV shows last year, down 14% year-on-year. Major studios are commissioning fewer titles, and last year’s Hollywood strike delayed those under production.

Meanwhile, viewers are increasingly pirating blockbuster films that hit streaming early, spending little time in theatres, Variety reports. As the number of services multiply and everybody hikes subscription prices, piracy is looking more attractive.

Bowing out: French music label Believe S.A. is leaving the Paris stock exchange, three years after it first listed. At the time, it listed at a €1.9 billion (~$2.04 billion) valuation; today, its CEO Denis Ladegaillerie and a consortium of investors is offering to take it private at roughly €1.5 billion (~$1.61 billion). The label specialises in representing independent, under-the-radar artists. In India, its roster includes rapper Emiway Bantai. It also acquired the vintage label Venus Music in 2021 and renamed it Ishtar.

Trumpet 🎺

Dissecting this week’s viral ‘thing’

Some would say featuring an iconic adult films star in an ad for erectile dysfunction is a little too on the nose. But in a country where sexual health still isn’t openly discussed, getting Johnny Sins in kurta on the set of a saas-bahu soap with Bollywood star Ranveer Singh is probably the only way to get the conversation going.

Bold Care’s ad, largely for erectile dysfunction (ED) supplements, certainly got attention. It has 24.5 million views on Instagram and another 360,000 or so on YouTube. Who doesn’t enjoy seeing a big film star share a frame with an even bigger porn star, one who everyone recognises but won’t admit to recognising?

Men’s sexual wellness (such as ED) is relatively new in the personal care business in India. But brands have long been using sexual innuendo to sell almost anything. Remember the 2007 ‘Yeh Toh Bada Toing Hai’ ad for Amul Macho innerwear, featuring an orgasming young wife washing her husband’s underwear? Don’t forget: for years, we have watched actress Katrina Kaif manhandling bottles of Slice mango juice on TV and billboards.

At least in Bold Care’s ad, sexual innuendo (watch out for a cheesy visual of a key turning a lock) is used to encourage men to address a common health problem. Maybe one day when we stop being so touchy about sex, Indian sexual wellness brands may finally have a chance to treat the subject with tenderness rather than adolescent humour.

I hope in a few years we’ll see something like this ad for Pfizer’s erectile dysfunction pill Viagra, where the problem is framed as a gentle, Pixar-like love story.

That’s all this week. If you enjoyed reading The Impression, please share it with your friends, family, and colleagues. And please write to me anytime at soumya@thesignal.co with thoughts, feedback, criticism or anything you’d like to see discussed in this space. I'd love to hear from you.

Thanks for reading, and see you again next Wednesday!