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Times Private Treaty – Pro’s and Con’s ?

By Himanshu Mody on 22 Comments / 3174 views

Hi, 

I got to know about times private treaty via someone. 

 

Times group takes equity in your company for a stake and in return they give you access to their media properties for x amount. 

 

Before I meet them wanted to ask people here if they have experience dealing with them ? and what are the benefits or negatives of a deal like this ?

 

I just met them and they gave me an over view of options one of which basically meant insignifcant stake – 5 % + performance based matrix. 

Where we arrive at a number that my company will achieve because of the media support.  If we do we have to pay 100% of the value of media used [ pricing remains discounted ] , if we achieve less we pay proportionately.  So basically they say that the risk of whether the media will work for my company or not is with them and not on me. 

There were few other options also discussed , but I think structure of deals comes much later. 

 

About Tekno Point 

We offer 3 services  – Training , Interactive and Consulting. 

We mainly need media to communicate about our training services in which we want to promote this following 2 career tracks for the student community :

1.Digital Content Designer  – aimed at non-engineers 

2. RIA Developer  – aimed at BSc IT graduates and engineers. 

 

The objective is to create talent which can design and deliver content on browser , desktop and mobile devices. 

 

What do you think is the best way to reach out to this target audience.  We took part in Times Education Boutique 2011 , it did not yield expected results. 

 

Early response will be really appreciated. 

 

Thanks and Regards, 

Himanshu Mody

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22 Comments

  1. I know this model very well.

     

    Questions (Himanshu please answer them) – then I will reply with additional comments:

     

    1. Do you need PRINT MEDIA for Teckno Point to advertise and get students? Do students like Suresh and Sanket (in my games2win office who are your students) ever read the newspaper or should you be using TARGETED GOOGLE AD sense ads and Mobile ads for them?

     

    2. Your business is a services business. If you adevertize 100, you should earn 101 at least. So why should ADVERTISING BE exchanged for EQUITY?

     

    (In the case of businesses like games2win, where we are building assets and audiences and not cash flow, advertising without paying for it makes more sense)

     

    3. If you get LOTS of ads – will you be able to service the student flows? 

     

    4. TOI demands an exit in the next 3-5 years – that is either via IPO or Sale. Are you prepared for that?

     

    5. Debt or cash borrowed to GROW is always returnable – EQUITY is never returnable. So THINK – IS THIS A P&L investment or a BALANCE SHEET INVESTMENT?

     

    6. How do they VALUE their media? At Rack Rate? or the rate a media firm like Mindshare will buy it at?

     

    7. How do you value your unlisted company??

     

    Tell me these answers and I will give you more ‘ganna’ to chew on 🙂

     

  2. Himanshu – Can you edit your post to descrive your business a bit and the services your provide? I want to throw this question open on my FB/Twitter/Linked in walls…

  3.  

    1. Do you need PRINT MEDIA for Teckno Point to advertise and get students? Do students like Suresh and Sanket (in my games2win office who are your students) ever read the newspaper or should you be using TARGETED GOOGLE AD sense ads and Mobile ads for them?

     

    I am not sure if I need print media so much , but I think they have a lot of media inventory in online properties as well is what I was told.My problem is that I am at mercy of working professionals to realize their need for upgrade and then they come to us. However if you see other retail training institutes , they almost run like a parallel college in terms of number of students. 
    I get requests for recruitment for my students continuously but I am unable to supply as most of our students are company sponsored candidates. Will spreading of word via print media help me to acquire more students is a question that even I do not have and answer for ?  

     

    2. Your business is a services business. If you adevertize 100, you should earn 101 at least. So why should ADVERTISING BE exchanged for EQUITY?

     

     It is more of a cashflow thing , I started with almost 0 money so working capital is always a challenge. And when we have couple of good runs , money was mainly reinvested in business or at times to improve my life. 

     

    (In the case of businesses like games2win, where we are building assets and audiences and not cash flow, advertising without paying for it makes more sense)

     

    3. If you get LOTS of ads – will you be able to service the student flows? 

     

    If lot’s of  ads get us lot’s of students 🙂 Yes we should be able to scale and considerable amount will be spent in acquiring talent to meet my expansion needs.  

     

    4. TOI demands an exit in the next 3-5 years – that is either via IPO or Sale. Are you prepared for that?

     

    I am yet to decide on this.  

     

    5. Debt or cash borrowed to GROW is always returnable – EQUITY is never returnable. So THINK – IS THIS A P&L investment or a BALANCE SHEET INVESTMENT?

     

    I have taken the debt route as of now as I find that more comfortable as well. need more clarity on what you mean by P&L or Balance Sheer investment. 


    6. How do they VALUE their media? At Rack Rate? or the rate a media firm like Mindshare will buy it at?

     

    Discounted price is what I am told. 

     

    7. How do you value your unlisted company?

     

    I have no clue on valuations. 

     

  4. Since most value is in the form of print media -that being the most expensive yet- the private treaty makes a lot of sense for new businesses aimed at the mass consumer market. For the kind of target audience u r talking about u maybe able to capture them better with online campaigns and social media campaigns – don’t think todays youth really read newspapers…u can reach ur youth audience at pretty low costs using the right online campaigns – both traditional seo and banner ads etc and via social media..

  5. The TOI private treaty is a total rip off, its a win – win situation for them, they sell you all their advertisements at rack rate or about 15% below rack rate.  Their online portals as you mentioned above doesn’t match your TG between the age group of 18-25 its niche segment and not sure how much does TOI has reach in this TG both online and offline.  Not to mention after the end of three years, no matter what your ROI on the investment has been TOI can either take a call on IPO or sale of the company. Once you are locked in the treaty, irrespective of whether there are returns or not, breaking the treaty is a hard sell.  

    You are better of using and investing in social media, google adsense , or a strategic performance company like us to reach out and generate quality (read interested) students rather than on TOI treaty.

     

  6. As part of pvt treaty arrangement the media is not presented as advertorials but usually as pure ads.. Their route of selling editorials was under the name medianet and that was where they sold editorial properties like straight answers on bombay times for money … 🙂 pvt treaty is barter of advertising space across their media vehicles for a stake in a start up n then they sell out and make more than the media was worth – this is v good for both parties if the start up needs a lot of mass consumer marketing – which in my opinion with 12 yrs of brand marketing experience u don’t – u can use a mix of online, social media and unconventional promos at colleges and coaching classes to get ur audience..

  7. We do following things online as of now

    – SEO – we rank no 1 for important keywords related to our services and this is where most of the leads come from

    – Google adsense  – from time to time we do campaigns 

    – facebook ads – we created facebook page only recently adding over 100 student testimonials, but have been using facebook ads since long time. 

    – listed on various classified websites both paid [ shiksha, sulekha ]  and unpaid [ clickindia , olx, training-classes, ask edu ] etc. 

    Apart from above online activities , we recently chose outdoor which had great ‘impact’ and also generated good leads for us apart from reinforcing us as leaders to people who already know what we do. 

    We have done workshops for over 1000 students in colleges in last 4 months however this was more of a community initiative from Adobe and we did not do any ‘selling’ in these activities. 

    However we have realized that online media is good for targeting people who are probably already looking for the service. But not sure if it helps in creating awareness about the opportunity. Hence the inclination to include print media. 

  8. Good question Jyoti 🙂 

     

    We already attract students from other cities in India and even working professionals from abroad come to us to do our courses.  We have 2 locations , Mumbai and Banglore.  However we would like to expand to other cities. I have been skeptical about choosing the franchising way of growing business. From time to time people of shown interest in opening tekno point in different cities of India. But I have done nothing about it so far. 

     

    So we continue to focus on delivery and grow organically with word of mouth and incremental help from online initiatives.

     

  9. Wow – Priya Ramani – Editor of the Mint Lounge RETWEETED this query.

     

    She has 23,000+ followers!!!

     

    Thanks Priya!

     

  10. Infact, himanshu, jyoti has made a good point. that would be the perfect way to scale, at minimal cost, and maximum exposure. 

    but i have a question. In training companies, a franchise model , is a highly complex thread, intertwined with IP, strategic entry barriers, and overseer control on which franchise is doing what, is a exorbitantly daunting task. But once mastered, world is at your feet. 

  11. Posting my reply to a facebook comment on this article :

     

    I have been able to service large debt without any trouble so far. And yes the fact that it does not involve any management interventions is the reason enough for me to choose pay high interests rate compared to equity. I am taking another round of debt from my bankers to fund my expansion and working capital needs. I do not need all the money immediately but I have seen that when you need debt badly no one gives it , so I am stocking up when my sugar is half empty 🙂

  12. OMG  🙂  thank u alok for doing what you are doing for entrepreneurs like me.

  13. Anil Malik (via Linkedin)

    hi himanshu,

    Some friends here are confusing Pvt treaty with medianet. its medianet that is paid editorials.

    Pvt treaty is an excellent initiative for SME advertisers who wanna grow business but hav just started. Do private treaty and utilise the media offerings of toi group, that reach your customer. Take ET and TOI brand, bundle with a indiatimes. Go for higher frequency of ads rather than large size ads ( in print). So u spread your communication for a longer period. Take advertising on specialist brands like TOI Education Times , TOI Ascent for branding ( since you wanna reach IT graduates). Maybe add medianet in Pvt treaty deal. Great cashless way to advertise.

  14. Yes Anil ,

    I completely understand the benefits to an entrepreneur from this route of advertising. But does it reach my customer and at what cost is what I have to deliberate on.  Am looking for some inputs from someone who has been there done that with them and has exited to know how the treaty spells out when implemented in action. 

  15.  

    Good discussion 😉 It is required for those who want newspaper to help them taking their venture to next level (like me 😉

  16. I just wanted to add that Times offers a holistic media options [ got a mail listing all the media options ] that includes print , digital , outdoor , tv and radio. So it is not only print.  The question of what is useful for me still remains.

  17. I know but the valuation of their offer is mostly towards the print media. if u want their online and digital properties _ they are not so expensive anyway…

     

    try to figure out with them that if u want plug ins on tv/ radio/ outdoor plus digital media with exposure during their on ground events which are relevant to you – what will be the deal – i still feel – advertising in print is no use for u… though a cover story in education times – their supplement about the kind of courses you offer – unbiased towards you with a mention of all players in the field may help achieve your aim of increasing the awareness for your product and service – though it will do so for all players – but if u r the strongest then u will reap maximum benefits..

  18. i am very confused…. why dont you just VC yourself? Then spend cash the way you want – on print/ toi/ dna/ google/etc etc

  19. I tried to talk to a couple of them at events i attended. No one showed interest 🙂

  20. I totally second Jyothi on this.  Franchising is the only way to grow fast. And B and C Tier India have very strong aspirations that are as yet untapped.

     

    Also, To see if TOI is worth it why don’t you buy a slice of ads on TOI and run a campaign there.  TOI shows Google Adwords so you can run a Display Network placement campaign for the properties there. Also just tell ’em to do a test run for x days and if the result is positive then convert it into an equity deal or else pay for it and walk away. 

  21. Himanshu,

     

    Happy to giving you a first hand perspective, both from a business need side and also as an enterprise that has dealt with Brand Capital (Bennett, Coleman & Co Ltd) 

     

    First of all you must clearly have an established brand building need, there is no point jumping into advertising, when in reality your business may not really require it. Once you are clear on that, then basis your business growth objectives you can decide the scale of brand building activity.

     

    As far as a partnering with Brand Capital is concerned, their core competency lies in brand building and that goes a long way in aiding your business growth, however the enterprises value growth always remains with you to steer.

     

    I must tell you that we have had a good experience. The deal gives you access to the entire range of media vehicles owned by the Times Group. I don’t think any other media group can match their width.

    There is no compulsion on what media properties you choose. You could arrive at the best mix basis your discussions with their team. This option is ideal for entrepreneurs who believe in brand building, yet are unable to scale up brand related activity, due to constraints.

     

    In your specific case, you could always engage with the Brand Capital team on your brand building strategy, if you like what you hear, you could then decide if you want to sign up or not.

     

    Best of Luck

    Neelam Purohit Thakkar 

  22. Hmmmm.  That’s interesting.  Half the battle in the edu market is brand awareness. The actual course content plays a much lesser role especially in the entry level fresher segment.  So if as Neelam suggests these guys are able to give your brand an identity then you should go for it.  The real value of a brand identity is something that not be computed on the balance sheet.

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