The year 2008 was one of the most difficult years for the print industry. While input costs, especially the newsprint prices, went up, advertising revenues took a hit. Ashish Bagga takes a peep into the likely trends for 2009.
*The effects of the current economic slowdown will impact the coming year, especially the first half, thereby, limiting the advertising revenue growth to no more than 10%.
Greater synergy and consolidation: Living Media CEO Ashish Bagga.
* We will also see lower pagination with higher cover prices, resulting in lower circulation. This clearly is a consequence of relatively higher input costs, especially the newsprint, combined with lower advertising to editorial ratio. Cover prices will see an upward trend due to a correction in the business model, which has been largely dependent on the advertising revenue stream.
* Valuations will be based on real current profits, and not future earnings. This is a typical trend that emerges when the economy is growing slower and investor and consumer confidence is low.
* There will be greater synergies and consolidation across businesses that hitherto were working in silos. Both the scenarios have their pros and cons but when demand is low and business models are under pressure to perform efficiently, it becomes increasingly important to exploit synergies.
* Rightsizing of human resource will be another key trend. Both the number of employees as well as the cost of employment will be under review.
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* There will be greater accountability on monies spent/invested by advertisers. Given the demand-supply situation as well as rising media costs, publishers will be accountable to a greater extent on the return on investment to advertisers.
* Digital media will eat into the share of print media. This is already happening and with more and more people, especially the youth, turning to digital systems for content, digital media with its relatively low cost structure and performance potential will show growth.
* High engagement media forms, such as consumer and business-to-business magazines, will gain over low engagement print forms, such as undifferentiated newspapers. Magazine publishers with strong print brands will leverage their brands beyond the print across Internet and mobile and will address alternative revenue and profit models.
* Market leaders will consolidate their position further but with lower profits despite a higher market share in advertising spends. This will be because of the changing cost and revenue structure as well as the capability of market leaders to tweak pricing and offer value added propositions to wean away market share from the smaller players.
* With limited access to cash and the high cost of capital, low investor confidence and strained business models, there will be fewer new entrants or launches from the existing players than before and this trend will continue into 2009-10.
Ashish Baggais CEO, Living Media India Ltd. The media company publishes several magazines including India Today and Business Today, along with running news channels such as Aaj Tak and Headlines Today.
This is the fifth in a nine-part series. Monday: Rajesh Jain, MD of Netcore Solutions Pvt. Ltd talks about mobile trends.