GroupM Report | No full stops in Indian media story21 min read . Updated: 10 Nov 2008, 11:53 AM IST
GroupM Report | No full stops in Indian media story
GroupM Report | No full stops in Indian media story
The media story in India is very different from that in the West. Traditional media such as newspapers and magazines are holding their own here in the face of new media, unlike in many countries where print has been losing readers, and thereby advertising revenue, to the Internet. Both the newspaper and the television — the two biggest businesses in the media market here — are witnessing high growth rates, and are the primary choice for advertisers.
A comprehensive report by GroupM, the media buying arm of the UK-based marketing communications conglomerate WPP Group Plc., predicts that the Indian media market will grow 20% year-on-year in 2008. The study, titled “This Year, Next Year: India Media Forecasts", examines the trends in eight media sectors. It concludes that while advertisers will continue to give priority to newspapers and television, they will also be inclined to check out the promise of new media, such as digital. “While new media as well as radio would grow very fast in 2008, the numbers would be still small to offer any competition to the bigger segments like newspapers and television. Advertisers, however, would certainly look at these options too," says Vikram Sakhuja, CEO, GroupM. Product innovations, ranging from e-paper versions targeted at non-resident Indians to tabloids focused on metro commuters, are all expected to help keep the newspaper segment growing at 18% in 2008.
While some experts have raised concerns over the implications of an economic slowdown, industry players shrug it off, saying that with growing internal consumption — and, thus, the necessity among marketers to advertise — the media sector will keep growing. “It (the slowdown) may take off a couple of percentage (points) but will not result in a significant slowdown," says Paritosh Joshi, president, Star India Pvt. Ltd. “Categories which are important to us — for instance, consumer goods, telecom, financial products and services—are growing very well this year."
Media buying agency Starcom Mediavest Group CEO, South Asia/South East Asia, Ravi Kiran, sees an upside to a potential economic slump. “In a slowdown, the role of non-mainstream platforms will increase, resulting in higher than usual growth for experiential marketing, consumer and trade promotions and one-to-one marketing."
As for television, overcrowding in the market with the entry of new players is likely to change the dynamics but, overall, the projections for the sector are positive. “The Hindi general entertainment channels will continue to lose market share to newer genres like special interest channels. While the cost per contact will go up as a result, revenues, too, will go up simultaneously," points out Shantanu Aditya, executive director, UTV Global Broadcasting Ltd.
The GroupM report divides the Indian media market into eight sectors — newspapers, magazines, television, radio, outdoor, Internet, cinema and retail media — and examines in detail the various factors at play — the market and its main players, the audience, the product, the growth factors and the comparative trends in 2007 and 2008.
Edited excerpts from the report:
Offering more than plain vanilla
Hikes in card rates despite increased competition; new launches and formats are driving growth
The display advertising component of the newspaper market in India for 2007 was valued at Rs9,290 crore. This is a growth of 18% over 2006 (Rs7,856 crore) as against the 17% predicted by us in last year’s report.
Print, in spite of being the biggest incumbent medium, continued to attract the largest share of advertising spends. The major reason for the revenue growth has been the consistent hike in card rates of major players, in spite of increased competition in the top eight metros and stagnant average issue readership numbers. While this has been made possible due to the continued dominance of publications in their home markets, rate hikes in some part have also been taken to offset their entry into new markets. Print is a classic example of how market share dominance can allow pricing leverage to create a cash cow.
Rate hikes have taken place at both the premium and popular ends of the product spectrum. Expensive English print became even more expensive with leading brands making forays into new markets or improving relative readership contribution from smaller markets. On the other hand, the local retail market continued to strengthen its media investment in regional publications. Here, increased colour options helped publications in improving their yield from advertisers — 60% of total volume consumption in 2007 was in colour as against 52% the year before. Publications are also actively looking at ways to tap into the local advertising market with “Go local" drives by way of new supplements. With restrictions in OOH (out-of-home) medium usage in some cities, publications are increasingly targeting retailers and cashing in on their diverted OOH spends.
Leading publications are also creating new avenues for growth through forays into other languages and formats. Publications are using e-paper versions by targeting the NRI (non-resident Indian) population, which gives them over 75% of the total hits. Publications which promoted their classifieds’ portals as separate entities have succeeded in penetrating segments like matrimonials, real estate and jobs.
Within each language there are one-two players that have seen over 25% growth and others which are closer to 10% levels. Typically, the big players have gotten bigger. While some players have grown on the back of increased offerings and entry into new markets, others have done so on the back of rate hikes and improved colour to black and white ratios.
# Death of the front page as we know it: TOI (The Times of India) has made the half front-page gatefold a regular feature and most other publications have followed suit. It has become a very attractive option for advertisers as well.
# Rise of the tabloid: Even though broadsheet still remains the popular format, there is an increasing accent towards smaller formats. The newly launched Mail Today (joint venture, or JV, between Associated Newspapers Ltd and Living Media India Ltd) and Metro Now (JV between HT Media Ltd and Bennett, Coleman and Co. Ltd) have indicated that there might be a subtle shift towards “tabloidization" of the Indian market. Factors such as increasing cost of newsprint and shift in reader preference (young readers who find newspapers dull have shown interest in this format), might only accelerate this trend.
# Move to other languages: 2007 witnessed the transition in areas such as business papers which have always been considered the domain of the English press. The Economic Times broke the trend by launching a Gujarati edition in Ahmedabad and a Hindi edition in Delhi. Business Standard was not far behind with its launch of Hindi editions for Delhi and Mumbai.
The India reader has never had it better. While two years back everything appeared plain vanilla, today, he/she has a choice of multiple flavours and publishing houses are more than willing to cater to his/her tastes.
# Rising literacy levels and limited access to the Internet will be the key reasons why print will continue to grow. Just as in 2007, this year will see a host of new launches.
# Newsprint prices are on the rise and the next few quarters will continue to see increasing prices and shortages. This will put pressure on margins, forcing publishers to look at new formats/revenue streams.
# Private equity players and bankers will also continue to explore investment opportunities in Indian media houses.
# Growth in transport infrastructure will result in the launch of commuter newspapers across cities. For instance, Delhi’s underground, which did not exist before 2002, will have 100 stations in three years’ time and is expected to carry three million commuters, mostly in the age group of 15-45, daily. This is the target group most coveted by advertisers, and media houses are already launching publications to tap into this bunch.
(HT Media also publishes Mint)
Niche is the watchword here
A spate of new launches is expected, with almost a dozen global players planning India editions
At a time when magazines the world over are seeing a decline in advertising pages and are moving to digital form of distribution, India is experiencing an unprecedented boom in titles. Niche international titles are flocking to India and not to be outdone, local publication houses are launching targeted special interest titles to cash in on the advertisers’ liking for suitable editorial environments for their brands. However, this increase in titles has not resulted in a significant increase in tracked advertising spends, probably because many of the foreign brands that place advertisements in the India editions of international magazines do so as part of regional plans.
Local players continue to have the edge in terms of readership given their long history here. Most new titles have limited paid circulation in the 20,000 range but profess to be quite content with these numbers. Even in the absence of any real readership base, the very equity of these publications and their high production standards have found support from the international luxury brands launching in India. While the high cover prices remain a deterrent, many publications continue to counter it through monthly subscription drives, with freebies thrown in. Last year began with big-ticket announcements such as the partnership between US-based Fortune Money Group and Ananda Bazaar Patrika Ltd to launch the Indian edition of Fortune magazine and US-based Forbes’ tie-up with Network18 for the launch of Forbes magazine in India.
Niche was the watchword as publication houses raced to corner different consumer segments. Titles launches have been across news, fashion, travel and health. Vogue, FHM and music magazine Rolling Stone were some of the well-known foreign titles to make it here.
Indian publishers also seem to have taken a cue from their foreign counterparts. This is evidenced in recent launches of EXPAT Insider(aimed at giving the expat community settled in India an insight into entertainment to lifestyle and people of India), Bride & Style (a wedding magazine), DARE (focusing on entrepreneurship) and TRAFFIC Life (lifestyle magazine for urban Indians).
The market is expected to see a spate of new launches in the coming months, with almost a dozen global players planning to launch India editions. This will also be in part due to Indian media laws, which restrict foreign equity to 26% in the news segment, but allow 100% foreign equity in non-news and non-current affairs speciality magazines.
Market dynamics to decide pricing
Viewer fragmentation pushed up rates but only ingenuity will help channels build a better connect
Television is one medium that has surprised even the media pundits and delivered higher growth than expected. Cricket saw a revival in the second half of last year with Twenty20 World Cup and viewer fragmentation led to rates being strengthened owing to the increasing cost of reaching consumers. As newer channels are launched and fragmentation continues, we expect similar growth in the coming year.
2007 witnessed the launch of over 30 new channels across genres. In a typical scenario, when competition increases, one expects a resultant downward trend in absolute rates. However, this hasn’t happened in India due to three reasons:
# Erstwhile high spending categories like FMCG (fast moving consumer goods) which used to historically drive the growth of TV are now looking at “smart regional investments" which trade off size for cost efficiency. On the other hand, many of the current large spenders like cellular service, mobile phones, automobile and financial services are increasingly shifting advertising monies to TV. Advertisers in these categories value “impact" as much as “cost efficiency" in their choice of media and believe that TV is more suited to their “lifestyle" approach to advertising.
# The year also saw the entry of lot of new advertisers from the sunrise sectors willing to pick up inventory at higher rates. Being nascent categories, these companies could afford to spend way beyond what traditional advertising to sales ratios dictated.
# New channel launches have resulted in further audience fragmentation. Top programmes which delivered 12+ television ratings (TVRs) in the ubiquitous female target group (SEC ABC, 25+ years, cable and satellite households, or HHs) dropped to 9+ TVRs. Advertisers had to buy more advertising spots/gross rating point to achieve the desired reach objective, thereby increasing their investment levels even on existing channels. As a result, the cost per rating point across channel genres went up during the year. Regional/niche channel launches have, however, helped in expanding the market by reducing the entry cost for many advertisers from categories like real estate, retail, education and dot-coms.
The Hindi GEC (general entertainment channel) genre showed signs of decline in 2007 and will get fragmented further with the entry of new channels with “me too" programming.
Kids channels registered better numbers in 2007 as compared to the previous year. The entry of regional channels in this genre will grow the segment further as is being witnessed in the state of Tamil Nadu. Improved content on regional GECs and entry of new channels has resulted in viewers shifting from Hindi in states like Maharashtra and West Bengal.
The year also saw “anti-incumbency" factor coming into play with regard to channel viewership choices made by the consumer. In many genres, existing leaders who continued with their age-old programming concepts were overtaken or challenged by those who offered differentiated content (9XM’s launch in music genre being a classic case). On the other hand, new launches which were clones of existing channels have failed to sustain viewership beyond the initial sampling phase. Tamil Nadu remained the only monopoly market with a single player/group dominating TV viewership.
Existing channel groups on their part have started de-risking by venturing into new markets/genres, thereby creating bouquet offerings. This has enabled them to offer network packages to advertisers and improve their bargaining power with cable operators.
Regional channels embraced reality shows/talent hunts with a vengeance, while the format gained strength on Hindi GECs. Channels continued to charge higher rates for these programmes keeping in mind the production cost and the visibility such big-ticket properties offer. High-yield inventory and auction-like bidding for title sponsorship among competing brands ensures that this kind of programming is here to stay for a while.
Channels continued to leverage the high mobile penetration in the country by making their shows interactive. The improved audience participation opened up a new revenue stream for channels through SMS voting, song downloads, etc. However, this did not translate into increased audience involvement and time spent on the medium did not show any major growth. The spikes, if any, were limited to some programmes.
Interactivity being the cornerstone of a rapidly growing digital medium, ingenuity alone will help channels in building better viewer connect in future.
Cable and satellite HHs have seen a growth of about 6% in 2007 (in syndicated surveys). The average time spent by a viewer remains unchanged at around 150 minutes/day with an occasional upswing brought about by special programming. New channels have largely succeeded only in getting the viewing time redistributed.
Advertising spends on television are expected to maintain similar growth levels in 2008. The key drivers for this growth will be:
# Launch of new channels and the resultant audience fragmentation leading to higher cost per contact.
# Increased launch activity by advertisers in sectors like cellular service, DTH (direct-to-home), personal finance and FMCG.
# Additional advertising money being ploughed into the Indian Premier League.
#New channel launches will reduce the entry cost for first-time advertisers who will increasingly sample the medium.
Broadcasters continue to blame limited market coverage by the Television Audience Measurement (TAM) system for their woes. However, even with an increased sample spread, market dynamics will continue to determine channel pricing.
A dream come true for retailers
The entry of FM channels into smaller markets will increase the reach of the medium
Radio’s share of the total media pie has grown to 3% in 2007. From being an add-on to TV and print, today radio has become the integral part of many campaigns. This growth has also been augmented by listenership measurement, with the three RAM (radio audience measurement) markets accounting for 65% of the total radio spends.
The top categories contributing to the growth of radio are banks, financial institutions, telecom, retail, media (TV channel promotions and films), auto, real estate and IPOs. Radio has become a retailer’s dream come true and almost 70% of the deals are tactical in nature (linked to brand promotion rather than brand building).
Over 240 private FM stations have become operational since Phase-2 of the bidding for radio channel licences. Radio channels with the highest number of operational stations are Radio Mirchi with 32 stations, Radio City with 16 stations, Big FM with 44 stations and My FM with 17 stations.
The sudden glut of radio stations has resulted in similar sounding stations with little variety in content. However, 2007 saw some radio stations coming out with innovations in an attempt to cut through the clutter by differentiating on the basis of conversational language, the kind of songs they played and RJ (radio jockey) speak.
Today, 70% of the total radio revenues come from spot buys and activations (10-12%) and innovations (18-20%) bring in the balance.
The primary target group for radio is the 18-34 age group from SEC ABC. The growth of this medium even in the absence of any measurement system can be attributed to:
# Local nature of the medium—in many cases, the retailer himself would be a listener of the particular station.
# Marketing activities undertaken by individual stations.
The radio market is expected to grow by 50%, touching Rs900 crore by the end of 2008. Phase-3 of bidding for licences is scheduled for 2008 and could bring in a lot of changes in the medium. This growth would be driven by:
# Entry of FM channels into smaller markets.
# The opening up of news and current affairs programming on private FM could change the profile of the FM listener and allow stations to create clear differentiators similar to developed radio markets.
# Multiple ownership of channels in a city, which will help networks in providing station bouquets covering different target segments.
# FDI limit, which is currently at 20% in FM radio space, is likely to increase to 26% in radio channels that want to broadcast news and 49% in non-news FM stations.
Still very much a city phenomenon
It’s a market waiting to take off, with site owners, such as airport authorities, realizing the potential
The Indian OOH (out-of-home) market is expected to cross the Rs1,700-crore mark in 2008. The OOH industry in India is characterized by a distinct metro skew in market spends where the top five metros constitute nearly 75% of the total spends.
The “city beautification" drive by the metropolitan corporations is causing a rationalization of larger format OOH media such as hoardings. Interestingly, there is a rise in development of smaller frequency builder and ambient OOH media such as pole kiosks and bus shelters, to name a few. Add to that the growing realization among site owners, such as airport authorities, on the potential of advertising as a key revenue stream and we have a market waiting to take off in the near future.
Key advertiser categories such as automotive and financial services use OOH mediums tactically to lend support to local retail channels and dealerships. The need of mobile phone operators to penetrate smaller markets where OOH media is more advantageous than print and radio has also contributed to its growth.
The Indian OOH market, currently, has a three-four tiered model that encompasses OOH site owners, vendor/concessionaires, specialist OOH agencies and, eventually, the OOH advertisers.
The medium will continue to grow on the back of changes in inventory. Given its long history, advertisers don’t seem to question its efficacy as they do for emerging media.
OOH advertisers led by cellular operators, TV channels, print media and organized real estate developers are expected to up the ante as the competition, quite literally, spills over to the streets.
The burgeoning of mall spaces as well as the modernization and expansion of existing infrastructure is bound to increase over the next five years when the Airports Authority of India plans to refurbish over 35 airports in India.
Solutions that click with clients
Internet searches, networking sites and mobile services are becoming increasingly popular
The digital media, comprising Internet and mobile, is the fastest growing medium, albeit accounting for only 2% of total media spends.
While most categories are using the medium for lead generation, some FMCG (fast moving consumer goods) and lifestyle brands are trying to also use it for brand engagement.
Technology clients and consumer durables use Internet search as it provides them with consumer leads. Advertisers are moving away from pure display advertising to Internet search as the returns are measurable and, hence, it is easier to evaluate the efficiency of the campaign.
The key players can be categorized into search engines (Google), horizontal portals (Yahoo and Rediff) and vertical portals (Web 18).
Delivery mechanisms used by these portals are keywords, banners, images, links, videos and calls. Some of the commonly used metrics to measure them are cost per impression, cost per click and cost per lead.
Mobiles are gaining prominence with increased priority being given to one-to-one communication. The 3G (third generation) platform will revolutionize mobile advertising.
Sites like Orkut and Facebook have become youth icons. A lot of advertisers used these platforms to generate positive word-of-mouth.
# IPTV (Internet protocol television) services are likely to give a major thrust to digital advertising in 2008.
#Social media is gaining relevance in building communities.
# Advertiser categories likely to increase their digital share of spend in 2008 are technology, travel, automobile and telecom.
# With the ever increasing demand for digital media and increase in spends by top categories, Internet, search and mobile services are expected to grow in 2008 by 60%, 80% and 60%, respectively.
Cost effective and high impact
Advertisers can effectively showcase their brands against an entertainment backdrop
The strong growth of cinema in India in the last five years has implications not just for film producers, distributors, audiences and cinema hall owners, but also for advertisers reaching out to film-going audiences.
Digital cinemas now account for about 15% of total screen universe across townclasses. Since this results in assured print quality and monitoring of advertising has become easy, there is no time delay in the advertising message reaching even the smaller towns.
Cinema advertising is finding easier acceptance in the media plan for many brand categories. Advertisers use cinema to effectively showcase their brands against an entertainment backdrop and access the star power that drives consumers to theatres.
Food and beverage, cellular phones, automobiles and entertainment brands see this space as having a logical fit. Other brands see this as an extension of their television communication.
Categories are attracted to the multiplex spaces for the quality of the TG (target group) and the controlled environment in these spaces. Cinema advertising is a dynamic medium offering advertisers the opportunity to reach target consumers in a distraction-free environment.
Even though cinema has lower reach than TV, it is a far more cost effective and high impact medium.
Shopping for ad space?
Restrictions on OOH and the boom in organized retail are giving a boost to this segment
Organized retail is booming in India and as a result, retail media is beginning to take a more definitive form and has grown by 50% from a Rs150 crore medium in 2006 to Rs225 crore in 2007.
Retail media in India currently consists of traditional options such as facades/show windows, static media in stores such as standees and drop-down banners. In addition to these, retail television and store magazines have emerged as popular mediums. Activation/contests (including kiosk/promoters/sampling, etc.) have become effective modes to increase interactivity and engage the consumer. These options are available in destinations such as malls, quick service restaurants (QSRs, including coffee chains), department stores, music stores, supermarkets, cinema (excluding screenings) and other locations such as consumer durable chains and health and wellness chains.
The prominent categories advertising in this medium are cellular service providers, handset manufacturers, lifestyle, media and entertainment, personal care and FMCG (fast moving consumer goods), banking/finance and insurance and automobiles.
Future Media India Ltd is one of the early movers in this space with a pan-India retail media offering across formats. It is the only one that offers an integrated solution across formats. Other key players in the retail media space are department stores like Shoppers Stop, coffee chains like Café Coffee Day and music outlets like Planet M.
Advertising expenditure on retail TV is expected to increase by 300% by the end of 2008.
The overall industry is expected to grow by 55% with the retail media industry reaching Rs340 crore by end-2008.
Possible drivers of future growth:
# Restrictions are already in place in the OOH space in Delhi and are expected to be implemented in Mumbai by the end of 2008. This could increase the demand for key retail spaces dramatically.
# Use of technologies like video mining and RFID (radio frequency identification) by retailers and vendors would help to customize offers for consumers and also put metrics in place for advertisers.
The report is based on spend data of marketers. The data has been analysed by GroupM software METIS that uses ad volume data and then factors in rate discount based on internal estimates. Live data from group agencies is pooled to arrive at estimates of the actual values realized by media brands.