Regional print media – Part 2: Flexing advertising muscle and reach

Despite the increasing media fragmentation and growing onslaught of digital media, regional print media remains buoyant and still commands a significant share of the ad spend pie. In the first part, carried yesterday, we had explored the factors that have contributed to the strong performance of the regional print media sector.

In the second and concluding part of this article, we take a look at the advertising revenues, response from brands, inputs from media experts and much more.

The business from brands

When asked about what the response from brands and advertisers had been like in the last 4-5 years, Ajit Nair, National Head - Advertisement, Lokmat Media, responded, “We have seen strong growth in our advertising revenues as brands are increasingly using our platforms to penetrate deeper into the Tier 2 and Tier 3 markets. The ability of the medium to provide innovation and customisations seem a very cost efficient model to target for new brands targeting Tier 2 and 3 cities.”

Pradeep Dwivedi, CEO, Sakaal Media Group, remarked, “Regional is the new national in terms of consumer spend propensity and hence, gaining the attention of marketers. As metro markets saturate with hyper competition, it is really the Tier 2 and 3 cities that are offering sustainable avenues of growth and market expansion for most corporates. As readers become more sophisticated in their understanding and demands of editorial content, they also move up the value chain as a consumer of various products and services. The quantum of innovations and aggregate adex is ample evidence of same.”

“The response from brands and advertisers for regional media is very good. This can be proved by looking at the adex data. Even FMCG brands, which used to take only TV, are now spending more on print,” said K Uma Shankar, Vice President, Marketing – National, Prabhat Khabar.

“With the mounting trend of a multitude of newspapers around the world downsizing or transitioning towards digital media, the newspaper space in India is still holding strong,” observed George Sebestian, Senior General Manager - Marketing at The Mathrubhumi Printing And Publishing Company Ltd. According to him, over the last 4-5 years, there had been a subsequent shift by advertisers to regional dailies, advertisers had started to increasingly look at opportunities presented by Hindi and vernacular print media segment as they directly reached customers in prospering Tier 2 and 3 cities/ regions of the country. “The increasing size of the middle class that speaks different languages has led to brands eyeing smaller towns as prospective growth markets to increase their focus on localised messaging in regional languages,” he added.

Sectors increasing ad spends on regional media

Advertising from sectors such as auto, jewellery, textiles and education have been strong for Malayala Manorama and continue to be so. “With the Manorama daily reaching 33 per cent of Kerala, which is the highest reach for any daily in a single market in India, advertisers are sure to get good response for their advertising campaigns with us. Hence, advertisers are sure to get response through our newspaper,” said Varghese Chandy, Vice President, Marketing, Adverting Sales at Malayala Manorama.

However, according to Shankar, regional has retained all the sectors which are typically for print and also seen an increase from sectors like FMCG and e-commerce.

For Pradeep Dwivedi, almost all key advertising categories like auto, consumer durables, electronics, FMCG, real estate, services, education, etc., are increasing their spends on regional media. He added, “Even digital-led categories like e-commerce and app-based services like cabs, travel, holidays, etc., actually spend higher on print across Tier 2 and 3.”

“Indian print media continues to feature prominently in the advertising plans of traditional sector advertisers (FMCG, automotive, durables, financial services, etc.),” pointed out Sebestian. “There is a growing focus on Tier 2 and 3 cities, which is likely to drive advertising spends in the coming few years too. According to KPMG 2016 report, non-metro cities contribute as much as 35 per cent of the total sales in Indian luxury brands and going forward, the print ad spends are expected to grow at 7.8 per cent in 2016.”

Owing to the massive digitisation, advertisers have moved to TV and digital for reaching out to the right consumer at right time. As per a report published in yourstory.com, the parallel products like advertising, classified ads, and job notices are also being switched to the Internet, bringing substantial pressure on revenues of conventional media houses.

What media experts say

Adgully caught up with Ashish Bhasin Dentsu Aegis Network and Neelkamal of Madison India to talk about the significance of regional print media in their marketing mix strategy and ad spends in language print.

According to Neelkamal, Head of Buying, Madison India, regional print media plays a very important role as it has the critical mass readers across most markets.

Ashish Bhasin, Chairman & CEO South Asia Dentsu Aegis Network, observed, “It is growing in Tier 2 and Tier 3 cities and in smaller towns because of 2-3 reasons: one, there is the Seventh Pay Commission, so generally consumption in Tier 1 and 2 towns and rural is expected to go up. So, it will gain an even more important role. Secondly, literacy levels are rising, so the readership is rising in smaller towns where regional print operates; and thirdly, people are getting particularly more aware, they are more interested in news in and around their own areas, which the regional print covers in a better way. My thinking is that probably regional print’s growth will be better than English print’s growth going forward.”

Increase in ad spends in regional media

When asked, whether his agency had increased its ad spends in regional media in the last 4-5 years, Bhasin replied, “Yes. It has been increasing every year. Generally print hasn’t been a very fast growing medium. Digital has been the fastest growing medium. Television has grown faster, however print has not been growing as fast. But within print, regional print has been growing and doing relatively well. India is one of the few countries where print is still growing. In most markets, print has been actually in a state of decline. In India, it is continuing to grow, albeit at a lower rate.”

Giving more insight into print media’s growth, Bhasin said, “Roughly, print has been growing at 7-8 per cent, but it varies year-to-year. This year, we expect it to grow around 7-8 per cent. Regional print will probably grow a little faster, while magazines, etc., will grow much slower. It will not be significantly different in terms of growth. I am talking in terms of growth in advertising, not in circulation.”

Neelkamal commented, “Regional print media’s reach has been on the rise in the last few years as many new editions have also been launched and so our spends have also gone up.”

Regional Vs English media as advertising vehicle

“Depending on the objective of the campaign, role of regional and English media would change,” said Neelkamal. “While the strength of English media lies more in 10 lakh+ towns, regional media reaches out far deeper across markets. Due to its wider and deeper coverage, regional vehicles offer much more efficient reach than English vehicles. For example, regional can offer 2-5 times better efficiency depending on the target audience and the market.”

Ashish Bhasin doesn’t think that there are obstacles as such for the regional print media. “Generally, the growth of print by itself as a medium, whether regional or English, is slowing down because of digital and so on. However, I still feel that regional print particularly continues to do well. So I don’t see any obstacle, I think the festive season would be the key to determine as far as 2016 is concerned. If the season goes well, then it will be a good period for advertising in general for regional print. If it doesn’t go well, then we have a problem in hand,” he said.

We also caught hold of a couple of media observers to shed some light on the investment trends by PE firms in regional media, implications of FDI cap and more.

Nripendra Singh, Director, Business Advisory Services - Media & Entertainment, Ernst & Young LLP

What is keeping the regional media buoyant? What are the key growth drivers?

Emerging regional markets provide new opportunities for media companies to expand into. The increasing size of the middle class audiences in India which speaks different languages has encouraged media companies to increase their focus on localised messaging in regional languages. In TV, as the quality of content for regional entertainment is going up, so is the investment made by advertisers. Today regional entertainment forms approximately 30% of the share of Indian broadcast viewership and in the coming years this share is only expected to grow as consumer preferences move towards regional content.

Investment in regional media by PE firms and strategic investors

There has been a number of regional acquisitions by the larger groups but nothing of significant importance directly by PE firms. National print / broadcast players are deepening their reach into the regional space through M&A. Some of the large deals that took place include:

Rupert Murdoch’s Star India last year took over Maa Television Network which runs 4 channels for movies, music and entertainment. Maa has a 26% market share amongst regional channels.
- Viacom 18 completed a merger of Prism TV Private Ltd. Thereby adding 5 regional channels- Colors Kannada, Colors Marathi, ColorsBangal, ColorsOdiya and Colors Gujarati, to its existing offerings.
- ZEEL acquired 100% stake in Odiya channel operator Sarthak Entertainment Private Ltd. Sarthak TV is the leading Odiya GEC channel and would add to Zee’s already existing strengths in the regional market namely: Zee Marathi, Zee Talkies, Zee Bangla, Zee Bangla Cinema, Zee Telugu, Zee Kannada and Zee Tamizh.
- Dainik Jagran acquired NaiDuniya

Regional print publications as advertising vehicles

Brands are increasingly becoming aware of the potential that regional markets hold in the country. Increasing per capita income, internet and smartphone penetration and the trend towards premiumisation has made the regional markets increasing attractive for advertisers. Apart from large national brands, regional FMCG and consumer goods companies are also gradually shifting spends towards regional publications as it enables them to reach audiences in their target regions.

FDI cap in print media - implications for regional media

The government has approved 100% FDI through the direct route in other segments of the media industry such as television broadcast services. For print media however, this cap remains 26%. This could hinder the growth of print publications in the country as PE firms who wish to invest in the companies will not be able to exert any pressure on them. The suggested 49% FDI would have allowed the investing firm some amount of control over the publications. However, since regional print is growing at a faster rate than English print, PE firms and strategic investors may find it comparatively more lucrative to invest in regional media.

Profitable business models in regional media

As referred to above, the regional media be it for broadcasters or print companies is thriving. Broadcasters are reporting an approx. ~30-35% EBITDA on their regional channels. Print companies with their limited penetration are driving deeper and closer to consumers/readers. The key to the success largely depends on owning/knowing your reader/viewer/consumer and augmenting his needs by print / tv / radio / digital, etc.

Shedding some light on the issues facing regional print media growth, AS Raghunath, Media Brand Consultant, shared, While newspapers have shown excellent growth, improvements in content, printing, distribution etc., but the advertising rates offered by advertisers and agencies, especially those from the national circuit are reluctant to improve their offering. The language print media has been showing exemplary growth in smaller towns and in the rural country side regions. This as far as subscription is concerned. But the research industry allocates very feeble sample size to places where the bulk of readership is based for the regional newspapers.

Despite the fact that regional languages command better readership in comparison to English, advertisers have had a higher preference towards urban geographies with English newspapers catering primarily to SECA/B households as target audiences. The ad fraternity still believes that SEC AB buys everything that India has to produce! While the highly fragmented regional budgets do come primarily to the language dailies, but the advertising share from the national advertisers/agencies still remain confined to English dailies as if only English readers living in urban area buy everything that India has on offer. 

Tier 2 and 3 cities witnessed higher advertisement spends in consumer sectors in regional languages and local newspaper editions. Regional language dailies also demonstrated increasing coverage in Sec A, B homes while holding on to their broader readership bases in semi-urban and small towns. Going color was another strategy to increase advertising premiums by regional players. We expect the ad premium disparity between English and Regional languages has to be corrected now as the value proposition of a strong and expanding regional readership base gains momentum now than ever before. Newspaper industry doesn't confine only to premium English brands.