Let me begin with emphasizing on the promising story about expected boom in Indian Economy. On 28th August, The Economic Times carried a special edition on new government’s 100 days scorecard. The dominant themes of this short-term review are as follows:
1. India Inc is confident and geared to drive the economic growth .
2. Push to FDI and financial inclusion are likely to brighten up the markets.
3. Infrastructure, entrepreneurship will be the key drivers of growth.
4. And, governance will play its role of enabler.
ET followed this up with another story that certainly makes the air pregnant with optimism: Indian economy set to achieve highest ever growth, in the next two years.
What does this mean for Print Media Business?
As per FICCI-KPMG Indian Media and Entertainment Industry Report, 2013, India is one of the largest newspaper markets with more than 107 million newspapers circulated daily, that accounts for more than 20 percent of all dailies circulated in the world. The market potential is even bigger – the penetration of newspapers into the literate population of 579 million is at 30 percent only. The report suggested few important pointers of growth in this sector: ( Quotes from the report )
• “Traditionally English language revenues have enjoyed a majority share; however, revenues from regional languages (Hindi and Vernacular) will catch up with English by 2015 erasing the historical advantage that English enjoyed.”
• “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. Though the top six metros constitute only 30 percent of the total consumption of goods and services, roughly 60 percent of the media spend is diverted to these top 6 cities . In 2007-09, the advertising rate premium commanded by English newspapers was roughly 10x times that commanded by regional languages. This was because English newspapers were perceived to have better coverage in Sec A, B homes corresponding to consumers with higher purchasing power and concentrated in urban pockets. 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. We expect the ad premium disparity between English and Regional languages to continue correcting as the value proposition of a strong and expanding regional readership base gains momentum in the years ahead.”
The McKinsey Global institute suggest that while the total no. of households in India will grow by about 40 million (from 2015 to 2025); 34 million will come from middle and the bottom of the consumer pyramid. The aggregate consumption is likely to grow by 100%!
If we summarise the key takeaways of these reports and the projections therein, it’s clearly a big case for projected growth of advertising in smaller markets and not surprisingly, Language newspaper segment would be the potent driver of growth for the industry. This trend was evident from the shift in strategies related to product-market combinations. However, the strategic vision and unmatched delivery promise of BCCL Languages (A bouquet of language newspaper brands owned by BCCL), is set to change the tactical and innovation value chain in language advertising business. Let us consider the likely shift in consumption patterns and the resultant need for reach to the consumers. No newspaper company can afford to miss this excitement of delivering value to the advertisers.
The big value-creation opportunity and strategic imperatives
• Much like in telecom, credit cards and travel/hospitality business, strategic alliances are the new realities in print media business. Therefore, media brand A in Tamil, B in Marathi, C in Kannada and so on, will be required to evaluate strategic options for alliances that would go beyond the principles of cartel formation and explore value creation opportunities based on advertisers (marketers) needs.
• Language newspaper brands would require a deep sense of market sensing and ability to innovate to create superior customer value: both for the reader and the advertiser.
• Marketers will be eyeing tier 2 markets for several value communication opportunities such as product trails, discounting through coupons etc. Newspapers with better sense of appreciation for their outbound logistics and market distribution will be more successful in delivering higher value to its advertisers.
• Newspapers operating with a tight cost philosophy are likely to be more future ready. There could a full range of strategic considerations including shedding readership that does not add to firm value.
• Since absolute leadership will be impossible to achieve in a fragmented media space, the key source of competitive advantage will be more about spotting collaboration opportunities for value maximization ; both for the customers and the firm.
• Lastly, the possibilities of regional players forming a formidable alliance on a pan India basis across the print media verticals should be a source of serious worry to the bigger players. They would require tighter control on their resources!