Media’s incredible tryst with growth rages on

30 Mar,2012

By a Correspondent

 

The good thing about the Indian economy and its consistent growth story, especially when the economic conditions are favourable, is the stellar numbers it manages to throw up with aplomb. From sectors that have a minimum hold on the market to some of the biggest contributors like Energy, Retail, Services, FMCG, Real Estate, etc most categories go all out in propelling the economy achieve the desired GDP growth when the conditions are favourable. But the true test of a nation said to be making steady progress is when it withstands pressures, especially when the economic conditions are frail and beats the other developed economies in the game of survival.

 

In its annual study titled, ‘This Year, Next Year: Indian Media Forecasts’ released by Mindshare India, the report highlights the tremendous growth story witnessed by the Indian media industry in 2011, safely beating the downfall odds that 2011 was supposed to have cast on the sector. With an AdEx growth of 13 per cent the industry managed to accumulate net revenue of INR 33,388 crore for CY 2011 as against INR 29,609 crore that was reported in 2010. (This year, GroupM has switched to reporting calendar year numbers and not fiscal numbers as has been done in the past to be in line with global reporting. Also, while the numbers have been calibrated keeping in mind the actual performance of the media market, they are net advertising revenues not inclusive of agency commissions and thus reflect what media owners have earned and not what advertisers have spent.)

 

What makes the report a must-read is the prediction for 2012 that boasts of a recovery and increased AdEx spends by advertisers. With net revenue projected at INR 37,397 crore, the media industry is slated to grow at 12 per cent in 2012 driven largely by the mediums of television, newspapers and digital. Topping the AdEx charts for 2012 would be television that is estimated to net INR 16,083 crore revenue at a growth rate of 15 per cent. Adding up to the growth numbers would be the contribution from Print that is estimated to bring in revenues totalling INR 15,250 crore (newspapers + magazines) at a growth rate of 8 per cent. This would be followed by the contribution from Digital that is estimated to fetch INR 1,968 crore in revenue and a modest growth of 30 per cent. At INR 2,277 crore, the study estimates Out-of-home to be the next big contributor clocking a growth rate of 10 per cent. At INR 199 crore and growth rate of 15 per cent, Cinema would continue raking in big bucks and casting its positive influence on the audience in 2012, the report states.

 

Winter

Media                    2008        2009        2010        2011Actuals       2012f

INR mn, net

TV                         89,796       94,133       118,535     140,263                  160,839

Radio                 10,094       10,878       13,250       14,575                    16,178

Newspapers  101,775      102,229     123,790     133,029                144,260

Magazines       8,424         8,151          8,200         8,200                      8,241

Cinema             1,108         1,303          1,508         1,734                      1,994

Outdoor           12,103       13,314       15,710       16,967                    18,409

Retail                 3,000         3,000          3,450         3,968                      4,364

Total                  15,103       16,314       19,160       20,934                    22,773

Out-of-home*               

Digital               7,256         8,768          11,650       15,145                    19,689

Media total    233,555 | 241,774 | 296,093 | 333,881 | 373,975

(* Total Out-of-home = Outdoor + Retail)

 

 

                                                  YOY % Change

                               2008        2009        2010        2011Actuals   2012f

TV                         11%           5%              26%           18%                        15%

Radio                 25%           8%              22%           10%                        11%

Newspapers 3%              0%              21%           7%                           8%

Magazines     2%              -3%            1%              0%                           0%

Cinema            10%           10%           16%           15%                        15%            

Outdoor           -10.2%      0%              18%           8%                           9%

Retail                0%              0%              15%           15%                        10%

Digital               33%           21%           33%           30%                        30%

Media total   8.1%        3.5%        22.5%     12.8%                  12.0%

 

 

Where growth numbers for 2011 are concerned, yet again, the domains of television, print and digital were the most sought-after by advertisers in terms of net revenue and percentage share of media. With a growth rate of 18 per cent television eclipses the other mediums managing to attract revenues worth INR 14,026 crore and a percentage share of 42 per cent. This was modestly better than what it managed to attract in 2010 which was INR 11,853 crore and a media share of 40 per cent. Following close is Print (newspapers and magazines) that have reported a combined share of 42 per cent and revenue of INR 14,122 crore. This is somewhat better than what it managed to garner in 2010 – INR 13,199 crore. When dissected further, newspapers have managed to grow at 7 per cent while magazines have managed to stay unchanged for 2011.

 

Following print is the domain of digital that has reported a percentage share of 5 per cent and net revenue of INR 1,514 crore for 2011. This too is healthy from what the medium managed to attain in 2010: INR 1,165 crore at a growth rate of 33 per cent. With a percentage share of 4 per cent and revenue of INR 1,457 crore, radio is next on the charts recording a growth of 10 per cent for 2011. This is comparatively better than its 2010 estimates that stood at INR 1,325 crore though the growth was far healthy at 22 per cent. Outdoor has managed to attract revenues to the tune of INR 1,696 crore registering a growth of 8 per cent. Under Out-of-Home, retail outdoor advertising managed to attract revenues to the tune of INR 396 crore against a growth rate of 15 per cent. Whereas Outdoor attracted net revenue of INR 1,696 crore at a growth rate of 8 per cent. When combined, outdoor and retail together account a percentage share of 6 per cent. The combined Out-of-home number for 2010 stood at INR 1,916 crore that grew at a rate of 15-16 per cent. Cinema follows next with INR 173 crore registering a growth rate of 15 per cent in 2011. This was better than what it managed to record in 2010: INR 150 crore and a growth rate of 16 per cent.

 

According to the report, the key top categories that have fuelled growth in CY 2011 include auto (owing to various new launches across categories in both 2 wheelers and 4 wheelers), consumer durables and telecom (due to the launch of mobile number portability and 3G services). The study also notes that FMCG advertising has grown at a healthy rate, despite slowdown in spends from a few of the large players. However, growth in FMCG spends has been slower than the market average and has to an extent slowed down a potential more robust AdEx given that the category contributes to approximately 50 per cent of total television AdEx.

 

 

Television:

                                          2008        2009        2010        2011Actuals        2012f

Net Revenue (mn)     89,796       94,133       118,535    140,263               160,839

YOY % change                        11%           5%             26%          18%                     15%

% shares of media              38%           39%           40%          42%                     43%

 

 

With a growth of 18 per cent and 42 per cent share in 2011, the report notes that television will continue to post high growth numbers as its cost-effectiveness and high reach make it the default choice of advertisers in difficult economic conditions. In fact, the first six months of CY 2011 have shown an even greater growth vs. the same period last year for the medium.

 

The factors that have led to the superb growth of the medium include Sports (owing to Cricket World Cup, IPL moving from 60 matches to 74 matches etc.) and Niche channels owing to new channel launches and advertisers’ increasing concentration on high margin categories. Hindi GECs, too, have managed to grow at a fair pace, given the increase in ratings of some of the players and a change in the hierarchy. The regional markets, especially the South, have grown slower than industry average owing to a high base effect and drop in ratings of some of the key players. Similar is the tale with the genre of News (English, Hindi and business) which has been growing at a very slow pace, owing to the slowdown in spends from BFSI players who dominate the genre and a drop in ratings of some of the leading channels of the genre.

 

For 2012, the study notes that the sector will be able to register a growth rate of 15 per cent with net revenue standing at INR 16,083 crore.

 

 

Print:
– Newspapers

                                          2008        2009        2010        2011Actuals        2012f

Net Revenue (mn)     101,775     102,229     123,790    133,029       144,260

YOY % change             3%             0%             21%          7%                                8%

% shares of media    44%           42%           42%          40%                             39%

 

– Magazines

                                            2008        2009        2010        2011Actuals        2012f

Net Revenue (mn)     8424          8151          8200         8200                    8241

YOY % change             2%                  -3%           1%            0%                              0%

% shares of media     4%                    3%          3%          2%                                 2%

 

 

While print did see a comeback in 2011, the first six months of this fiscal have not grown as well at all. While newspapers reported an overall CY growth of 7 per cent magazines were unchanged as they recorded a zero per cent growth. Further, the recent economic situation again impacted the categories that favour print such as education, real estate, retail and to a lesser extent financial services and the automotive categories.

 

In print, while overall volumes of English dailies have increased marginally, key positions such as front page, back page have seen a drop in volumes for most leading publications. Hindi print and regional print on the other hand has been growing owing to, amongst other reasons, new launches by existing players. The overall 5 per cent increase seen is made of very different numbers for different players. Key regional language players will have double digit growths, while smaller players in their markets decline and feel the brunt of the move away from print. The large English dailies will fight hard to stay in the same place.

 

For 2012, a similar sentiment is expected from the medium with newspapers estimated to report a growth of 8 per cent and magazines a bland zero per cent.

 

Radio:

                                               2008        2009        2010        2011Actuals        2012f

Net Revenue (mn)     10,094       10,878       13,250      14,575                 16,178

YOY % change                           25%           8%             22%          10%                     11%

% shares of media                             4%          4%          4%          4%                          4%

 

A mixed CY 2011 for radio. With a growth rate of 10 per cent, radio earned revenues to the tune of INR 1,457 crore. But this rate is less than the 22 per cent it managed to attract in 2010. According to the study, while previous six month periods showed growths of the order of 20-30 per cent versus the same period the previous year, the last six months have seen only a 1 per cent growth versus the same period last year. The same situation is reflected in the advertising volumes. The larger players seem to have chosen to hold on to their rates while the smaller ones have discounted to get more volumes.

 

Going forward, the report states that in the short term radio will not have much growth. At 11 per cent, the medium is expected to attract a stagnant AdEx share of 4 per cent in CY 2012. And while new frequencies will be allocated in April 2012, it will take at least six months for these to be up and running; the subsequent revenue impact will be really felt only in 2013.

 

Digital:

                                          2008        2009        2010        2011Actuals        2012f

Net Revenue (mn)     7,256         8,768         11,650      15,145                 19,689

YOY % change                         33%           21%           33%          30%                     30%

% shares of media                  3%               4%             4%          5%                          5%

 

Perhaps the only medium to be blazing ahead with high growth numbers in 2011 reporting net revenue figures of INR 1,514 crore and a growth rate of 30 per cent. Growth in this medium continues as expected due to several factors. The online populace now stands at 100Mn. New advertisers are coming online and existing ones are said to be increasing their spends. In display advertising, video advertising content is expected to drive growth. Search is the major part and also growing strongly. This is a result of increased consumer activity online as well as the clear response measurability it offers. These 2 components are very “visible” to consumers and advertisers and follow the increase in the audience involvement with the medium.

 

As for Mobile, it is witnessing high growth with 5-600 mn connections. With legislation restricting SMS advertising, mobile internet is what is driving it forward. Some of the factors include…

 

• Superior quality handsets i.e. smartphones which are getting more affordable making it possible for more consumers to view superior quality brand messages. There are estimated 5-7.5 lakh tablets today which are expected to grow very significantly. Costs are also falling down significantly. 3G is as yet expensive for the average consumer so it has not yet become a significant driver. Rich media ads can be served only on smart phones.

• Apps – Since screens are small, people are going through the apps route which makes it easier for consumers to download and consume content like news. Hence print players have developed apps that allow their “readers” to consume their content anywhere. Digital teams are building destination advertising. All players are seeing significant 200% growths in downloads. This also allows more engaging, innovative advertising too vs. the print version.

• Superior Content – From the brands’ point of view, interest increases with superior quality content. Content such as movies/ cricket attract plain display advertising as well as sponsorships. The content providers are themselves making efforts to drive usage because of the revenue sharing arrangements they have with providers.

Growth is driven through visibility in forums and advertiser education. Hence usage of the medium is more a function of advertiser evolution and the ability to use the medium well rather than being linked to specific categories. For 2012, the study envisages a growth of 30 per cent with AdEx share of 5 per cent.

 

Out-of-Home:

Outdoor:

                                              2008        2009        2010        2011Actuals        2012f

Net Revenue (mn)     12,103       13,314       15,710      16,967                 18,409

YOY % change                              -10.2%   0%          18%        8%                          9%

 

Retail:

                                           2008        2009        2010        2011Actuals        2012f

Net Revenue (mn)     3000          3000          3450         3968                    4364

YOY % change                       0%          0%              15%        15%                          10%

Outdoor + Retail:

                                          2008        2009        2010        2011Actuals        2012f

% shares of media   6%               7%             6%                 6%                          6%

 

 

The year has been a mixed bag for the medium of Out-of-home too. Outdoor as a medium managed to record revenue to the tune of INR 1,696 crore and a 8 per cent growth rate. What can be said of the outdoor industry is that it is going through changes of inventory formats, move to smaller towns and players getting more organized. All this is expected to result in growth albeit at lower levels. It is however better than the uncertain future it would have faced in its original form.

 

2010 saw an 18 per cent increase in spends as compared to 2009 OOH investments. This year was a year of recovery in OOH, with spends pacing up in the 2nd half of the year. Interestingly, Real estate emerged as the biggest category investing in OOH for the first time toppling mobile services to a 2nd position.  Media (T.V, Newspapers, magazines and radio) feature among the top ten spenders in OOH. Another interesting aspect which emerged in 2010 was heavy spending by local jewellery and local showroom brands reinforcing the fact that the disposable incomes are actually rising even beyond metros and mini-metros.

 

Another noticeable trend was that spends also increased significantly in malls (facades) and airports. As air passenger traffic grew in India by an approximate 19 per cent, there was a 15 per cent increase in Airport spends as compared to 2009. As more and more Indians are spending more time out of home in tune with their Asian counterparts, increased footfalls at these spaces have led the advertisers investing more in malls and airports. All new car launches had actual car displays at the airports and few key malls.

 

Prior to 2010, an average OOH plan had 5-8 cities and 2010 saw a  paradigm shift with most of the national OOH campaigns across categories rolling out in tier I and tier II cities as well.

 

A trend that was observed in Delhi was that the OOH inventory there changed significantly with the Commonwealth Games. The city now has international OOH formats such as seniors, columns, information kiosks, Pole MUPI’s etc. Municipal Corporations seem to have woken up to street furniture and its role in public convenience, too.

 

Industry operating practices: Till early 2010, there was no formal national OOH Association in the country. Recession, decline in OOH spends in 2009 and few industry malpractices forced the different regional OOH associations to align themselves with IOAA (Indian Outdoor Advertising Association). Some much required norms were laid down in 2010 around:

 

– Credit period

– Timelines for release orders, Campaign confirmation forms (CCF)

– Introduction of formal media agreements

 

Also, the much awaited 2nd phase of MRUC OOH research was not initiated in 2010. In the first phase, Mumbai and Pune were covered and the findings were shared in 2009. It is hoped that the 2nd phase will be initiated soon.

 

With the increase in the number of digital/LED screens at various consumption spaces, the share of Digital OOH increased in 2010. With the inauguration of T3 terminal at Delhi airport and several other big format LED panels coming up, digital OOH spends witnessed an upward trend in 2011.

 

Retail Media

With net revenues at INR 396 crore and a growth rate of 15 per cent, Retail continues to grow steadily providing active platform not only to reach the consumer at the right place but also leave him with a Maximum Impact with innovative form of communication possible at the said destinations. Malls and Multiplex still hold a large share of this space and spends observed for Activation VS Static Branding range approximately in the ratio of 30:70.

 

Apart from Top 6 Metro’s and Tier II cities, Malls and Multiplexes are also emerging rapidly in Tier III cities thereby validating their growth numbers year on year. Eating & Dining as a category also continues to attract advertisers for carrying on tactical campaigns in a controlled manner and register high ITP for their brands.

 

Digital OOH screens as a medium is still stagnant at the growth rate with majority of the spends still with key players like OOH Media, Live Media, etc. Other Retail mediums like Supermarkets & MBO’s continue to grow steadily at around 10–12 per cent with advertisers supporting on ground activation at these destinations for sampling, product demonstration and eventually aid sales.

 

The active categories in this medium have been FMCG, Telecom, Banking & Insurance, Automobile and Entertainment.

 

Cinema

                                          2008        2009        2010        2011Actuals        2012f

Net Revenue (mn)     1108          1303          1508         1734                    1994

YOY % change             10%               10%           16%          15%                      15%

% shares of media      0%                  1%             1%          1%                           1%

 

A medium that is being heavily pursued by advertisers and audiences alike, Cinema recorded revenue of INR 173 crore in CY 2011 registering a growth of 15 per cent. Over time, the medium has been seeing a lot of activity on ground which has significantly impacted the number of active advertiser screens in the country; over a third of the total screens are seeing sustained advertiser interest. National multiplex chains and digital cinemas operating in the single screen space are the key drivers of the industry.

 

National Multiplex chains: The reorganization of the multiplexes sales model is likely to see rate revisions being collectively enforced by the large chains. Further, the expansion of cinema chains into class I towns is helping to drive advertiser interest in the medium at both local retail and with regional / national players. However given the uncertainty on the available content, the study foresees a situation where rates will swing reasonably this year. Digital cinema is catching on considerably and is already contributing to a third of the cinema AdEx now. As a result, the study expects to see a 15 per cent growth in this medium.

 

2012: a year of revival?

As for CY 2012, the study predicts a growth rate of 12 per cent. Trends suggest that while in the near term the industry is likely to see some slowdown in advertising, ad spend levels are likely to increase in the medium term. IT/ITES, BFSI are the sectors most likely to see a negative impact on ad spends while FMCG, auto, pharma etc are likely to revive/ remain strong. The study further notes that big advertisers who have been maintaining margins by cutting ad spends owing high commodity prices, are likely to get back to higher ad spends with commodity prices reducing as margin pressure eases off.

 

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