Up, up and ahead – Media in 2012

30 Mar,2012

Jai Lala & Amin Lakhani

 

As indicated by the report ‘This Year, Next Year: Indian Media Forecast’ by Mindshare, it was a mixed year for Media in terms of the growth story in 2011. The industry per se grew at a rate of 13 percent. In terms of AdEx, and in the first half of the Calendar Year (CY) 2011, the medium of television grew as high as 26 percent, which then slowed down to a rate of 16 percent in the second half. So it would be safe to say here that television grew at an average rate of 20 percent in 2011. Taking off from there, we anticipate 2012 to throw up similar growth numbers. So a 15-16 percent growth is what is being estimated for the medium of television in 2012. But unlike last year, we expect the first half of CY 2012 to show a slow growth while the second half will manage to show a sudden spurt in growth numbers.

 

SECTOR WISE PERFORMANCE:
TELEVISION
If we analyse the properties that will drive the medium of television to deliver such a healthy growth in 2012, the marquee property that takes the cake yet again would be cricket (Sports). Like last year, this year would also witness an equal number of cricket-playing days involving team India. So while we had the World Cup last year, this year we have the T20 World Cup and also the Asia Cup that will balance out for the number of cricket-playing days. IPL will continue to add to the cricket-playing days with 76 matches being forecasted as against 74 last year.

 

The other element that will drive growth for television from a supply point of view is reality shows. Each and every channel has slated a quarter-by-quarter plan around reality shows. Accordingly, the programming content around reality shows will be very high. For example, if a channel in yesteryears used to have around 10-12 percent content around reality, that is changing now to around the 15-18 percent mark. Also, given the high production costs involved with reality shows, they come at a higher price. They thus cannot be pegged at the same value as the other regular shows. While they may not command high ratings, owing to the production costs the expense for the show is definitely higher. The key point here is that all key broadcasters have a dedicated programming budget. Now given the volatility in the economic scenario, none of the top broadcasters are bringing down investments around non-fiction shows. If you look at the factors driving this trend the first thing that comes to the fore is the change in pecking order of GECs. It has moved from a 3-channel scenario to a 5-channel scenario. Till until last year you had Star, Zee and Colors vying for the No 1 slot and now it is Star, Sony, Zee, Colors and another new channel from the Star stable – Life Ok – that is also fighting for the top slot. Given the highly competitive scenario, none of these players are slicing their budgets; they are actually increasing their spends around non-fiction programmes. Even a player like Zee – it may do fewer number of reality shows but it will do them on a grand scale. In fact it is investing heavily behind acquiring big movie titles in the market. So these players won’t cut down on their expenses as they want to sample new audiences and they want to create stickiness. A recent example is Maa Group, which is said to be launching a channel that’ll be dedicated completely towards non-fiction shows. There are several such examples that can be cited here that shows non-fiction is here to stay. Even if seen from an advertiser’s standpoint, most big launches that have taken place in 2011 have been good launches. Nobody has compromised on costs for launching their product. Marketers are not shying away from need-based advertising; they are probably trying to shy away from unwarranted advertising.

 

The other important factor that will drive television growth in 2012 would be regionalisation – thrust around this area will continue to see a rise. While we witnessed the advent of this phenomenon in the last 2-3 years, 2012 would see regionalisation completely taking off. So while the Southern markets will continue making an impact, the markets of Maharashtra, Kolkata, etc will also kick off in a big way. Also, many channels have come up in the Hindi heartland, catering to niche audiences. Another important trend that will drive the growth for television is specialisation, more so in the area of niche channels. To put this in perspective, what is being observed currently is that the long tail has been growing spontaneously. Which means that every genre is witnessing further sub-categorisation. For example, first we had the infotainment genre which has now been sliced further into food, travel, adventure, wild life etc. In fact there is further slicing that is being witnessed within these channels as well. This has led to specific channels being launched for specific audiences, indirectly leading to a long tail. So it results in media budgets being sliced further so as to enable marketers to reach out to niche audience sets. So specialisation would be another key avenue for players to tap niche markets and audiences.

 

Another trend that will foster the growth of the medium of television is DTH. As is known, DTH has crossed in excess of 30 million homes and will continue to report healthy numbers going forward. While DTH provides the option of a more personalised mode of advertising, it also caters to a certain kind of audience. There are two sets of audiences that DTH caters to: one is where somebody prefers better quality in terms of viewing pleasure and the other is where cable is not reachable. So DTH is catering to two ends of the spectrum, thereby fuelling the growth of the medium. Another phenomenon that’ll blast full-throttle in 2012 is HD. A lot of channels have already launched their feeds on HD. It’s for the advertisers to cash in on the benefits of advertising on HD. The current estimate of people with HD-enabled boxes stands at 1 million plus. In fact, this number will swell up by a huge margin in the next 2-3 years.

 

As for the sector-wise contributions for 2012, we expect the auto sector to bounce back. This is on the back of multiple car launches that have been slated for 2012. Even FMCG will witness a strong bounce-back. Other categories like finance, IT & ITES, retail, etc will continue to perform in a similar fashion as witnessed in 2011.

 

PRINT
The year 2012 is expected to be a big one for players from the print medium. The primary reason being elections – be it state level elections, municipal level, or any other. For example, in a city like Mumbai political parties themselves have realised the value of associating with print players to further their popularity amongst the masses. Even a political party like Shiv Sena is spending a good amount of money in coming up with supplements to distribute among the people. So the little lacuna support that print as a medium desperately required will come in from elections. Another sector that used print brilliantly in 2011 was auto. Thus innovations will continue to happen on a large scale. If not as a rival medium, print will continue to play a big role as a complementary medium to television.

 

When analysed separately, magazines as a medium had witnessed a drastic fall in the last three years. But the recent past has seen the advent of speciality magazines which are boosting the fortunes of the medium. These are subscription-based and cater to niche audiences, thereby managing to attract the attention of the advertiser as well. So while the mainline titles are seeing a dip the niche magazines are witnessing an upward swing. Growth-wise, the medium of magazines will remain stagnant but the shift from general to niche will be the order of the day.

 

As for newspapers, we anticipate a growth of 8-9 percent this year. This is due to the fact that there is going to be a certain amount of demand through elections, bounce-back of certain sectors like auto, etc. Real estate is another sector that has suddenly jumped on to the newspaper bandwagon and is spending hugely on supplements/editorial booklets. A phenomenon that is being witnessed where print is concerned is the geographical venturing that players are getting into. Every publication house of today is trying to become a national player. Players like Times of India, HT, DNA etc have expanded their base across other cities and towns today. Even regional players like Rajasthan Patrika are gaining ground in other regional markets as well.

 

The other rage that is fast picking up where print is concerned is the e-paper. Most newspapers are providing content that is conducive to the mobile and online world. A large number of advertisers have also hopped on to that medium and the numbers will grow only further. This is a trend that is being spotted on a large scale in the global markets as well.

 

RADIO
The biggest event that will change the fortunes of the radio industry in 2012 is Phase 3. It will obviously help radio owners to drive some incremental revenues. Also the new revenue-sharing rule in favour of radio has helped the players to reduce costs and make better money. It has helped them reduce their bleeding numbers significantly. The entire activity around phase 3 will depend upon how much revenue these players can create from local markets. Sector wise, the biggest spender on the medium will continue to be the retail advertiser in these new local markets. That’s because they will have an alternative medium to advertise on apart from the local newspaper that they advertise on more regularly. As for the metros, the larger players have managed to do well. The challenge is for players with just 4-5 stations to perform and compete with the bigger players. But there are corrections that are being carried out and we could possibly look at a revival in 2012.

 

As for the challenges for radio, one of the things that will continue to hurt radio is measurement. While radio has managed to penetrate into smaller cities and towns, the measurement is still restricted to the 4 metros by RAM. This issue needs to be sorted on an immediate basis given that there is going to be wide scale penetration across India. Where growth is concerned, 2011 was a stable year for radio and we expect a similar environment in 2012 as well. Overall, we anticipate a 10-11 percent growth for the medium in 2012.

 

Sector wise, retail will continue playing a big role. They will be backed by education, media and even auto. But being a highly localised medium, it will largely be retail driven.

CINEMA
Could be categorised as a medium that has been witnessing a golden run where growth is concerned. The only factor that will drive growth for the medium is content. If there is good content available, people will come to watch it on the screens, and not vice-versa. In fact 2011 was a year that witnessed big-ticket blockbuster movies that managed to set the cash registers ringing. This has forced even the single screen owners to realign themselves. The other factor that will propel the popularity of this medium is the increased penetration of malls and multiplexes across metros, cities and small towns. Digitisation is another factor that is helping the medium find acceptance with the masses. For example, to do a reverse telecine was a nightmare earlier. It was a task that was tedious and took an invariably long time to execute, but with digitisation, the entire process has been simplified. Also, what is fuelling the growth of cinema is that if people want to be a part of cinema which is niche in nature they can do that or if they want to be a part of mass cinema, they can do that. And given the ease in digitisation, it is now possible for advertisers to go only in Punjab and do your advertising or go only to Pune and do your advertising. So if an advertiser wants to give an impetus to a certain market or if he wants to do a pressure test in a certain market digitisation enables him achieve that rather easily. This is another factor that is leading advertisers to head back to the theatre as a favoured advertising option.
The growth projections for this medium would be in the range of 14-15 percent for 2012. Sector wise, the trends are quite similar to that observed on TV. So categories from across would continue to pursue cinema as an advertising option.

 

OUTDOOR
The biggest thing that has happened to the industry is the formation of an official body for Outdoor. The biggest threat for Outdoor was the transparency of the medium itself. Today the reality around the medium is such that the moment you engage a client in a conversation around outdoor they prefer to stay away from investing in the medium. The formation of the IOA would lead to standardisation of rates and other operational modalities that will help push for more research into the medium. This effort by the industry would be recognised by clients who will go all out and invest in the medium. Marketers want to use outdoor as they provide a good imagery and high visibility. It has even allowed for newer and better innovations to help advance the sector. Also, outdoor panels, screens, LEDs are now shaping up a new revenue stream which is now getting separately classified as retail. So the medium has come into its own and will continue to grow at a healthy rate.

 

If we club outdoor and retail activity, they both are interdependent on the other. Retail activations allow advertisers the chance to mingle and talk to the customer in a more personalised manner. Even in the case of Outdoor, earlier it was just the vinyl formats but today you have large and static LCD screens that allow you to do more. If you look at the phenomenon outside urban markets and into smaller cities and towns, Outdoor has always played a superior role. These are centres where the opportunities are far more, cost per consumer is very less and archaic modes of display like wall paintings still command a high presence there.

 

We are predicting a double digit rate for both the mediums in 2012.

 

-Jai Lala and Amin Lakhani are Principal Partners,

The Exchange, Mindshare

(As told to Johnson Napier)

 

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