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What advertising revenue tells us about the newspaper industry

As the literacy rate picks up in parts of the Indian heartland, newspapers are at the vanguard of creating an informed populace.

August 01, 2018 / 10:45 AM IST

Advertisers have not forsaken the print media in its hour of need. A hike in the price of newsprint, among other factors, has prompted newspapers across the country to lay off journalists to cover operating costs. The readership of print publications in India has recorded consistent growth, an anomaly in the global media landscape. As advertising revenue continues to remain robust, a bloodbath in newsrooms might still be far away. But a shift to digital news consumption is afoot, albeit slowly.

According to GroupM’s annual forecast for 2018, Indians are spending more time skimming the airwaves for content. The agency, which tracks trends in the media, has predicted that digital advertising will expand by 30 percent in 2018, to Rs 12,377 crore.

Source: Group M

In terms of ad revenue, digital news organizations have closed the gap on their print counterparts. Advertising in digital outlets has grown by almost 70 percent in two years.

However, television continues to be the preferred medium for promotional activity. Businesses pumped in Rs 27,961 crore by way of TV advertisements. This figure is expected to increase by 13 percent in 2018. Newspaper advertisements are slated to rise by 4 percent.

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The audience for digital content has expanded exponentially over the years, with the prices of handsets and mobile data going down in tandem. The GroupM report identifies video advertisements as an area of growth in the coming year, as bandwidth improves and smartphones become cheaper. Digital platforms may see as much as 54 percent more video ads this year.

However, the lukewarm growth in print advertisements is not truly indicative of readership preferences. Newspapers are inculcating the reading habit in more people than ever before. As the literacy rate picks up in parts of the Indian heartland, newspapers are at the vanguard of creating an informed populace.

The Indian Readership Survey (IRS) 2017 found that the newspaper industry added 110 million new readers between 2014 and 2017. Newspapers in regional languages and those focusing on local news were the main beneficiaries of the uptick in demand.

The challenge for newspapers will be to retain their audience, as readers move towards consuming news on their mobile devices. Many print organizations have a digital presence, but the key driver of growth has been the newspaper business. An erosion in subscription revenue induced by an attrition to digital could also hurt the margins of newspapers.

Source: Group M

The evidence of this is already visible. According to the GroupM report, the share of spending towards print ads has been on the wane. From 31.4 percent of the total spending in 2016, the share of money spent on advertising in the print media dropped to 29 percent in 2017. This figure is expected to fall further in 2018, to a quarter of the total ad spend across mediums.

Only television has managed to keep both viewers and advertisers engaged. As a proportion of the whole, advertisers have spent roughly the same amount of money in buying airtime.

However, the outlook is not entirely gloomy. The GroupM report reckons that the media industry will see an improvement over the past year, touching double digit growth in 2018. As the economy returns to normalcy after the double whammy of demonetization and the implementation of the goods and services tax (GST), businesses are loosening their purse strings to spend more on advertisements.

Subscription growth and better ad revenues are expected to propel the industry to clock 13 percent growth in 2018.
Rohan Abraham
first published: Jul 31, 2018 03:13 pm

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