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‘News Channels revenues grows faster than viewership’ says TAM study

12-December-2002
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‘News Channels revenues grows faster than viewership’ says TAM study

For the last year and a half and especially since the September 11th Attacks, News Channels have been the topic of hot debate. Advertisers are asking their media planners how much money to put behind News, on which channels and across which dayparts.

Obviously this means more monies coming into News channels. Now here is where the story becomes interesting! Should the rewards be proportional to the success… or more? If the rewards are proportional, then for every one percent increase in viewership share, there ought to be a one percent increase in revenues. However, what we see is that the rewards in this case have been greater than the success itself as is seen in the chart below.

As one can see from the above chart that Revenue shares have moved up faster than Viewership shares. What’s interesting to see is that the surge in greater monies always happens about 3 to 4 weeks after a major event (See the increase in revenue share after Gujarat Earthquake and WTC bombings).

In fact, if we plot average growths for the last 2 years the same pattern gets highlighted (shown in the chart below). While viewership share has moved from 1.9% to 3.7%, in the last one & a half years, revenue share has jumped from 8.6% to 12.2%.

So what does the fact that Revenues are growing faster than Viewerships point to? Does it mean that Media Planners have over-reacted? Does it mean that the hype surrounding News Channels has propelled Advertisers to have a mass hysteria to make a beeline for News Channels in the media plans? Perhaps not. In fact, after speaking to some of the most scientific media planners and advertisers who have been buying a lot of News Channels, we have come to the conclusion that News has a tremendous potential to generate incremental reach at a very small cost. It gives an advertiser’s media plan a big thrust in terms of newer audiences though at the same time keeping costs under check. This fact is validated through an Optimiser query, where the Optimiser sucks in News Channels in a big way. It also gets validated in the chart below where you can see the close correlation between increase in News loyalists and increase in News Channel Revenue Shares.

Now that its established that News channels as a group have been making more and more money, it will be interesting to see how the 5 News channels that are scheduled to be launched in the next few months shape up the landscape. Surely, the spends of News channels to promote themselves on Press, Outdoor and Radio will reach a new pitch. Already TV Channels spend close to 100 Crores annually on Press (see previous TAM ADEX Newsletters). Within that, News Channels spent more money on press last year than Sports, Music and Movie channels as is evident from the chart. We will have to wait and watch how this shapes up in the next few months as some new channels get launched in this category.

Atul Phadnis, director, S-Group, TAM Media Research
(All figures used are courtesy TAM Peoplemeter System and TAM ADEX. All the viewership analysis has been done on CS4+)

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