Cost cut & ad volume growth to propel print’s recovery post Covid’s second wave
Lower pagination & contracted inventory have helped the medium rationalize costs. Also, businesses opening up after the second wave has led to increase in ad volumes
With relaxation in lockdown rules across many states, print media is gearing up for recovery in the second quarter of FY22. According to experts, while rearranging operations and optimizing costs is helping the sector bring back stable toplines, it is the rising demand of the printed word that is the main driver of the market.
Experts also suggest that ad growth in FY22 in the print ecosystem will majorly be volume-led with no major hike in ad rates expected in the next two to three months. While April saw a drop in numbers in the wake of the second wave of the ongoing pandemic, according to latest TAM AdEx report, during May'21, ad space in print grew by 53% compared to May'20 and overall ad space per publication rose by 7% in June'21 over June'20.
Recovery is also being led by reduction in costs. Lower pagination and contracted inventory has helped the medium rationalize costs. According to market and consumer database company Statista, India imported newsprint valued at over Rs 49 billion in the fiscal year 2020, a decrease from the previous year’s Rs 68 billion. With newsprint prices poised to rise up to $730/tonne by Q3, clearly publishers have been strategizing accordingly to minimize losses.
Talking about recovery, Linu John, Vice President, Media Planning, Zenith said, “This medium has definitely seen a decline with the onset of Covid. But the need for print is very much back this year with multiple categories increasing their investments. Hence the demand is 30% higher than 2020. Though volumes on the medium is directly linked to the on-ground situations like lockdown and opening up of businesses, we are expecting stability in the medium to amplify in the coming months.”
“Categories like durables, e-commerce and jewellery are leveraging the medium and have increased their visibility in print for immediate sales (compared to 2020). Categories like telecom, handsets, BFSI and FMCG have got an upper hand during the period and hence have increased their spends in January-May period in 2021 as compared to last two years,” John said.
According to TAM, coaching/competitive exam centres category topped the list during both June'21 and May'21 while hospital and clinics were also among the top 5 categories during both the periods.
For most publishers, the main focus area is to bring back volumes in FY22 and cash on pent- up demand in the market.
“While it is true that the second wave of Covid-19 has affected the momentum of economic recovery, with the number of cases decreasing and states doing a calibrated removal of restrictions and faster vaccinations, the economy has begun the recovery journey. The pent-up demand from the lockdown imposed in the second wave coupled with the government's stimulus package is likely to fuel a stronger economic recovery,” said Girish Agarwal Promoter Director, Dainik Bhaskar Group.
On the circulation front, while the print industry as a whole experienced massive disruption, newspapers continued to remain relatively unfazed during the second wave. The circulation numbers remain largely intact, with an improved reader engagement.
“For most of the markets for Indian language newspapers, the recovery process began quickly after the first wave. The non-metro tier II and tier III markets, which are also a favourite for advertisers, have been a major driver of print growth. Furthermore, print media’s ability to reach wider audiences, ease of carrying out geo-control campaigns and tailored communication with category-specific audiences coupled with its higher credibility quotient, provides a lucrative proposition to the advertisers,” he added.
Even as publishers closed the final quarter of FY21 with drop in numbers, overall cost control helped them prevent huge losses. Cost control measures for DB Corp, for instance, helped them in a sharp margin expansion year on year. The company has achieved cost saving of Rs 195 crore during FY21 in the process.
Analysing FY 21 Q4 numbers of Jagran Prakashan, a report by ICICI Direct Research said, “We note that in the base quarter, the impact was severe due to fear psychosis of newspaper carrying virus, which was later dismissed by the Health Ministry. Circulation also improved to 80% of pre-Covid level now from the trough of 40% in the past. Going forward, we believe that gradual economic recovery due to possible accelerated vaccination drive and resumption of spending by some key sectors like auto, real estate and tailwind from UP election would help print advertisement. We are baking in 23.5% CAGR print advertisement growth over FY21-23E to Rs 1080 crore on a depressed base while circulation growth is expected to grow at 16.5% CAGR over FY21-23E, largely due to a recovery in circulation with cover price increase only in FY23E once the volumes stabilizes.”
Recovery is gaining momentum in the southern markets too.
According to MV Shreyams Kumar, Managing Director, Mathrubhumi, the impact had been milder than last year. “With a sizable portion of the society getting vaccinated, and factors such as good monsoons and festival season around the corner by end of July/ beginning of August, the print industry will surely move towards a growth trajectory,” he said.
“Kerala is considered to have the highest literacy state in India, with 87% reach, so there is a high affinity towards print in Kerala. The Malayalam newspapers are the primary source of information for people in the state, and advertisers are well aware of this fact. Any new product launches, or campaign planned is first advertised in regional dailies followed by other mediums. Mathrubhumi has a legacy of 98 years and is backed by the credibility of the medium. The reach of print has been exceptional and we offer advertisers a 360-degree integrated plan to reach out to their target audiences and keep ourselves abreast with the changing times and changing preferences all the time,” he added.
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