Newsprint price spike may burden print industry with over Rs 4,600 cr additional cost
Print industry has been hit by an increase in raw material cost, downfall of India rupee against US dollar and China imposing a ban on import of paper waste
Despite the death of print media in most parts of the world, newspapers in India have not only managed to survive but have also shown growth. However, with the recent spike in newsprint price, some feel the doomsday might not be far. The rise in newsprint price would mean an annual burden of more than Rs 4600 crore for the print industry in India.
Why the Situation?
With an increase in raw material cost, downfall of Indian rupee against US dollar and China imposing a ban on import of paper waste, the newsprint price has sky-rocketed. The situation looks worrisome for the industry because newsprint, which is the major raw material and represents nearly 30-40% of the overall spend, has seen a spike of over 50% in its price.
Last year around the same time, the rate of US dollar was Rs 64.16 while today it is Rs 68.62. In August 2017, the price of newsprint was around Rs 36,000 per tonne, while now the price has reached around Rs 55,000 per tonne. Annual demand in India for newsprint is around 2.6 million tonnes. The difference in these prices show an over 50% hike in the price of newsprint. At this rate, the industry is estimated to lose more than Rs 4600 crore annually (some waste newsprint is returned by the publishers).
Pauly, General Manager, Metro Vaartha, a Malayalam language daily newspaper published from Kochi, told exchange4media, “Previously, the price was around Rs 36-37 per kg, now it has increased to Rs 55-56 per kg. Imported newsprint price in August 2017 was Rs 35,000/tonne, which has increased to Rs 55,000-56,000k/tonne.”
Speaking about the situation the industry is stuck in, Jwalant Swaroop, former CEO of Sakal and Lokmat publications, said, “With dollar becoming expensive, those using more foreign newsprint will be impacted adversely. Largely, English dailies.”
The impact of newsprint price was also quite visible on HT Media’s Q1FY19 statement that showed a net profit drop of around 86%. “Our operating performance was also impacted by higher newsprint prices,” Shobhana Bhartia, Chairperson and Editorial Director, HT Media Ltd and Hindustan Media Ventures Ltd, had said in her statement.
In addition to the spike in newsprint price, lack of clarity on the actual user of newsprint in India has also created an issue.
According to a member of the Indian Newsprint Manufacturers’ Association, earlier, only registered mills and publishers could avail concessional taxes. However, after the implementation of GST, third parties are also buying newsprint (which was earlier sold to them as other grade paper). This ambiguity has allowed them to manipulate the GST rates. (There is 5% GST on newsprint while 12% GST on other grade paper). The purchasing of newsprint by third parties causes shortage of supply for publishers.
Impact on Industry
“As far as newsprint prices are concerned, it is locked for almost everybody this year. Because the newsprint orders go about 6-9 months in advance. The higher cost of implication is already baked into the P&L financials of everybody. And hence, some may even go into losses on account of newsprint costs alone. That is the reality of the industry,” Pradeep Dwivedi, Chief Executive Officer, Sakal Media Group, told exchange4media.
With input cost increasing by over 50% and no definite means to compensate it, the impact on the industry has been estimated to be around Rs 4600 crore a year.
A top management official from another leading paper told exchange4media, “The newsprint that we use to buy for $500 per tonne in 2017 is now costing around $750-$780. And we can’t increase the cover price. Also, there is no increase in ad rates. There is nothing that can be seen as a sign of relief. Our newspaper will lose around Rs 250 crore in a year. So newspapers larger than ours, such as the Times of India and Hindustan Times, that use mostly imported newsprint will suffer higher losses.”
Pauly added, “We are spending almost Rs 40 lakh extra every month, but we will never reduce the circulation as it will affect our image.”
Speaking on the condition of anonymity, a senior industry person from a large regional publication in southern India, told exchange4media, “The spike in cost is around 50-60% per cent if you take into consideration the devaluation of the Indian rupee. It is definitely a very difficult time, especially because advertising is not growing.”
He added that because of the price hike, the publication would be spending around Rs 80-90 crore more annually.
“Cutting cost is one of the things we are looking at. In fact, we increased the cover price increased by Re1. It will bring some relief, but definitely not complete relief. The cover price rise can only compensate around 35-40% of the inflation,” the industry veteran further revealed to us.
Interestingly, speaking about the situation, Paresh Nath, Publisher, Delhi Press, had very clear views. While Nath accepted that the situation is severe, he also pointed out that if publishers correct the cover price and stop giving the content for free, it wouldn’t be such a big crisis.
“Irrespective of the recent spike in newsprint price, the cover price should be kept decent. We should not give content this cheap to the reader. It is almost free,” he said.
On being asked if DAVP could do anything about the ad rates to calm the situation down, he said, “One page of government ad is enough to purchase 5 pages of newsprint. In any newspaper, there are only 5-7 ads from DAVP. There are around 70-80 ads from other departments. These are not ads from DAVP, but these ads are given at DAVP rates. So what DAVP spends is less than 5% of the total ad spent. Everybody has been misled about the ads by the industry deliberately.”
What Can Be Done?
Dwivedi, CEO Sakal Media Group, says, “Adex volumes are not growing as much as we would like. And cost pressures, especially on newsprint, have an adverse bearing for almost everyone in the industry.”
Dwivedi further brought the attention towards limited print ad revenue, which he said, “has grown only by 5%-7%.”
For the first quarter of this year, while the data of listed companies is in public domain, some unlisted companies are either flat or have around low single digit growth on top-line, he added.
“The coming festive season of three months is going to be the most critical time. Everyone is hoping that the period will bail them out with stronger adex growth. If the revenue grows, the ability to absorb the cost gets better. That’s when we are expecting a lot more money to come in. In any case, print companies are continuing to focus on digital, activations and event solutions to shore up the revenue,” he added.
“Our partners in the advertising industry should empathise with the newspaper industry. There is a great amount of reluctance from the industry to take up rates. The rates have remained unchanged for the last 4-5 years. It is the only industry probably which sees almost 60% hike in the input cost and still advertisers want lower rates,” an industry veteran said.
Jwalant Swaroop, CEO of Happinessinfinite Solutions, feels that the usual ways to bear the pressure of newsprint prices are cutting down on the number of pages, and opting for compact size rather than broadsheet needs. This needs to be supported by raising the cover price substantially and a serious effort on ad rates. He insisted that these solutions can be opted for only if the industry comes together united.
“No single publisher can individually make that decision in such a competitive environment,” he said.
(Parts pertaining to unconfirmed numbers on loses to organisations have been edited)
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Margin pressures push industry to find solutions to ‘pitch discount’ issue
With increasing competition and technology playing a larger role than talent, pricing is the biggest factor driving pitches. Read on to find out some steps experts feel can help resolve the growing crisis
By Naziya Alvi Rahman | Aug 13, 2018 9:00 AM | 5 min read
The mail, a first-of-its-kind initiative by an industry body, intends to put a halt to a practice that has been discouraged vehemently during several IBF meetings in the last one year. Though the practice hurts the agencies that work primarily on commissions, it hurts broadcasters more.
Industry experts unanimously claim that with increasing competition and technology playing a larger role than talent, pricing is the biggest factor driving pitches. Another factor that has worked against the business is the growing role of consultancies.
According to a senior agency head, “Consultants are increasingly putting pressure on clients to cut on advertising margins, which puts further pressure on our pricing. They have also contributed significantly in reducing the trust we shared with our clients. Brands are calling pitches sooner than before. There have been times when we were forced to quote a lesser price than our previous pitch held three years ago, just because we wanted to retain our client.”
While everyone in the industry is concerned about and affected by diminishing profit margins, will a mail, merely asking the agencies to abstain from offering discounts, work as a solution to a larger problem that the industry is grappling with for the last few years?
Raj Nayak, COO -Viacom18, lauded IBF’s initiative but said that it needs two hands to clap. “Broadcasters are equally responsible. We need to find a solution within ourselves too. Just an agreement in letter and spirit among even the top five-six networks, that they will not reduce the rate given to an incumbent agency when the account shifts, itself will solve the problem. At the end of the day, it is broadcasters who are succumbing to pressure because of lack of unity and the advertiser is taking advantage of this.”
“I don’t blame the agencies because they have no skin in the game and they will do anything to retain a client or acquire new business. Having said this, there should also be a stringent punishment which could even mean cancelling the agency’s accreditation if they continue to disregard the IBF guidance on pitching for new business and work in a manner that is against the overall growth of the industry,” Nayak told exchange4media
Ashish Sehgal, COO of Zee Unimedia, however, believes that the problem is much more complex. The industry needs to introspect the need to shift its focus back on quality, he said.
"Media is being commoditised and pitching is not at all focused on strategy to capture relevant target audience thereby right media mix, but only on pricing. From a specialist role, it has moved to the role of procurement where the sole objective is to put more and more pressure on the marketing heads to reduce budgets.”
“However, what needs to be understood is that with the fragmentation and segmentation of the market, creation of content as well as marketing have not only become challenging but also expensive. Hence, it is critical that we get right pricing from the advertisers, else the industry will eventually collapse," he adds.
Agency heads, however, bring the issue back to the principles of economics.
“We are perfectly fine with broadcasters fixing whatever rates they want to, but then there should be unity. If the industry shows a positive growth, we all will benefit from it. At the end of the day, our purpose is to drive the business,” said an agency head.
Another agency head added that the issue needs to be resolved by tripartite discussions among broadcasters, agency heads and marketers. All three need to sit together and form a consensus in the larger interest of the industry.
“We all have our own compulsions driving our decisions. It’s a free market. I have to protect my business and hold my clients back and win new clients. I have every right to get them the lowest price. If not me, someone else will. Therefore, the solution will only come from a discussion among all three verticals of the industry,” said the agency head.
Nayak, meanwhile, added that another area IBF needs to put its foot down is the long-pending issue of CPT. “We have been dragging this for too long. With the universe expanding, the broadcasters are not getting fair value but the content & other input costs are going up. We cannot keep procrastinating this anymore,” he said.
THE PRINT SAGA
The issue of ‘pitch discount rates’ has affected the print industry alike. Hormusji N Cama, Chairman, of Indian Newspaper Society (INS) has already raised the issue with the Advertising Agencies Association of India (AAAI) and would soon be taking it with each agency one on one.
“We jointly took the decision that the agencies would not do it. And in case they do, INS henceforth will take action,” he told exchange4media.
When asked if the action could include something as serious as cancellation of accreditation of agencies, Cama said that in extreme cases, the association may even consider that.
The owner of a leading publishing house also raised his concerns over diminishing margins. “In many cases, we told the agencies to bear the loss on committing a lesser rate on our behalf. Why should I suffer the loss,” said the publisher.
Another publisher complained that agencies are pushing the ads from print to digital where the margins are higher.
“Digital gives a commission ranging from 20-30% whereas print only gives you 2-3%. Therefore, there is an ongoing movement against publishers and towards digital. I am not saying that digital is not growing, but the projections are hyped as compared to print by agencies to get higher margins,” said another leading publisher.
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With rise of localised content creation, kids genre to grow by 12-14% in 2018
According to BARC data, the age group between 2-14 years accounts for 20 per cent of the total TV impressions, however, much of the content kids consume is on GECs or movie channels
By Sonam Saini | Apr 23, 2018 9:00 AM | 6 min read
Nina Elavia Jaipuria, Business Head, Kids Entertainment Cluster at Viacom18 said, “I think slowly and steadily we all have realized that we are great at conceptualizing, developing and creating our own content. Therefore over the years, a lot of local content has evolved in the genre. The dependence on international content that we acquired from the West is going to dwindle and local IPs will evolve even more. We will continue to grow as broadcast and local IPs and that’s the future.”
Echoing similar thoughts on the local IPs, Leena Lele Dutta, Business Head, SPN Kids genre added, “what has worked for us was local characters, names and stories. This is the reason the channel has such good viewership today. We intentionally moved away from alien characters as we would have needed a long time to establish them.” The channel completed a year recently.
“Over the years, local animation has definitely come of age as Indian characters sit comfortably alongside global ones within the kids’ landscape. At Disney, our stories and characters remain region and platform agnostic,” said Devika Prabhu, Executive Director – Content and Communications, Media Networks, Disney India.
Talking about the growth in the genre, Nina mentioned, “I see a lot of growth this year, now that GST and demonetization is behind us, the category will grow 12-15 per cent, both in terms of viewership and ad sales.” Whereas Ashish Bhasin, Chairman & CEO - South Asia, Dentsu Aegis Network Dentsu Aegis Network, feels that the growth will be more or less in the line of overall television growth, which is expected to be around 10-12 per cent.
Challenges in the kids genre space
As per the BARC data, children, as an audience i.e: the age group of 02-14 years, account for 20 per cent of total TV impressions. This is the highest share across all age cuts. However, the biggest challenge the industry is witnessing is that a lot of content which kids consume is on GEC or a movie channel.
87 per cent kids in 2-14 age group watch non-kids channels, while only 13 watch kids channels, according to a research report by BARC India titled ‘A Peek into Kids Viewership’.
Krishna Desai, Executive Director & Network Head - Kids, South Asia, Turner India, “Kids are increasingly exposed to a range of content online and offline. Their viewing habits are dynamic and ever-evolving. While they are exposed to a vast range of other content, cartoons hold a special place in their hearts. However, the fact remains that due to the burgeoning phenomenon of Indian households primarily owning a single television set, since decades, the percentage of time spent by kids watching kids’ channels has flattened out to not more than 20 per cent.”
On the Production Front
Recently, Discovery Kids launched Little Singham in partnership with Reliance Animation Studio. Also on completing a year, Sony Yay announced their new character Kicko. Viacom18 will also be launching their fifth IP.
Speaking about the production part of the industry, Shibasish Sarkar, COO, Reliance Entertainment explained, “What is lacking in the Indian animation industry is its equation with cartoons. When you talk about animation, people only think of it in terms of cartoons. Today animation is for all ages , you can’t define that it is only for children. When we started animation in the country, it was all about mythological characters such as, Ram, Krishna and Arjun, because all these characters were established in viewers' minds. You really don’t need to spend money on these characters. But if we launch a new character, we also need to establish them, and you need to have some kind of engagement with kids. The problem is, we don't have that kind of funds available in India, because we are still growing and the industry is not that mature.”
He further added, “Nobody is ready to put that much investment in, but in the West, they first create characters, interact with kids, then convert it into a show. Now that we are maturing, we have to come out with shows like Little Singham, where we can start connecting with the kids, but again Singham is an established brand. Also we need to be very strong in pre-production. India is very weak in pre -roduction, as we do not have much talent in India. Also we have to create awareness about animation is.”
Desai also mentioned that animation is not a quick and easy process; it involves thorough visualization and storytelling. “Currently, the major challenge which India faces is a relatively low supply of key talent in animation, especially when it comes to local writers and storyboard artists. While there is incredible potential, there is a need for animation education and training, and the creation of a skilled workforce in India. With the right kind of funding and education, we can be confident of Indian animation standards being on par with global counterparts.”
Kids --the under indexed category
Although it is a robust category, the genre is still under leveraged. Uttam Pal Singh- Head of Discovery Kids feels it is more of an industry call here. “We have meetings with our sales team and with advertisers, but what we essentially understand is that kids. as an audience, are becoming stronger, the genre is growing. You cannot really ignore them and I think things will improve.”
“The genre has a total of 7 percent of viewership on TV, but does not have more 50 per cent of Adex. The kids genre is not the only category which is serving children, but the situation is getting better,” said Jaipuria.
Disney's Prabhu refused to mention numbers, but she said while advertising remains under-indexed for this genre, “we continue to witness a high double digit growth on Disney Channels on the back of great performance and partnerships.”
Talking about the growth, Jaipuria shared, “Despite having headwinds, thanks to GST, we have still seen a fairly robust growth on the top line and ad revenue perspective. We have grown between 12-15 per cent which include the subscription revenue as well. Meanwhile, Dutta believed that ad revenue in the category has remained stable.
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Spotlight: Newsprint Price Sees 40% Hike, Industry Worried
Newsprint, a low-cost non-archival paper, is most commonly used to print newspapers, publications and advertising material. There has been an almost 40 per cent spike in its price since the crisis began last year
By Nishant Saxena | Mar 26, 2018 8:59 AM | 4 min read
Newsprint, a low-cost non-archival paper consisting mainly of wood pulp, is most commonly used to print newspapers, publications and advertising material. There has been an almost 40 per cent spike in its price since the crisis began last year.
China, the world’s largest paper recycler, produced about 63.3 million tons of waste paper pulp in 2016, according to the China Paper Association (CPA), with about 24 per cent of it produced from imported waste paper. “In the last six to nine months, the prices have increased. Also, the newsprint prices have gone through cyclicality over decades. However, the spike in price in the recent months is because of China,” said Pradeep Dwivedi, CEO, Sakal Media Group to exchange4media.
As the newsprint stocks with the publications are being used up, they are preparing to face the challenge and find the right measure to decimate the effect of the price hike. “Right now, some publishers can manage till the end of Q1 of the next financial year, and then there are some who have stock left only for one or two months, they will now have to order at the revised prices,” added Dwivedi.
However, Paresh Nath, Editor and Owner of Delhi Press magazine, said that since the revised prices have already entered the market, its impact can partly be seen in the coming financial quarter. Similar views were also shared by Indranil Roy, CEO, Outlook India.
“The print industry as a whole has not taken a call. Individual publications are taking their own measures. Some are cutting down the pages, some are increasing the retail price, some are increasing ad rates, etc.,” said I Venkat, Director, Eenadu, an Indian Telugu language daily newspaper.
Adding fuel to the fire over the concern of India’s print industry, which was already recovering from the ill-effects of demonetisation and GST, is the union government’s recent decision to publish ads of tender notices digitally instead of newspapers. This is also expected to further cause loss to newspaper companies. "Paper prices have gone up by 15-18 per cent and it's expected to rise more. It is and will continue to negatively impact the industry. On top of that, GST is unfavourable to the quoted paper which we use,” said Roy.
“Most print companies have shown de-growth in revenues. Some have missed the projections way off, making the newspaper and magazine owners jittery,” said Jwalant Swaroop, former CEO of Sakal Media Group and Lokmat wrote in a column on exchange4media.
While suggesting various coping methods that publishers might use, Dwivedi said, “The cost of marketing, distribution, salary cost and other components will also come under scrutiny.”
Of all the stakeholders affected by the crisis, according to a media report, shares of Indian paper companies are positively growing after manufacturers raised prices. To cope with the challenges, the print industry is expected to demand better rates from commercial advertisers as well as the government based on the tremendous growth shown in the latest Indian Readership Survey. “We now have IRS as a currency to show growth of the total readership. The value of the print media is still noticeable,” said Dwivedi adding that this is not a permanent crisis and can be handled like any other problem with innovative thinking.
“There have been years in the past when the prices were similar and publishers did balance the situation even at that point in time. Yes, it is a big problem. It is a problem that calls for innovative thinking but like any business challenge, it’s not so big that everything falls apart,” he said.
Sharing similar thoughts on Indian readers’ reluctance to pay for news, Paresh Nath said, “I wish that cover prices should increase because they are already very low. Also, if the cover prices are low; the delivery cost is high. So in case, the cover price is increased, it will somehow give more incentive to the distributor to sell newspapers and magazines.”
To calm down a panicked industry, Nath, who has had a very long association with the print industry, said, “It is still not doomsday and the newspaper industry can still survive by increasing the cover price and reducing the pages. These two things put together will help the industry weather the crisis.”
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Where's the chink in India's creative armour?
From budgets, lack of mid-level talent, low quality execution, to entry barriers at award shows, the hurdles are many but the industry is upbeat about overcoming them
By Venkata Susmita Biswas | Feb 26, 2018 9:00 AM | 6 min read
Yet, Indian creative agencies lag behind in the Gunn Report, an authoritative global index of creative excellence in Advertising. Only McCann Worldgroup India featured in the top 50 agencies list (ranked 32 worldwide.) In addition to McCann Worldgroup India, six other agencies from India made it to the top 50 APAC list. Taproot Dentsu, BBDO, Ogilvy and Mather, Leo Burnett, Law & Kenneth Saatchi & Saatchi along with Wieden+Kennedy appeared in the list, in that order, for their path-breaking campaigns from 2017.
Award show entry barrier
While finding them in such global lists is always a matter of pride and celebration, Indian agencies not featuring in this list or any list for that matter should not be the only reflection of the creativity and calibre of agencies here, felt Kainaz Karmakar, Group Creative Director - Ogilvy & Mather India. She said, "Our work is creatively sharp and relevant. A lot of our work is making a mark on the world and we must acknowledge that. Not just in creative awards but also in international effectiveness award shows. This report, like every report card must be looked at with a sense of balance."
Finding a place in the Gunn Report is dependent on the number of awards an agency wins. Topping the Gunn Report therefore is all about playing the awards game. Law & Kenneth Saatchi & Saatchi (Publicis Groupe) that won accolades for the GiveHer5 campaign last year will not be participating in any award shows in 2018 as per the holding company's directive to divert funds to building the AI platform Marcel. "Playing this award is a very expensive game; with the entry factor and all. It's also about how significant India is in ad market globally. We are important from a strategic perspective but not from the top 10 global ad revenue market perspective because of our economy," pointed out Anil S Nair, CEO and Managing Partner, Law & Kenneth Saatchi & Saatchi.
He further added, "We're the so-called under-valued ad market in terms of the value for population. So the fact is that we don't have the kind of resources to play up this awards game."
Taproot Dentsu has emerged as the second most awarded agency from India in 2017 as per the Gunn Report. It is ranked at 20 in the APAC top agencies list. Agnello Dias, co-founder and CCO, Taproot Dentsu, concurred with Nair, when he said that, "Entering awards is tough. So if you can't enter awards, you cannot get a high score in the Gunn Report irrespective of what you do."
While taking part in award shows is a real hurdle for agencies, there are other factors that dictate India's representation globally. "According to me, it's also about the constitution of the jury and their understanding of the work that needs to be awarded. Many times, we think a certain piece of work is good internally and we share it with our global counterparts; but we don't get the kind of acknowledgment we were hoping for. That's because of a cultural disconnect and also their understanding. Because our humour is very different than theirs. Even if you were to look at the Oscars, the benchmarks are really different," noted Nair.
He added, "It's also that the market for all work produced in India is in India only. That's not the case for many other countries. What's produced in UK or US is exposed beyond that particular region."
Pointing out that talent deficit is a concern for agencies, Prasoon Joshi, Chairman McCann Worldgroup Asia Pacific and CEO & CCO of McCann Worldgroup India, said, "There is a talent deficit at mid-level. The maximum churn has happened here with a lot more avenues open for the talent to explore so today we see a gap and an area of concern here. Industry is cognisant of this reality and has been making efforts to retain this talent and also groom younger talent."
Improve idea execution
Karmakar felt that India does need to sharpen some of its approaches. "We can sharpen our understanding of new-age media and push those boundaries harder. We can put our minds to how our executions can compete with the best in the world and become the best in the world," she said.
Execution, as Karmakar pointed out, is what India does not get right even when there is a great idea. Nair said, "Many times, our finesse of execution lets us down. People in the network have confessed that the idea was to do well but finally when it came to gold or silver consideration, the shortlist conversion, if you look at it from a mere marketing perspective, is very poor."
Budgets fail us too. Nair further added, "We don't have the ability to pay for all technical teams across advertising. It's important have that level of detailing in our films."
We shall overcome
Speaking about India's global performance, Joshi said that while there is much left to be desired, "Internationally India's talent is well recognised today and I'm optimistic about the future of our talent." He further added, "Indian Advertising has come a long way and is uniquely addressing the complex demands and needs of the market and brands."
Both Nair and Karmakar said that while India does have to improve its quality of work and execution, one must not dwell on lists and rankings. "We have a long way to go and should look beyond if we can make our advertising better," said Nair. Karmakar was confident that "We can do all this, but we must do it with joy and without a sense of panic."
"We must never turn into those parents who make a report card, the only measure of their child's success," she pointed out.
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Need of the Hour: Diversify Your Digital Strategy
The Facebook and Google duopoly that claims around 70 per cent of the global ad spends.
By Venkata Susmita Biswas | Feb 5, 2018 8:56 AM | 6 min read
The writing on the wall has never been more clear for publishers and brands - do not put all your eggs in one basket; in the case of digital advertising, two baskets.
Facebook’s recent announcement to deprioritise posts from brands and publishers comes as rude shock to these two communities that have been heavily dependent on Facebook to reach users and drive traffic back to their own websites.
Youtube’s partner programme tweak puts upcoming content creators at a disadvantage now. They cannot monetise their content unless they meet the minimum subscriber and view hours threshold. YouTube’s change in policy does not disadvantage brands, but it is still a significant move for the advertising community that has been fretting over brand safety. New content creators who already find it tough on YouTube will now have to rake in a significant number of view hours (4000) and subscribers (1000) to see money in the bank accounts. YouTuber PewDiePie believes that while this is harsh to content creators, it does seem fair. “There are only so many ads on YouTube. So cutting off ad revenue from channels that are uploading other people’s content or movies makes sense to me,” he noted.
The Facebook and Google duopoly that claims around 70 per cent of the global ad spends. Over the last few years organic reach of brands on Facebook has been consistently plummeting. “It was in the high 40% during 2011-12 and went down to 1% or less in 2014-15,” says Rahul Vengalil, Founder & Chief Executive Officer. Some say that in 2017 this number was down to zero. These were all sings that “that Facebook will be a completely paid platform,” said Gopa Kumar, EVP, Isobar India.
Facebook’s message was clear to brands: Pay or Perish. And Mark Zuckerberg’s latest statement that Facebook will return the platform to its core purpose of making and maintaining friends is a veiled message to message to brands and publishers. “Facebook is not a benevolent distributor of branded content but a company looking at profiteering. It cannot afford to alienate its core audience by just showing them brand pages or ads and therefore this move to control the newsfeed was inevitable. Advertisers moved to Facebook for the easy reach, but anything that is easy and free doesn't last long,” says Rashmi Putcha, Co-Founder & Director, LIQVD ASIA. She is quick to add: The party is over.
Agencies have been advising brands to look beyond the duopoly for a while now. “Facebook & YouTube are monetised platforms that want to earn revenues. They have been forced to tweak their rules because of media backlash & advertisers boycott. The digital fraternity needs to stop looking at these publishers for solutions,” observes Putcha.
Even though brands and publishers may want to move away from the two technology giants, the reach of the two is unparalleled. “Brands cannot afford to move away from Facebook at this stage, due to the reach and the targeting that is possible no this platform. All the other social platforms will only compliment the activities on Facebook, or to get additional reach/engagment,” says Vengalil.
Gopa Kumar, EVP, Isobar India, who advises advertisers to explore multiple platforms says that it will be hard to completely move away from Facebook. “Because there are limited ad units available, the bidding on these units will jack up prices, eventually resulting in brands pouring in more money into Facebook,” he says. “Brands will need to focus on shareable content rather than high quantity of content,” Kumar further adds. If brands do not crack the ‘sharable content’ formula, “it will have to be sponsored posts going forward,” he adds.
Putcha also notes that with organic reach likely to reduce even further, brands that desire a wide reach will need to spend more on ads and promotions to reach audiences. “Facebook & Instagram have bene testing ad units that will let businesses create a link between these platforms and WhatsApp. The more evolved brands might just be jolted by this new move (by FB) to re-look at their social media strategy which is increasingly becoming just another paid media platform and look at building their own communities which are meaningful and allow conversations between people of shared interests,” she says.
Speaking about platforms like WhatsApp for Business which has been launched in India, Instagram, etc, Kumar had a smart advice and warning for brands, “Enjoy it while its free; it will all start getting monetized.”
What about Brand Safety
After the instance of YouTuber Logan Paul sharing a graphic and bad-in-taste video featuring a dead body hanging from a tree that began trending on YouTube, the video sharing platform decided to review popular videos manually before placing ads. Marketers seem to feel reassured with YouTube’s initiative to manually review video and impose a minimum threshold for monetising videos.
“The update from YouTube seeks to ensure that brand ads won’t run on random, fly by night channels. But this is by no means even close to a solution for brand safety,” believes Putcha.
She says, “Along with aggressive measures of content review by both humans and machine learning algorithms, YouTube needs to enforce better targeting and segmentation measures. Smarter AI is the only real solution to solve the problem of safety but it is a mammoth task and will require collaborations with third party tech partners.”
Vengalil also feels that ensuring a minimum threshold is not enough to ensure brand safety deal with ad fraud. “What if the subscription is from Clicks Farms or Bots and not genuine users. YouTube needs to be open up its walled gardens to third party verification across Brand Safety, Ad Fraud & Viewability, wherein the impressions & delivery are independently verified by a third party,” he says.
Not just this, the journey towards a cleaner ecosystem will need to include “better awareness among advertisers, agency folks; creating accepted tolerances & guidelines. And improve the understanding of ad:Tech solutions; and penalise defaulters & fraudsters,” notes Vengalil.
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Digital trendspotting for 2018
Digital advertising currently contributes around 15 per cent to the total advertising Industry in India and this is expected to reach 24 per cent of the entire market by 2020
By Venkata Susmita Biswas | Jan 15, 2018 9:00 AM | 6 min read
It is also estimated to grow with a CAGR of 32 per cent by 2020. Keeping up with this fast-paced industry means taking risks and crystal-gazing to finally hit the proverbial bull’s eye. As the industry hurtles towards the digital marketplace, new trends replace old ones and brands need to swiftly change gears to keep up with the emerging innovations and technologies. Here is a look at some of the trends brands need to adapt to in 2018:
Digital is a way of life, not a medium of communication or piece of technology. Digital marketers are increasing recommending brands to transform their entire value chains using digital. To this end, agencies are developing competencies to deliver what the new digital age demands.
Anil K Nair, CEO & Managing Partner, Digital Law & Kenneth Saatchi & Saatchi said that clients are going to be talking more about digital transformation than just digital communication. “Rather than doing superficial digital, more and more clients are beginning to realise that they may want to change their core to have a lasting impact,” he noted. Given that Indian businesses are still stuck with archaic systems and processes, “now is the right pivot point for these businesses to invest in new technology and processes,” he added.
As one digital marketer rightly said to this reporter: Privacy is dead. For brands, there is an upside to this: hyper-personalised marketing. When you have the kind of granular data on consumers it would a waste to spend money on anything but pinpointed marketing. “Any non-personalised marketing techniques will become obsolete,” said Sudhir Nair, managing director, digital, Omnicom India. He added that non-personalised methods for even simple things like emailers, direct response campaigns will perish in 2018. He was confident that hyper-personalisation is the way forward in the digitised world.
Although content marketing makes for a small chunk of digital advertising, It is an entity that deserves its space in the world of advertising. “Content marketing is definitely taking money away from the television commercial,” said Arnab Mitra, founder and MD Liqvd Asia. Mitra said that 2018 will see a boom in the content marketing space, thus redefining the media landscape.
The thumb rule that marketers can spend up to 10X of what they spend on content on media is now obsolete in the digital ecosystem. Marketers are willing to put in disproportionate amount of money in content marketing because they have the chance to go viral on digital media which would mean that media cost is negligible and people are distributing the content themselves. “Therefore, brands are focussed on creating good quality content which will get propagated on digital platforms by their own steam,” said Mitra.
Deshpande concurred with Mitra, and said that the appetite for content is definitely growing among brands. Anil Nair cautioned that content is like ‘Emperor’s New Clothes.’ “Too many people are trying too many new things, which is what any kind of evolutionary market will see,” he said. He advised that brands must look to create short-format snackable content and keep the brand’s involvement as subtle as possible, “because overt brand involvement will be rejected,” he added.
Content on digital platforms is currently skewed towards the metro audience, this will see a dramatic shift in 2018. “There will be an exponential growth of vernacular content in 2018 coming from languages like Telugu, Tamil and Kannada. New markets untapped markets like Gujrati, Orissa, and Punjab will also emerge,” said Devendra Deshpande, Head, Content+ at Mindshare.
Sudir noted that more regional content will lead to the emergence of content studios at the regional level. “Local content has not kept pace with the growing internet penetration. Indic content is becoming popular but the content is not being created from an Indic perspective,” he added. Sudir further said that this growth of regional Indic content may be bad news for the Indian print fraternity which has so far been cushioned from the digital explosion in India. “Unlike other countries, Indian print industry has been able to hold fort so, but that may not be the case going forward when we see more hard-core local micro-geo level content,” he said.
Experts bet that voice will be the future of digital and not just advertising alone. “Voice will take over all digital formats, for example, voice search: people will search lesser and lesser by typing and more by speaking into devices. According to the latest statistics, 30 per cent of users in the US use voice search and 45 per cent of millennials use search,” said Shamsuddin Jasani, Managing Director, Isobar India.
As per data from Google, 28 percent of search queries in India are done by voice and Hindi voice search queries are growing at over 400 percent year on year. “This 28% are urban internet savvy users who are comfortable using voice assistants like Siri,” said Jasani. He added, “It is not just Siri and Google Assistant, the beginning for voice has happened in 2017 with Alexa, Cortana, etc. And this movement towards voice will take off in 2018.”
Sudhir Nair called voice an inclusive medium that should be given its due and not slighted because of the proliferation of video. Voice is an intuitive interface that can interact with consumers and sense consumer sentiment. “Mobile is still an external element unlike wearable devices that can read a consumer unobtrusively. While wearables and implantable devices may be a little farther away in the future, the interim medium will be voice,” felt Anil Nair.
Some of the other emerging trends are:
Augmented Reality: VR costs are still prohibitive. Many smartphones are already AR enabled, because of the cost barrier, AR might overtake VR in the immediate future.
Photos: Platforms like Snapchat and Instagram have brought back photographs. Photo stories are an interesting new medium that brands can utilise.
Micro-influencers: Following some gaffes with celebrity influencers, brands began leveraging micro-influencers in 2017. These domain experts and have a meaningful reach and will see greater play in 2018 as compared to celebrity influencers.
Movie Launches on OTT: Movies that do not have the budgets for huge marketing campaigns but have a niche audience could launch primarily on OTT platforms.
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SPOTLIGHT: 2018 TV trends predict 15 per cent growth
Experts positive about FMCG, automobile, telecom, smartphone brands and govt sectors spending big money on TV advertising
By Sonam Saini | Jan 8, 2018 9:00 AM | 6 min read
Zee Unimedia COO, Ashish Sehgal felt that January will be clouded by cricket and sports will score robust growth for TV this year. “Last year, a lot of growth came from FTA. However, the mainline GECs that had shown stagnation may grow again. They will have to produce more fresh content that has come to them because of the competition from FTA. This year you will see a fireback from GECs. We also didn’t see many blockbuster launches in 2017, but that will soon change and propel the Hindi TV movie category too,” he said.
TV advertising revenue to grow
Sehgal also said that the advertising industry may see a growth of 13-14 per cent in 2018. “There’ll be a 13-14 per cent growth in the advertising industry in 2018. On television, I’m expecting good double-digit growth, anywhere between 15-20 per cent. On digital, it looks like we’ll have a good growth this year,” he said.
The broadcasting industry de-grew by about 21 per cent battling 2016’s note ban compared to 2017. It lost an estimated Rs. 850 crore. As the dust around the big government decisions settles, 2018 is predicted to see a clear rise in advertising revenue.
Pawan Jailkhani, Chief Revenue Officer, 9X Media, said that 2018 would likely witness three things like increased digitization on ground, massive fictional content creation and growth from advertising from the second half of the year.
“H2 will see a major jump in terms of advertising growth. Though first half will be decent but H2 will be much bigger. I think the year will see around 14-15 per cent growth. In terms of advertising, from a fiction or channel launches perspective, we’ll see abundant rise. There will be some uproar on FTA. If we’re going with FTA on larger level or not, the rethinking and consolidation about it will happen in 2018,” he said.
Categories that will spend big in 2018
Jailkhani agreed with Sehgal and said that sentiments will flare with six to eight upcoming state elections which will impact revenues and overall economy. “News channels will get huge benefits. Certain categories will be aggressive in the next year. Automobile predictions say that there will be 16 launches this year which will give a boost. Telecom seems to be in the mood to spend and will be generous this year. Digital as a medium will also further complement TV from the audience point of view,” he said.
The reach of television continues to grow with eight to 10 million homes being added to the already 180 million homes every year. Advertisers won’t be taking their hands off this pulse anytime soon. With the FMCG, automobile, and financial sector doing well, they will be in a position to spend more money, observed Rohit Gupta, President, Network Sales and International Business, Sony Pictures Networks. “Govt expenditure is expected to rise due to upcoming state elections. 2018 will be far better year and we should positively expect a healthy growth of 12-15 per cent,” he said.
“FMCG is having a good run, primarily on television. Auto category has seen a good growth will continue to spend. Telecom wars will get stronger now that Jio will start monetizing on the services they were offering for free. The consolidation of Telecom industry will be a big push. If the Vodafone and Idea merger takes place, they will also pump in more money. Mobile handsets will also be one of the big spenders,” added Sehgal.
“Chinese handsets have taken over. They are strong competitors to even Samsung and Apple in India and that run will continue this year too. Oppo, Vivo and now Gionee will start advertising more,” he mentioned.
Sehgal felt that e-commerce will see a similar trend as they won’t grow as much in 2018. “Another category, BFSI and retail will grow this year. Keeping this demonetization and GST affect aside, the growth we were seeing in 2015 in SME category will come back,” he said.
Focussed fictional content for TV
In the last one and half years, TV business was a tad muted, not only in terms of advertising revenue but also with the slow of pace digitisation. Fiction and non-fiction shows haven’t enjoyed great success either. “I think fiction, which is a bread and butter for TV, has not done well in the last one year. 2017 was not that great in terms of content. If it was created, it didn't get the viewership,” asserted Jailkhani.
ZEEL premium channel’s, Business Cluster Head, Aparna Bhosle, experienced that for the English Entertainment channels, the year 2017 saw a considerable change in consumption patterns by the audience. Speaking about the English GEC particularly, she felt that viewers have become socially evolved and aren’t looking at English content just from a recreation point of view but also as a conversation starter. “At Zee, our endeavour has always been to give our viewers riveting and engaging content. With an exciting line-up of properties, our viewers were exposed to an extensive array of fresh and high-quality shows and movies. With an increase in the number of HD users and the fact that consumption of English entertainment is on a steady rise, last year, our focus was primarily to offer great content supported by dynamic marketing campaigns. In 2018, the aim is to further present quality content,” she said.
2018 should see this as introduction of new advertisers to boost monetisation in the category. “The focus will continue to be what the category does best – capture the imagination of this young generation. For this, I see a further introduction of new homegrown shows and characters. Additionally, there will also be efforts towards building an ecosystem around the existing popular characters and shows beyond just TV. The shift from 4-14 to 2-14 years in 2017 has surely broadened the canvas for this category. 2018 may thus see differential content offerings within 2-14 years to cater to different age groups,” said Leena Lele Dutta, Business Head of Sony Pictures Networks, India - Kids Genre.
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