afaqs!

DNA wants to remain an affordable newspaper for advertisers: KU Rao

By Sapna Nair , afaqs!, Mumbai | In Media Publishing | August 24, 2009
Last month, DNA celebrated its fourth birthday. afaqs! speaks to KU Rao, chief executive officer, Diligent Media, on the journey so far

Last month, DNA celebrated its fourth birthday. afaqs! speaks to KU Rao, chief executive officer, Diligent Media, on the journey so far...

Q. From the oil industry to a print company, it was a complete shift for you. What has been the learning from the print industry in the last three years?

A. It has been excellent. I think at the end of the day, it does not matter which business you come from, because the principles of business remain the same. Whether you are running a newspaper or an oil company, you have to ensure that your top-lines happen, costs are under control, your portfolio and people are well-managed.

& #BANNER1 & #Oil companies are extremely cost conscious. The media companies have a lot to learn from them, because they tend to build costs very quickly.

Q. The Indian print industry sells its product at a subsidised cost, which is compensated by advertising revenue. You seem to be great advocate of this business model, though you have come from an oil company...

For the last several decades, the newspaper business has chosen to focus attention on advertisers' money, instead of the subscription revenue. The consumer psyche in this sector has shaped up accordingly, and he doesn't want to pay more than Rs 3 for the product. Now, it's difficult to change this mindset.

Can the newspaper be priced at Rs 15? I really don't think so. It's too huge a change for newspapers to be commercially priced. You will need to have a massive education campaign to change this public perception.

On the other hand, print, as an advertising medium, is very attractive and will grow as an industry. So, it's better to focus attention on getting more advertising revenues, rather than go after subscription revenues.

Q. Four years ago, DNA entered Mumbai, which was considered TOI's fort. Has DNA managed to put a dent in this fort?

I believe so. In Mumbai, we are the second largest newspaper, and have made a huge mark across the city and strata. Our competition is just 30 per cent higher. Besides, DNA is perceived as a credible newspaper today.

The fact that the competition now offers massive discounts shows that DNA has come of age. There are about 660 advertisers in Mumbai, out of which 450 advertise with DNA. And most of them repeat their advertisements.

For several years in Mumbai, the advertisers had been conditioned to a single newspaper. In such a scenario, it was a tough task to change their mindset, and to include another newspaper in the media plan.

However, in the last four years, DNA has been part of every major campaign that has broken in Mumbai.

As per the latest IRS report, we are the eighth largest newspaper in the country. For a newspaper which started four years ago, that too in Mumbai, it's a great feat.

Q. Though you weren't in the company then, the first year must have been quite difficult for DNA. The corporates wanted to wait and watch; and the government ads were missing because of the lack of an ABC certificate.

A. Yes, it took a while for us to get the advertisers on board. It's a fact that government agencies go through an empanelment procedure, and in the case of corporate advertisers, they first want to check other advertisers on board. The follow a wait and watch policy.

But, fortunately, now we have got most of them on board. The next task for us is to increase the frequency.

This year, our advertising revenue will be around Rs 135 crore. In Mumbai, it will be close to 12 per cent of the total print ad revenue that the city gets.

Q. But DNA is still the second newspaper in Mumbai homes and also in other markets. Are you satisfied being the second newspaper?

When we launched in 2005, we took the subscription route, with an invitation price of Rs 99 per annum. Over the last four years, the subscription charges have increased to Rs 499, which is about 400 per cent increase.

Despite this, 70 per cent of the subscriptions are being renewed, which is a very high conversion rate.

This proves that we are already a newspaper of choice.

Q. What's DNA's DNA?

What differentiates DNA from the other newspapers is that -- thanks to our subscription drive -- we know who our customers are. We know their profile, what kind of families they live with. So, we are able to provide a much more targeted offering to our advertisers.

There are advertisers who only advertise in DNA in Mumbai for the target audience and that's a big vindication of DNA's delivery.

Besides, DNA is very well placed. One of our JV partners, Zee has massive presence in the GEC space, while the other partner, Dainik Bhaskar is extremely powerful in the vernacular press. Bhaskar also has a radio venture, My FM. So, we have a combination of media that we can offer. At some stage, I think media will be bought consolidated rather than standalone.

Q. Have you been able to match the ad rates with the competition?

We have a totally different approach on this. Many advertisers think it's too expensive to advertise in print in Mumbai, thanks to our competitor. However, we position ourselves as the affordable newspaper.

I think the Mumbai market has been misconstrued for too long as an expensive place to advertise. In such a scenario, DNA has come as a relief.

In short, the pricing strategy has been working well for us. And because we deliver phenomenal response, advertisers come back to us.

We are a necessity, and not a trial newspaper anymore.

Q. After Mumbai, Bangalore, Pune, Ahmedabad, Surat and Jaipur…which places are next on the agenda?

Our obvious next destination will be to Delhi, and like Mumbai, it's one of the biggest advertising corridors.

We hope to breakeven in Mumbai in the next 12-18 months. Then, we will firm up our plans for the Delhi launch. We are still gauging the market.

Q. DNA Money was launched as a standalone brand in some cities. However, it wasn't replicated in many cities. What happened? Will the supplement take the standalone route in future?

The strategy was to seed DNA Money in those markets where DNA was expected to launch, and we did that.

So, there was no purpose in selling DNA Money as a standalone. We are not planning to launch it as a standalone in future.

DNA Money was launched as a standalone paper in Ahmedabad and Indore. Subsequently, in Ahmedabad, we launched the full edition, so DNA Money was made a part of it.

We pulled out from Indore because at that point of time, we were planning to launch DNA there, which, later, did not happen. Hopefully, we should see an edition launching there soon.

Q. How has DNA combated the slowdown? What were the measures taken?

The slowdown majorly impacted the period between November and February. Having said that, it only slowed the growth rate down.

Unlike many other newspapers, luckily, we did not see a decline. Rather, we were on the growth trajectory.

We were growing at the rate of 50 per cent year on year, which has now slowed to about 25 per cent. But by the festive season (September-October), I am certain that we will reach a growth rate of 35 per cent.

Q. Going forward, what, in your view, will boost readership for newspapers in general, considering the easy access to news in other media?

I think newspapers can provide in-depth coverage, compared to any other medium. On television, you just get the headlines, as it provides general information that cuts across the country. It doesn't give a comprehensive coverage of the entire city.

Worldwide, newspapers reach out to about 3 billion people on a daily basis. It's the single largest mass media communication tool that can't be ignored.

With regard to other media, I think, in future, all media will complement each other, especially the new media.

However, the market is still very young in this country, unlike other developed countries. Only 3 per cent of India's population has access to the Internet. So, it's a long way to go. We also need to learn how to monetize the new media.