There has been a lot going on around the world in the media space - slow changes, sudden changes and imperceptible changes. Advertising revenues are playing a key role in many of these changes.
Magazines, too, will decline from 11 per cent to 10 per cent. Television (38 per cent), radio (7 per cent), cinema (1 per cent) and even outdoor (7 per cent) seem to be oblivious to all the change in the ad share pie.
A PricewaterhouseCoopers (PWC) report on global newspaper media predicts a decline in revenues of 10.2 per cent over the next five years. Some recovery is expected in 2011 but overall, the period 2008-13 is seen as one of slow decline.
The current revenue mix of the press (55 per cent advertising, 42 per cent circulation and 3 per cent online) will also change, with online going up to 7 per cent, advertising declining to 45 per cent and circulation revenues increasing to almost 50 per cent.
The global picture has turned gloomy, thanks to the rapid decline of the print media in the US and Europe. The owner of The Los Angeles Times, Tribune Co., filed for bankruptcy in December 2008. The Seattle Port has gone fully digital. However, across the border, Canada seems to have a healthy newspaper industry!
The PWC report points to India as one of the growth markets, where revenue grew by 16 per cent in 2007.
What is the status of press and newspaper in the Asian markets? The news from around Asia is not that rosy.
This is the advance report I got from my DraftFCB colleagues from around Asia:
China is seeing a decline in press readership - from 71.6 per cent (2006-07) to 64.5 per cent (2008-09), a fall of more than 5 per cent. Indonesia offers only 22 per cent print reach and this seems steady for the last two years. However, compared to 2005, there is a 5 per cent decline in the country. In Malaysia, the reach of print is 54 per cent and has been at this level for a while.
The news from Asia seems to be that of a slow decline.
In India, we have a better story as print reach is still growing. Overall, print reach is about 20 per cent (urban 35 per cent; rural 13 per cent) and compared to television, which is at almost 60 per cent, print readership, which tops 185 million, still has potential to grow. The media and entertainment industry is expected to grow by 12.5 per cent over 2009-13 and press is expected to grow by 9 per cent.
Print readership in India, especially Indian language readership, is growing. This will be powered by a few specific factors:
• Increase in literacy across rural India
• Low pricing of newspapers
• Increased GDP growth
• Increased entry of youth into the demographic profile.
Against these positives, print has some key threats:
• The growth of the Internet to 60 million users, which is expected to double in five years.
• The growth of mobile and mobile-based Internet surfing.
The rapid growth of Indian news television has made newspapers an expensive purchase for the lower income households. Today, with live news feeds, television is performing the role of live news delivery, like the Internet in countries with better net penetration.
The print media owners and editors in Asia are faced with a challenge - a market that is large and may start declining, and a new medium called mobile that threatens everything a news medium stands for.
The additional challenge in Asia is the heavy skew towards advertising revenue. Unlike the developed world, where subscription/circulation contributes almost 45 per cent of the revenue, in Asia, the contribution is rarely more than 25 per cent. In India, for English newspapers, it may even be in single digits or negative.
So, as print tries to become digital and mobile, it will have to figure out how to generate revenue.
The other big challenge is the rapid demise of C2C (consumer to consumer) and classified advertising in the developed world. In India and many parts of Asia, this is still a big revenue stream. How will this revenue behave in the new digital era?
Will Internet displace newspapers in the classified space?
The one barrier for the Internet in India is the English language. Windows is in English and almost all Indian Internet users use English as the language. This will have to change.
Global experts believe that the print medium will have to move from channel selling to consumer selling - target the consumer through multiple media vehicles such as print, Internet and mobile. It will also have to figure out how to work closely with advertising.
There was an interesting piece in The Atlantic about Newsweek and Time magazines' latest attempts to revive rapidly falling subscription bases. The article compared the editorial and positioning of the two big American news weeklies with that of the English news weekly, The Economist.
Citing the latest circulation figures, the article noted that there is a growing tribe of readers who want in-depth coverage of news. While Time has seen its circulation decline from 5 million (20 years ago) to 3.4 million now, both Time and Newsweek have had 27 per cent and 14 per cent declines in advertising revenues last year. The Economist has had a 25 per cent increase in ad revenue and its circulation in the US is approaching the 1 million mark at 800,000 copies. In fact, it may overtake Newsweek's planned circulation of about 1.3 million (from 2.7 million currently).
What is the secret of The Economist's success? The Atlantic believes that 'The Economist prides itself for cleverly distilling the world into a reasonably compact survey'. "The Economist has reached its current level of influence and importance because it is, in every sense of the word, a truly global digest for an age when the amount of undigested, indigestible information online continues to metastasize".
"The real value of The Economist lies in its smart analysis of everything it deems worth knowing".
How does that apply to Asia's daily newspaper? If the newspaper is not the quickest form of news delivery, should it become the smartest form? Should the print medium see itself beyond print and look at consumer news delivery as their business - not just cutting down trees?
The other key peg that the print medium will have to embrace in India is the way to offer innovative solutions to advertisers. Unlike most other product categories, media brands have a tripod like structure - editorial, distribution and advertising. Editorial has its independence and that needs to be preserved, without which it will not get the readers; distribution or circulation is what the publication spends to get the vehicle across; and the third entity is the advertiser, who pays for the medium.
There has to be a balance of the three, so that the reader gets what he or she pays for, the distribution does not end up selling the publication as waste paper and the advertiser gets the benefit of a committed readership base.
Innovation has to embrace all the three legs of this tripod so that all the players get their money's worth. Indian print brands have attempted to innovate to offer advertisers new options to reach their target audience.
Tata Docomo was launched with a high impact print campaign that used the shapes of the logo letters interspersed in the text of the editorials of newspapers. Volkswagen did a total buy out of The Times of India to create a roadblock - an expensive ploy to grab undivided attention of the readers.
In the pursuit of additional advertising revenues, there is a danger that the three legs of the tripod may not stay even and that is a real and present danger.
Consumer research tells us that consumers are interested in knowing about new products and services; they may even read an ad that interests them with greater attention than the editorial. In the seminal article 'Love the ad. Will buy the product' in the Admap some years ago, researchers revealed that consumers love ads that tell them what they want to know about a product. To make the consumer love the ad, you don't necessarily have to crack a joke.
Therein lies the rub. How can the print medium understand and interpret the fundamental truth that advertising is not something that readers hate, but could be something they actually look forward to? If this fundamental adjustment is made in the perception of print publishers, there could be many more possible innovations that result in a win-win situation all around.
Let us not forget what Thomas Jefferson said about advertising many years ago: "The only news that you can believe in the daily news paper is in the advertisements."
[Adapted from the speech delivered at the plenary session of the AMIC's 18th Annual Conference, 16 July 2009, New Delhi.]
(The author is executive director and chief executive officer, Mumbai, DraftFCB+Ulka.)