<FONT COLOR="#CC0033">The Future of News:</FONT> Big bucks lie in local advertising

Does local news translate into local advertising? This was the focus of the second session of The Future of News, a day long seminar organised by afaqs! events in New Delhi. The panel of speakers debated the extent to which news consumption has been growing in recent times, the consequent localisation of news and, therefore, of advertising, and whether the increased investment in local advertising was justified.

The panel, which included Bharat Kapadia, chief executive officer and managing director, Jagran18; Arvind Kalia, national head, Rajasthan Patrika; and Pramath Raj Sinha, chief executive officer and managing director, 9.9 Mediaworx, stood divided. The session was moderated by Prasanna Singh, chief operating officer, afaqs!

The background for the discussion emerged from the fact that the media boom in India in recent years has resulted in a huge increase in news consumption across print, TV and the Internet. Liberalisation has resulted in an increase in per capita income even in smaller towns and people’s rising aspirational needs have resulted in the localisation of content.

Arvind Kalia of Rajasthan Patrika was of the view that the answer to the question lay in how we defined local news, and the ratio between the investment made and the returns expected.

Firstly, said Kalia, when one uses the term local in the news context, one must not forget that the target audience (TG) lives locally, but it thinks globally. Localised content provides potential advertisers with a finer, better defined consumer profile. But at the same time, clarifying what the word local actually implied with reference to content, he explained, “For Rajasthan Patrika, 30 per cent of the content is local, 20 per cent is about the state and its affairs, another 20 per cent is global developments, and the rest is regular subjects such as sports and entertainment.”

Kalia said that as far as the profile of the advertiser is concerned, to begin with, local media attract local advertisers such as educational institutes, small retailers, local political bodies such as gram sabhas, village panchayats, and local politicians publicising their achievements in development projects. The next bunch of advertisers is the state government. The third set of advertisers constitutes PSUs, banks and other national advertisers.

Bharat Kapadia of Jagran18 agreed with Kalia that local was a relative concept. He said that segmented local content increases readers' interest, propelling readership, and ultimately attracting advertisers.

“Interestingly, print as a medium was first local and then became national, while TV is now becoming local after making its debut as a national medium. When it comes to the economics of running a profitable business, print wins hands down over TV. TV cannot go too local because the costs involved are higher when it comes to expanding the footprint.”

Pramath Raj Sinha of 9.9 Mediaworx said he both agreed and disagreed with the views expressed. He argued, “At the micro level, a lot of appetisers exist to provide plenty of local news and, accordingly, media products come on board to reach out to the readers. But there have been cases where media establishments have offered content even in the absence of advertisers, confident in the belief that there exists a market for interested advertisers, which will sooner or later come on board to advertise. When it comes to content, it’s not just local news that the readers are interested in, they want to know what's happening around them.”

He added, “But the cost of advertising becomes highly prohibitive when players work in an ad-supported market, making it tougher to justify the economics of the business.”

Singh drew the panellists’ attention to the complete neglect of local players and their markets by national media buyers and planners. The common refrain was that the cost of investment was too high when compared to the meagre returns achieved on reaching out to the available TG.

Kalia responded by sharing some revenue figures with the audience. In 1995, a salesperson used to deliver advertising business worth Rs 2 lakh, which has now increased considerably. If media agencies have reservations and budget constraints in formally entering local markets, they can always get salespersons to work for them on a commission basis, relating their spends to the revenue earned, he said.

The real problem, he said, emerged from the preoccupation of media observers with the English speaking markets. They refuse to believe that English as a language commands a readership of only 20 per cent – 80 per cent of the readership of news is in the local or regional segment.

This bias is also reflected in the fact that 60 per cent of media spends is spread across the six metros alone. For example, Anandabazar Patrika has as much of a reach among the affluent as any English daily in the metros, but media buyers simply refuse to believe that fact.

Kapadia pointed to the slow but gradual shift of focus in the perceptions of advertisers and media agencies. He drew attention to the fact that it wasn’t that long ago that the English media had a 70 per cent share in ad revenue, and that it came down to 64 per cent only in 2006. So, there is some hope when it comes to attracting advertisers to local content and markets.

What is more cost effective for a local publication – attracting a national advertiser or a local one?

Sinha declared outright that all the major national players bringing out local editions are running them at a loss.

In Kapadia's opinion, profitability depended on a number of things. One cannot deny or overlook the need of, say, a telecom major to advertise an area specific scheme aimed at a specified TG. Whether a national advertiser or a local one, both have to look at the market on the micro to macro basis and vice versa.

Amidst noises of secondary treatment to local entities, Singh raised the question of why local print editions of most publications are priced higher than most national newspapers.

Kalia explained the strategy behind such pricing: “The price difference emerges on account of higher penetration costs. To achieve higher readership figures, the cost per copy comes higher for a local daily in comparison to, say, a national product. Elasticity of demand in local areas leads to the higher price. For example, one copy of Rajasthan Patrika is read by 15 people in a village ‘chaupal’, whereas in the metros, the per copy readership of national dailies is lower because there are more nuclear families. So, the circulation of these newspapers is high and, on the basis of volumes, the national dailies can afford to keep their prices as low as Re 1.”

The Future of News was organised by afaqs! events and sponsored by STAR News, Dainik Jagran and Yuva.