IMC 2010: Indian magazine segment to navigate an alternate growth path: Ernst & Young study

The objectives of the study conducted by Ernst & Young, titled The Indian Magazine Segment - Navigating new growth avenues, were to find out more about the trends, strengths and problems of the Indian magazine industry. The report is based on both primary as well as secondary research. Detailed interviews and survey techniques were put into motion in order to collate insights from Indian magazine companies. Additionally, resources such as the IRS, TAM AdEx and NRS were also used.

The key highlights of the study revealed three main truths: Firstly, it showed how 86 per cent of the respondents believe that the magazine segment is well positioned and expected to grow by 6-10 per cent annually over the next three years. Secondly, it was found that alternate revenue streams such as events and digital are expected to account for 20-50 per cent of total revenues within the next three years. And thirdly, the study showed that 73 per cent of the respondents believe that magazine readership growth will continue to be driven in metros and small urban towns.

While subscription revenue for B2B magazines is not expected to grow much, that for B2C magazines is expected to grow in excess of 10 per cent. This is attributed to several factors including a rise in the purchasing power of consumers and a rise in cover prices.

One major implication for marketers is to up the distribution network, as geographically speaking, magazine sales are expected to grow in Tier II cities. Though currently media spends are concentrated in a few key metros in India, the growing consumption of magazines in the regional market will change this trend.

According to the report, the Indian magazine industry's share in the overall advertising market varies in the range of 3-4 per cent and is currently estimated at about Rs 11 billion. This figure, however, is far lower compared to the global markets, where the segment comprises about 15 per cent of the overall ad spends. Ad and subscription revenues are expected to increase at 10 per cent and 5 per cent, respectively.

The report also states some areas of concern, such as the lack of reliable and cost effective distribution systems, growth in the number of sales outlets, absence of an adequate readership measurement mechanism, increasing amount of time spent by readers on alternate media and the need for regulatory/tax reforms. A forward looking finding was that 77 per cent of the magazine company respondents expect to launch new magazines over the next few years.

In all, the study shows that confidence levels are high in India as scores of new magazine launches, new market entrants and new titles are on the cards. Alternative revenue streams, such as the digital space and events, are also on the rise. Moreover, there are more than 300 million literate Indians who do not read any publication - this goes on to show the scope for greater reach and circulation. A rise in education levels, penetration of magazines and per capita income spells out more readership figures. The future, thus, looks bright.