Thursday, May 26, 2005
Newspaper-War Correspondent: 26/05/05
Statistical Wrangling?
The Hindu disputes the circulation claims of the DC in Tamil Nadu, and again brings to light the dynamics of 'raddi economics'. Perhaps only the national readership survey can settle this debate! Wouldn't it be ideal for The Hindu to not have to be concerned with such petty debates at all, and enjoy such a massive advantage as the market leader that no other player could even dream of challenging?
From Agencyfaqs!:
Deccan Chronicle’s claim of having a circulation of 1.45 lakh copies is highly exaggerated and ridiculous. The newspaper may not be selling more than 15,000-20,000 copies,” says N Murali, joint managing director, The Hindu.
Welcome to battleground Chennai, where the King is in no mood to allow potential usurpers sneaking in. Murali adds, “The publication may be having a print run of as many copies as it claims but it's certainly not reaching the readers.”
He was responding to Deccan Chronicle Holdings’ executive director PK Iyer’s recent statement in a business daily that the newspaper’s average print order is 1.45 lakh copies and the hype that the Hyderabad-based daily has created.
Murali explains the entire model of newspaper circulation business that exists in Chennai. He says, “Deccan Chronicle is sold at Re 1. Out of which, the hawker gets 50 paise, and the publication gets 40 paise. The agent, who is a link between the hawker and the publication, gets 10 paise. But when the agent sells the newspaper to a scrap dealer, he gets 70 paise for a newspaper – which is 20 paise more than what he gets from the hawker.”
Media planners support Murali’s explanation. A Mumbai-based media planner says, “This may be quite right. But Deccan Chronicle is no exception. Any newspaper, which launches in a new market, follows the same formula.”
He adds, “Publications pile up a huge print run to get high figures quoted in the ABC certificate. A part of the money invested in printing is, of course, recovered by selling the same newspapers as raddi (scrap).”
According to media planners, even a section of the readers buy a new daily for the same reasons. For instance, if a reader gets a new daily for Rs 30 a month and sells it as scrap for Rs 20 a month, the cost that he actually incurs to get a new daily is Rs 10. So, while a reader continues to read his old-favourite The Hindu, he can afford an additional publication for Rs 10. This, in turn, also helps the new publication to get high readership figures.
The Mumbai-based planner quips, “The success of the new entrant depends on how tactically the publication deals with this camouflage.” “Advertisers generally judge the response of a new daily from the response of direct-communicated ads,” he adds.
Industry sources estimate that Deccan Chronicle currently has been successful in getting 15 per cent of the total advertising revenue of all English dailies in Tamil Nadu. The Hindu still controls more than 75 per cent of the business, which is estimated to be around Rs 150- 200 crore, annually. A Delhi-based media planner says, “Deccan Chronicles' business will not affect The Hindu as mostly those advertisers, who couldn't afford The Hindu due to its high price, are taking Deccan Chronicle as a second option.”
In fact, most of the planners say that maximum advertisements on Deccan Chronicle's Chennai edition are essentially add-ons of the publication’s Hyderabad edition, as the publication is said to be offering very little discounts in the Hyderabad market.
The Hindu’s Murali refuses to even grant Deccan Chronicle an advertising share of 15 per cent. He says, “Only 12 per cent of Deccan Chronicle is advertisements. With that, they can't have 15 per cent of the total market.”
Several attempts to contact the Deccan Chronicle management went futile.
The Hindu disputes the circulation claims of the DC in Tamil Nadu, and again brings to light the dynamics of 'raddi economics'. Perhaps only the national readership survey can settle this debate! Wouldn't it be ideal for The Hindu to not have to be concerned with such petty debates at all, and enjoy such a massive advantage as the market leader that no other player could even dream of challenging?
From Agencyfaqs!:
Deccan Chronicle’s claim of having a circulation of 1.45 lakh copies is highly exaggerated and ridiculous. The newspaper may not be selling more than 15,000-20,000 copies,” says N Murali, joint managing director, The Hindu.
Welcome to battleground Chennai, where the King is in no mood to allow potential usurpers sneaking in. Murali adds, “The publication may be having a print run of as many copies as it claims but it's certainly not reaching the readers.”
He was responding to Deccan Chronicle Holdings’ executive director PK Iyer’s recent statement in a business daily that the newspaper’s average print order is 1.45 lakh copies and the hype that the Hyderabad-based daily has created.
Murali explains the entire model of newspaper circulation business that exists in Chennai. He says, “Deccan Chronicle is sold at Re 1. Out of which, the hawker gets 50 paise, and the publication gets 40 paise. The agent, who is a link between the hawker and the publication, gets 10 paise. But when the agent sells the newspaper to a scrap dealer, he gets 70 paise for a newspaper – which is 20 paise more than what he gets from the hawker.”
Media planners support Murali’s explanation. A Mumbai-based media planner says, “This may be quite right. But Deccan Chronicle is no exception. Any newspaper, which launches in a new market, follows the same formula.”
He adds, “Publications pile up a huge print run to get high figures quoted in the ABC certificate. A part of the money invested in printing is, of course, recovered by selling the same newspapers as raddi (scrap).”
According to media planners, even a section of the readers buy a new daily for the same reasons. For instance, if a reader gets a new daily for Rs 30 a month and sells it as scrap for Rs 20 a month, the cost that he actually incurs to get a new daily is Rs 10. So, while a reader continues to read his old-favourite The Hindu, he can afford an additional publication for Rs 10. This, in turn, also helps the new publication to get high readership figures.
The Mumbai-based planner quips, “The success of the new entrant depends on how tactically the publication deals with this camouflage.” “Advertisers generally judge the response of a new daily from the response of direct-communicated ads,” he adds.
Industry sources estimate that Deccan Chronicle currently has been successful in getting 15 per cent of the total advertising revenue of all English dailies in Tamil Nadu. The Hindu still controls more than 75 per cent of the business, which is estimated to be around Rs 150- 200 crore, annually. A Delhi-based media planner says, “Deccan Chronicles' business will not affect The Hindu as mostly those advertisers, who couldn't afford The Hindu due to its high price, are taking Deccan Chronicle as a second option.”
In fact, most of the planners say that maximum advertisements on Deccan Chronicle's Chennai edition are essentially add-ons of the publication’s Hyderabad edition, as the publication is said to be offering very little discounts in the Hyderabad market.
The Hindu’s Murali refuses to even grant Deccan Chronicle an advertising share of 15 per cent. He says, “Only 12 per cent of Deccan Chronicle is advertisements. With that, they can't have 15 per cent of the total market.”
Several attempts to contact the Deccan Chronicle management went futile.
Monday, May 23, 2005
Newspaper-War Correspondent: 22/05/05
And a yet another potential strategy that The Hindu might do well to follow- This time from an in-house source... Essentially, another agressive marketing approach would be in terms of acquisitions, not of other newspaper companies, but of companies that may be potential advertisers. After all, advertising does account for more than 80% of total revenue for most major newspapers in India. Of course, this raises the spectre of marketing functions dominating editorial operations, but The Hindu has a legendary ability to keep the former in check, and so this is unlikely to be problematic...
Sevanti Ninan writes
In the fortnight since this column was last published, two more TV channels (NDTV Profit and Awaaz from CNBC) and at least one more newspaper edition (Nai Duniya in Gwalior) have made their appearance. Last year saw several examples of expansion and consolidation. This year will see many more. Before the year is out, The Hindu's bastion, Chennai, is likely to see the entry of at least two more English newspapers. One of them will also go to Tiruchirapalli and Coimbatore. Mumbai may actually see the long-promised arrival of The Hindustan Times, as well as of the Dainik Bhaskar. Punjab may see a new Punjabi player called Dainik Jagran. Only the Eastern region — barring Bihar and Jharkhand — seems immune to the compulsive flowering of yet more and more media. Several new TV channels are also on the anvil, including a scheduled launch in the first quarter of 2005 from the Jagran group.
In the pink of health
What does so much growth signify? An industry that is in the pink of health? Or one in which expansion is increasingly becoming both a technological necessity and a matter of surviving the competition? With the advent of Direct to Home (DTH) platforms, it is no long enough to have one or two channels to offer; you need half a dozen to make up bouquets. And when another newspaper comes into your territory you have to go out and give it competition in its own territory if you don't want to get hammered.
Growth fuelled primarily by advertising will remain the norm, but avenues of financing are changing in the media business. Each successive year sees more and more media houses going in for initial public offerings. Deccan Chronicle, NDTV, TV Today, TV Eighteen, Balaji Telefilms have all seen enthusiastic public responses to their IPOs. Expansion has meant the following: more and more media stocks on offer, the entry of foreign investment, both direct and institutional, into the Indian media, media houses diluting equity through private placement, pushing for new avenues of advertising, doing journalism on the cheap, and investing in new territories.
When family-owned companies go public, it opens up their functioning to the scrutiny of a market regulator. When foreign direct investment comes into a paper like the Dainik Jagran or a Hindustan Times, as happened recently, it also leads to due diligence by the prospective foreign partner, and so theoretically, more transparency and professionalism all around. In theory, doing charming things like charging money for publishing news, printing just for raddi or the resale value of the newsprint, adopting unfair trade practices such as price undercutting should become more difficult. But one must not underestimate business ingenuity.
Or sheer inventiveness. Eyes popped within the media last week when a newspaper reported that the Bennett, Coleman and Co. Ltd. (BCCL), publishers of the Times of India, have worked out an altogether amazing new approach to ensuring a flow of advertising despite growing competition from TV and other publications. It is buying equity in companies which are expected to be big advertisers and sewing up deals whereby they will advertise exclusively with BCCL. Times have changed. Earlier, newspapers were owned by companies that produced sugar and textiles. Today newspapers are setting out to own stake in fashion wear and retail chain stores.
And what will BCCL do for its new partners in return? It will promote their brands in its newspapers, web portal, radio and TV channels. What will it get by promoting them, in addition to locked-in advertising? The value of its investment in those companies goes up. When it wants to get out of the arrangement, it can exit by selling the stock it has bought. The company says it intends to do many more such deals. Think of the many promotional news items that will sprout on its pages and channels as a result. Pragmatism will replace any shred of idealism that might remain about media objectives, and media consumers will have to come to terms with this.
Will this route to assured advertising be emulated by others? The catch is that most media houses do not have the spare cash to take such a route. BCCI is incredibly rich in comparison with many other media companies. In the last financial year it made a few hundred crores in post-tax profit which it has the freedom to invest.
When media stocks become listed, that too changes public perception of media motivation. Published criticism of the media's overreaction to the stock market crash when the United Progressive Alliance (UPA) Government was being formed, attributed the TV channel frenzy to the fact that stocks of recently-listed TV companies like NDTV had also been affected by the fall. But all the eyebrow-raising comes primarily from within the media. Consumers are going out and investing in media stocks, subscribing to the new media offerings and not worrying too much about motivation.
Overall, they are beneficiaries of all the dynamism in the media industry. It touches everybody. Competition is pushing more and more media companies into India's hinterland, beyond the metro cities. Every Indian will become a media consumer, a media source (as very local news becomes the norm), and an advertiser. Already, people in India's villages are placing advertisements in newspapers. Could anybody have foreseen this even five years ago?
Sevanti Ninan writes
In the fortnight since this column was last published, two more TV channels (NDTV Profit and Awaaz from CNBC) and at least one more newspaper edition (Nai Duniya in Gwalior) have made their appearance. Last year saw several examples of expansion and consolidation. This year will see many more. Before the year is out, The Hindu's bastion, Chennai, is likely to see the entry of at least two more English newspapers. One of them will also go to Tiruchirapalli and Coimbatore. Mumbai may actually see the long-promised arrival of The Hindustan Times, as well as of the Dainik Bhaskar. Punjab may see a new Punjabi player called Dainik Jagran. Only the Eastern region — barring Bihar and Jharkhand — seems immune to the compulsive flowering of yet more and more media. Several new TV channels are also on the anvil, including a scheduled launch in the first quarter of 2005 from the Jagran group.
In the pink of health
What does so much growth signify? An industry that is in the pink of health? Or one in which expansion is increasingly becoming both a technological necessity and a matter of surviving the competition? With the advent of Direct to Home (DTH) platforms, it is no long enough to have one or two channels to offer; you need half a dozen to make up bouquets. And when another newspaper comes into your territory you have to go out and give it competition in its own territory if you don't want to get hammered.
Growth fuelled primarily by advertising will remain the norm, but avenues of financing are changing in the media business. Each successive year sees more and more media houses going in for initial public offerings. Deccan Chronicle, NDTV, TV Today, TV Eighteen, Balaji Telefilms have all seen enthusiastic public responses to their IPOs. Expansion has meant the following: more and more media stocks on offer, the entry of foreign investment, both direct and institutional, into the Indian media, media houses diluting equity through private placement, pushing for new avenues of advertising, doing journalism on the cheap, and investing in new territories.
When family-owned companies go public, it opens up their functioning to the scrutiny of a market regulator. When foreign direct investment comes into a paper like the Dainik Jagran or a Hindustan Times, as happened recently, it also leads to due diligence by the prospective foreign partner, and so theoretically, more transparency and professionalism all around. In theory, doing charming things like charging money for publishing news, printing just for raddi or the resale value of the newsprint, adopting unfair trade practices such as price undercutting should become more difficult. But one must not underestimate business ingenuity.
Or sheer inventiveness. Eyes popped within the media last week when a newspaper reported that the Bennett, Coleman and Co. Ltd. (BCCL), publishers of the Times of India, have worked out an altogether amazing new approach to ensuring a flow of advertising despite growing competition from TV and other publications. It is buying equity in companies which are expected to be big advertisers and sewing up deals whereby they will advertise exclusively with BCCL. Times have changed. Earlier, newspapers were owned by companies that produced sugar and textiles. Today newspapers are setting out to own stake in fashion wear and retail chain stores.
And what will BCCL do for its new partners in return? It will promote their brands in its newspapers, web portal, radio and TV channels. What will it get by promoting them, in addition to locked-in advertising? The value of its investment in those companies goes up. When it wants to get out of the arrangement, it can exit by selling the stock it has bought. The company says it intends to do many more such deals. Think of the many promotional news items that will sprout on its pages and channels as a result. Pragmatism will replace any shred of idealism that might remain about media objectives, and media consumers will have to come to terms with this.
Will this route to assured advertising be emulated by others? The catch is that most media houses do not have the spare cash to take such a route. BCCI is incredibly rich in comparison with many other media companies. In the last financial year it made a few hundred crores in post-tax profit which it has the freedom to invest.
When media stocks become listed, that too changes public perception of media motivation. Published criticism of the media's overreaction to the stock market crash when the United Progressive Alliance (UPA) Government was being formed, attributed the TV channel frenzy to the fact that stocks of recently-listed TV companies like NDTV had also been affected by the fall. But all the eyebrow-raising comes primarily from within the media. Consumers are going out and investing in media stocks, subscribing to the new media offerings and not worrying too much about motivation.
Overall, they are beneficiaries of all the dynamism in the media industry. It touches everybody. Competition is pushing more and more media companies into India's hinterland, beyond the metro cities. Every Indian will become a media consumer, a media source (as very local news becomes the norm), and an advertiser. Already, people in India's villages are placing advertisements in newspapers. Could anybody have foreseen this even five years ago?
Thursday, May 19, 2005
Newspaper-War Correspondent: 19/05/05
In war, the little things matter...
As The Hindu enters an era of ever-tightening profit and revenue margins, it will have to re-think some of its strategies, particularly in market positioning issues. While expansion into the cities of north India, such as Mumbai and New Delhi is a venture that requires vast amounts of expert planning and colossal amounts of capital- and consequently cannot be undertaken without due caution- there is nothing preventing the newspaper from adopting a more aggressive approach in its home territory. Why not acquire the neighbourhood newspapers that are delivered free and are just cash machines? Surely the leviathan can afford to buy them out? Wouldn't this extend the lead that The Hindu has over newcomers like the DC and ToI by utilising the full potential of its existing infrastructure and distribution networks in the city?
On the neighbourhood news war, from an article in the Business Standard:
Chennai's independent, local newspapers, distributed free, have established their own dynamics. Many are changing their colour from plain black.
In a silent move, two city-based newspaper companies, Kasturi & Sons Ltd (publishers of The Hindu) and News Today Printers & Publishers (P) Ltd (publishing News Today evening daily) have entered the Chennai neighbourhood newspaper market.
While News Today brings out four publications — Mylapore Talk (30,000 copies), T Nagar Talk (40,000 copies), Anna Nagar Talk (50,000 copies) and Adyar Talk (40,000 copies) — covering the respective localities, Kasturi & Sons brings its version as Downtown, a tabloid supplement that comes with The Hindu on Sundays.
Though the officials of the two companies are unwilling to talk about their recent move, the logic, obviously, is to tap the business potential now being exploited by several others.
For Kasturi & Sons, the move into neighbourhood segments could be a strategic one in the wake of ensuing competition from dailies like the Deccan Chronicle and Times of India.
As a local supplement that comes along with The Hindu, which boasts a 2.5-lakh circulation in Chennai, the paper can now offer more local news and features as its unique selling proposition that the new entrants cannot match, at least initially. Interestingly, the daily has another city supplement called Metro Plus.
While News Today has already appointed dedicated reporters for each of its publications, Kasturi & Sons, it is learnt, will be doing so soon.
Unlike the mainline English newspaper scene in Chennai where there are only two — The Hindu and The New Indian Express — there are more than 30 neighbourhood papers. Some like Adyar Times and Mylapore Times are a decade old and some like Apollo Times and Suburban Voice are relatively younger.
Though free newspapers or mailers are not new to Chennai their growth started in the early '90s when the liberalised economy brought in new industries and service providers. With the mainline dailies restricted essentially to national and international news and their high ad tariff rates keeping out local business establishments from advertising, free neighbourhood publications came to fill the void.
Almost all of them started as four-page free publications reaching around 5,000 homes in an up market locality. With the advertisers and the readers finding them useful, the revenues started flowing, resulting in increased pages and print runs.
Today, even multinationals and large Indian corporates find these publications an attractive media to reach their target audience. One can even find recruitment advertisements from call centres and other corporates in the local tabloids.
As R Krishna Mohan, president, Ogilvy & Mather, says, "We are looking at this segment positively as it offers distinct opportunities for our clients."
Small is big According to N Ravi, editor and publisher, Suburban Voice, "Gone are the days of people looking for neighbourhood publications to find a music teacher or gas stove service mechanic. Now, almost all large ad agencies approach us for specific needs and area-based reach." Launched in 1999, Suburban Voice covers 40,000 households in south Chennai suburbs every week.
"On an average, our publication deals with about 70 advertisers, both large and small, every week. Of the 70, there are at least 30 advertisers who have long-term relations or contracts with us," says Ravi.
There are organisations that swear by neighbourhood papers and do not advertise in mainline dailies. Apart from the display ads, the papers have a big cash-down classified section, eating into the revenues of the mainline dailies. According to Mohan, the Chennai print ad market is estimated at Rs500 crore. However, nobody is able to put a number to the ad market for the neighbourhood papers.
The operational economics seems to be simple but lucrative. The per copy cost of a 12-page tabloid works out to Rs1.20 in the case of black and white and Rs2.50 if produced in colour. And the profit margin according to one industry source is nearly 40-50 per cent per issue.
Areas with several middle, upper middle, rich class apartments, houses and commercial establishments are ideal areas for starting a publication. The two requisites for successful neighbourhood publications are: (a) reaching the newspaper to target households normally during the in the morning during the weekend and (b) a decent local content creator. If these two are tied up then advertisers automatically come, says an insider.
For their content, many publications depend on freelancers. Some like the Adyar Times, Mylapore Times, Arcot Road Times and Apollo Times have full time reporters and photographers.
Though the field is fiercely competitive, in some areas there are over five publications — everybody seems to be doing good business attracting new players.
And the majors are not bothered by the entry of big publishing groups like Kasturi & Sons and News Today Printers & Publishers despite their editorial and marketing strengths. Already senior journalists belonging to the two houses have started writing for their local tabloids.
Says the 45-year old Vincent D'Souza, editor and publisher of three publications — Adyar Times, Arcot Road Times and Mylapore Times, "Of what we have seen of the 'competitors', they are out of sync with the neighbourhoods. Everybody can make coffee, but only a few can make real coffee! Ours are the real papers. Downtown is an advert-paper." His three papers have a circulation reach of between 25,000 and 40,000, houses.
Adds Ravi, "I don't foresee a major daily group taking over our share in the market as we operate on a totally different platform carved out with reach and area specific information." According to him, the single advantage the smaller standalone papers have over the large media houses is the flexibility in modifying their ad rates or tailoring special packages. The individual papers can be more aggressive in offering attractive customised packages that the larger ones often find cumbersome to design for individual advertisers.
In addition, publications like Mylapore Times, Adyar Times and Apollo Times have bonded well with their communities by conducting local contests and events exclusively for their readers.
Pricing will be suicidal
Though the neighbourhood papers have built impressive circulation and good readership many agree that pricing their publication could be suicidal. The main reason for the success of neighbourhood newspapers is that it is dropped at the doorstep free. And the dynamics of a priced publication is entirely different.
As a matter of fact, one of the reasons the existing players are not perturbed by Downtown is that it comes with The Hindu priced at Rs4.50.
A cursory look at the neighbourhood papers seems to establish that news is what is published between advertisements. Some even term them as compendium of bit notices.
Most of the small publishers agree that priority is given to advertisements. According to Ravi, for the community newspaper readers, every advertisement is news by itself. "There are so many other media to deal with news. Neighbourhood magazines are purely an information resource and I strongly feel that we do perfectly what is expected of us."
But D' Souza strongly disagrees. "There cannot be news between ads! For the record, the Adyar Times, which has between 20 and 24 pages every week, carries no less than 40 news pieces and about 20 pictures."
As the publications are ad-driven, there are those who agree privately that editorial compromises have to be made in reporting and most of them confine themselves to harmless reporting.
However, the major problem they face is convincing new advertisers about their reach as there is no third party to certify the circulation.
Some ad agencies discount the reach of such papers by sizeable numbers. "One has to look at it practically. In the case of apartments, the delivery boys do not actually count and give copies to the watchman. They deliver a bunch and in many cases the number is lower than the actual number of apartments in that complex. The average readership is taken as two," reasons M Rajaram, director, Trinity Communications, an ad agency.
However, such discounting could not be done in the case of The Hindu as it reaches its subscribers doorsteps without fail.
According to him, content and the reach are what he looks at in a local tabloid while suggesting a publication to his clients. "As a test case I would advise my client to advertise in a couple of magazines in a locality. Based on the response, we finalise one paper and stick to that."
Would he consider neighbourhood publications as the sole medium for his clients? "These publications are only a supportive brand reinforcing medium and cannot substitute a mainline daily."
Though Ogilvy & Mather's Mohan terms Chennai's print ad market relatively small, the neighbourhood publications are doing good business and many are turning to colour. And with the entry the big boys, one has to wait and see how this segment pans out.
As The Hindu enters an era of ever-tightening profit and revenue margins, it will have to re-think some of its strategies, particularly in market positioning issues. While expansion into the cities of north India, such as Mumbai and New Delhi is a venture that requires vast amounts of expert planning and colossal amounts of capital- and consequently cannot be undertaken without due caution- there is nothing preventing the newspaper from adopting a more aggressive approach in its home territory. Why not acquire the neighbourhood newspapers that are delivered free and are just cash machines? Surely the leviathan can afford to buy them out? Wouldn't this extend the lead that The Hindu has over newcomers like the DC and ToI by utilising the full potential of its existing infrastructure and distribution networks in the city?
On the neighbourhood news war, from an article in the Business Standard:
Chennai's independent, local newspapers, distributed free, have established their own dynamics. Many are changing their colour from plain black.
In a silent move, two city-based newspaper companies, Kasturi & Sons Ltd (publishers of The Hindu) and News Today Printers & Publishers (P) Ltd (publishing News Today evening daily) have entered the Chennai neighbourhood newspaper market.
While News Today brings out four publications — Mylapore Talk (30,000 copies), T Nagar Talk (40,000 copies), Anna Nagar Talk (50,000 copies) and Adyar Talk (40,000 copies) — covering the respective localities, Kasturi & Sons brings its version as Downtown, a tabloid supplement that comes with The Hindu on Sundays.
Though the officials of the two companies are unwilling to talk about their recent move, the logic, obviously, is to tap the business potential now being exploited by several others.
For Kasturi & Sons, the move into neighbourhood segments could be a strategic one in the wake of ensuing competition from dailies like the Deccan Chronicle and Times of India.
As a local supplement that comes along with The Hindu, which boasts a 2.5-lakh circulation in Chennai, the paper can now offer more local news and features as its unique selling proposition that the new entrants cannot match, at least initially. Interestingly, the daily has another city supplement called Metro Plus.
While News Today has already appointed dedicated reporters for each of its publications, Kasturi & Sons, it is learnt, will be doing so soon.
Unlike the mainline English newspaper scene in Chennai where there are only two — The Hindu and The New Indian Express — there are more than 30 neighbourhood papers. Some like Adyar Times and Mylapore Times are a decade old and some like Apollo Times and Suburban Voice are relatively younger.
Though free newspapers or mailers are not new to Chennai their growth started in the early '90s when the liberalised economy brought in new industries and service providers. With the mainline dailies restricted essentially to national and international news and their high ad tariff rates keeping out local business establishments from advertising, free neighbourhood publications came to fill the void.
Almost all of them started as four-page free publications reaching around 5,000 homes in an up market locality. With the advertisers and the readers finding them useful, the revenues started flowing, resulting in increased pages and print runs.
Today, even multinationals and large Indian corporates find these publications an attractive media to reach their target audience. One can even find recruitment advertisements from call centres and other corporates in the local tabloids.
As R Krishna Mohan, president, Ogilvy & Mather, says, "We are looking at this segment positively as it offers distinct opportunities for our clients."
Small is big According to N Ravi, editor and publisher, Suburban Voice, "Gone are the days of people looking for neighbourhood publications to find a music teacher or gas stove service mechanic. Now, almost all large ad agencies approach us for specific needs and area-based reach." Launched in 1999, Suburban Voice covers 40,000 households in south Chennai suburbs every week.
"On an average, our publication deals with about 70 advertisers, both large and small, every week. Of the 70, there are at least 30 advertisers who have long-term relations or contracts with us," says Ravi.
There are organisations that swear by neighbourhood papers and do not advertise in mainline dailies. Apart from the display ads, the papers have a big cash-down classified section, eating into the revenues of the mainline dailies. According to Mohan, the Chennai print ad market is estimated at Rs500 crore. However, nobody is able to put a number to the ad market for the neighbourhood papers.
The operational economics seems to be simple but lucrative. The per copy cost of a 12-page tabloid works out to Rs1.20 in the case of black and white and Rs2.50 if produced in colour. And the profit margin according to one industry source is nearly 40-50 per cent per issue.
Areas with several middle, upper middle, rich class apartments, houses and commercial establishments are ideal areas for starting a publication. The two requisites for successful neighbourhood publications are: (a) reaching the newspaper to target households normally during the in the morning during the weekend and (b) a decent local content creator. If these two are tied up then advertisers automatically come, says an insider.
For their content, many publications depend on freelancers. Some like the Adyar Times, Mylapore Times, Arcot Road Times and Apollo Times have full time reporters and photographers.
Though the field is fiercely competitive, in some areas there are over five publications — everybody seems to be doing good business attracting new players.
And the majors are not bothered by the entry of big publishing groups like Kasturi & Sons and News Today Printers & Publishers despite their editorial and marketing strengths. Already senior journalists belonging to the two houses have started writing for their local tabloids.
Says the 45-year old Vincent D'Souza, editor and publisher of three publications — Adyar Times, Arcot Road Times and Mylapore Times, "Of what we have seen of the 'competitors', they are out of sync with the neighbourhoods. Everybody can make coffee, but only a few can make real coffee! Ours are the real papers. Downtown is an advert-paper." His three papers have a circulation reach of between 25,000 and 40,000, houses.
Adds Ravi, "I don't foresee a major daily group taking over our share in the market as we operate on a totally different platform carved out with reach and area specific information." According to him, the single advantage the smaller standalone papers have over the large media houses is the flexibility in modifying their ad rates or tailoring special packages. The individual papers can be more aggressive in offering attractive customised packages that the larger ones often find cumbersome to design for individual advertisers.
In addition, publications like Mylapore Times, Adyar Times and Apollo Times have bonded well with their communities by conducting local contests and events exclusively for their readers.
Pricing will be suicidal
Though the neighbourhood papers have built impressive circulation and good readership many agree that pricing their publication could be suicidal. The main reason for the success of neighbourhood newspapers is that it is dropped at the doorstep free. And the dynamics of a priced publication is entirely different.
As a matter of fact, one of the reasons the existing players are not perturbed by Downtown is that it comes with The Hindu priced at Rs4.50.
A cursory look at the neighbourhood papers seems to establish that news is what is published between advertisements. Some even term them as compendium of bit notices.
Most of the small publishers agree that priority is given to advertisements. According to Ravi, for the community newspaper readers, every advertisement is news by itself. "There are so many other media to deal with news. Neighbourhood magazines are purely an information resource and I strongly feel that we do perfectly what is expected of us."
But D' Souza strongly disagrees. "There cannot be news between ads! For the record, the Adyar Times, which has between 20 and 24 pages every week, carries no less than 40 news pieces and about 20 pictures."
As the publications are ad-driven, there are those who agree privately that editorial compromises have to be made in reporting and most of them confine themselves to harmless reporting.
However, the major problem they face is convincing new advertisers about their reach as there is no third party to certify the circulation.
Some ad agencies discount the reach of such papers by sizeable numbers. "One has to look at it practically. In the case of apartments, the delivery boys do not actually count and give copies to the watchman. They deliver a bunch and in many cases the number is lower than the actual number of apartments in that complex. The average readership is taken as two," reasons M Rajaram, director, Trinity Communications, an ad agency.
However, such discounting could not be done in the case of The Hindu as it reaches its subscribers doorsteps without fail.
According to him, content and the reach are what he looks at in a local tabloid while suggesting a publication to his clients. "As a test case I would advise my client to advertise in a couple of magazines in a locality. Based on the response, we finalise one paper and stick to that."
Would he consider neighbourhood publications as the sole medium for his clients? "These publications are only a supportive brand reinforcing medium and cannot substitute a mainline daily."
Though Ogilvy & Mather's Mohan terms Chennai's print ad market relatively small, the neighbourhood publications are doing good business and many are turning to colour. And with the entry the big boys, one has to wait and see how this segment pans out.
Wednesday, May 18, 2005
Newspaper-War Correspondent: 18/05/05
The Battle Beginneth?
It would appear that the gauntlet has been cast. The Deccan Chronicle (DC), according to its own estimates, is claiming a circulation of 140,000- but this figure has to be treated with caution as it has not been audited by the ABC. New Indian Express's Sonthalia certainly supports that view! The DC is upping the ante on the advertising front as well, and is hinting at bare-knuckle-brawl ad rate competition. Makes you wonder what The Hindu has got up its sleeve...
Tabloid is a Four-Letter Word:
PS- Technically, it refers to the size of the newspaper, not its contents. This is the meaning implied in the articles below...
Risks and rewards of tabloidisation: Mckinsey Quarterly
Going tabloid- international comparisons: Indeconomist.com
Views on The Hindu's recent design revamp: Indeconomist.com
From an article in the Business Standard:
Deccan Chronicle" claims that it has made considerable headway in the Chennai market.
Even at 5 a m, it takes a while to locate a parking spot around Ashok Pillar in Chennai’s Ashok Nagar. The place is choc-a-bloc with news agents scrambling for newspapers at one of the the city’s biggest distribution “drop points.”
In the wee hours of the morning, one news agent stands out in the crowd as he fixes his newspapers’ posters in front of his stand.
The posters are a good way of reminding the morning walkers that a new English newspaper has hit the city: “Deccan Chronicle.”
The Hyderabad- based paper, which launched its Chennai edition on March 28, is claiming a coup of sorts – a circulation of 1.40 lakh. Deccan Chronicle Holdings’ executive director P K Iyer says that the average print order is 1.45 lakh copies (some copies are sent to towns such as Vellore).
A part of the circulation, about 20,000 copies, comes from the paper’s deal with ICICI Bank – its credit card customers can buy a year’s subscription for Rs 99.
“Deccan Chronicle’s” circulation is unaudited. But if its claims are true, in less than a month the paper has notched up a circulation which is more than half “The Hindu’s” Chennai city circulation.
The 127-year-old Kasturi & Sons newspaper leads the Chennai city market with a circulation of 2,67,349 copies (Audit Bureau of Circulation figure for July-December 2004).
“Deccan Chronicle” has stormed the city with a cover price of Re 1 versus the Rs 3.25 and Rs 4.50 that “The Hindu” continues to charge on week days and Sundays, respectively. But “The Hindu’s” joint managing director N Murali says: “’Deccan Chronicle’ has made no impact whatsoever.”
The paper has not even responded to “Deccan Chronicle’s” lower price. “The New Indian Express,” more vulnerable to DC’s onslaught in popular perception, is priced at Rs 1.50 on weekdays, and Rs 5 on Sundays.
Says Express Publication (Madurai) chairman & managing director Manoj Kumar Sonthalia: “Express is bigger than Deccan Chronicle in Chennai.” However, he declines to reveal the circulation of the Express as the paper does not seem to have been certified by the ABC.
Sonthalia insists that “Deccan Chronicle” has not taken away his newspaper’s readers. He believes that “Deccan Chronicle” is probably expanding the market for English newspapers.
Also, not everyone accepts “Deccan Chronicle’s” claims on circulation numbers. In the absence of audited figures, the media buying units of ad agencies do internal assessments of the reach of different papers.
They estimate that “Deccan Chronicle” may not be selling more than 40,000 copies. “The New Indian Express” is believed to be ahead of Deccan Chronicle by 10,000 to 15,000 copies.
While the number of copies sold by the dailies is not clear, what’s agreed upon is Chennai’s advertising potential. Chennai and Bangalore are said to be the biggest markets for advertisements after Mumbai and New Delhi.
Murali thinks Chennai generates about Rs 500 crore in advertising. “Of this, Rs 250 crore to Rs 300 crore comes to the print media and ‘The Hindu’s” share is about 70 per cent.”
A significant chunk of advertisements are local. Chennai’s huge textiles and jewellery retail outlets are a significant sources of revenue.
Says K Satyanarayana, media director at RK Swamy BBDO’s media unit: “This kind of retail advertising is one of the highest in India. I don’t think Chennai residents contribute more than 50 per cent to retail sales.”
“Deccan Chronicle’s” Iyer, however, doesn’t quite believe that Chennai can generate only Rs 500 crore. “’The Hindu’s’ dominance has led to premium pricing. Once competition brings down advertising rates, the size of the market is bound to expand.”
Even if it does, not everyone will get more advertising revenue. Murali says that when it comes to advertising, historically, the winner takes all.
Still, “Deccan Chronicle” might be able to piggyback on its strength in its home market, Hyderabad. “It might have an edge because of the add-on rate it offers to all its advertisers using the Hyderabad edition,” says Satyanarayana.
For the moment, while circulation figures and the likely impact on the advertising flow are unclear, what does seem plausible is that “Deccan Chronicle’s” rock bottom cover price has begun expanding the market for English newspapers.
Another piece on the ad wars: DC claimes ad revenue rise
It would appear that the gauntlet has been cast. The Deccan Chronicle (DC), according to its own estimates, is claiming a circulation of 140,000- but this figure has to be treated with caution as it has not been audited by the ABC. New Indian Express's Sonthalia certainly supports that view! The DC is upping the ante on the advertising front as well, and is hinting at bare-knuckle-brawl ad rate competition. Makes you wonder what The Hindu has got up its sleeve...
Tabloid is a Four-Letter Word:
PS- Technically, it refers to the size of the newspaper, not its contents. This is the meaning implied in the articles below...
Risks and rewards of tabloidisation: Mckinsey Quarterly
Going tabloid- international comparisons: Indeconomist.com
Views on The Hindu's recent design revamp: Indeconomist.com
From an article in the Business Standard:
Deccan Chronicle" claims that it has made considerable headway in the Chennai market.
Even at 5 a m, it takes a while to locate a parking spot around Ashok Pillar in Chennai’s Ashok Nagar. The place is choc-a-bloc with news agents scrambling for newspapers at one of the the city’s biggest distribution “drop points.”
In the wee hours of the morning, one news agent stands out in the crowd as he fixes his newspapers’ posters in front of his stand.
The posters are a good way of reminding the morning walkers that a new English newspaper has hit the city: “Deccan Chronicle.”
The Hyderabad- based paper, which launched its Chennai edition on March 28, is claiming a coup of sorts – a circulation of 1.40 lakh. Deccan Chronicle Holdings’ executive director P K Iyer says that the average print order is 1.45 lakh copies (some copies are sent to towns such as Vellore).
A part of the circulation, about 20,000 copies, comes from the paper’s deal with ICICI Bank – its credit card customers can buy a year’s subscription for Rs 99.
“Deccan Chronicle’s” circulation is unaudited. But if its claims are true, in less than a month the paper has notched up a circulation which is more than half “The Hindu’s” Chennai city circulation.
The 127-year-old Kasturi & Sons newspaper leads the Chennai city market with a circulation of 2,67,349 copies (Audit Bureau of Circulation figure for July-December 2004).
“Deccan Chronicle” has stormed the city with a cover price of Re 1 versus the Rs 3.25 and Rs 4.50 that “The Hindu” continues to charge on week days and Sundays, respectively. But “The Hindu’s” joint managing director N Murali says: “’Deccan Chronicle’ has made no impact whatsoever.”
The paper has not even responded to “Deccan Chronicle’s” lower price. “The New Indian Express,” more vulnerable to DC’s onslaught in popular perception, is priced at Rs 1.50 on weekdays, and Rs 5 on Sundays.
Says Express Publication (Madurai) chairman & managing director Manoj Kumar Sonthalia: “Express is bigger than Deccan Chronicle in Chennai.” However, he declines to reveal the circulation of the Express as the paper does not seem to have been certified by the ABC.
Sonthalia insists that “Deccan Chronicle” has not taken away his newspaper’s readers. He believes that “Deccan Chronicle” is probably expanding the market for English newspapers.
Also, not everyone accepts “Deccan Chronicle’s” claims on circulation numbers. In the absence of audited figures, the media buying units of ad agencies do internal assessments of the reach of different papers.
They estimate that “Deccan Chronicle” may not be selling more than 40,000 copies. “The New Indian Express” is believed to be ahead of Deccan Chronicle by 10,000 to 15,000 copies.
While the number of copies sold by the dailies is not clear, what’s agreed upon is Chennai’s advertising potential. Chennai and Bangalore are said to be the biggest markets for advertisements after Mumbai and New Delhi.
Murali thinks Chennai generates about Rs 500 crore in advertising. “Of this, Rs 250 crore to Rs 300 crore comes to the print media and ‘The Hindu’s” share is about 70 per cent.”
A significant chunk of advertisements are local. Chennai’s huge textiles and jewellery retail outlets are a significant sources of revenue.
Says K Satyanarayana, media director at RK Swamy BBDO’s media unit: “This kind of retail advertising is one of the highest in India. I don’t think Chennai residents contribute more than 50 per cent to retail sales.”
“Deccan Chronicle’s” Iyer, however, doesn’t quite believe that Chennai can generate only Rs 500 crore. “’The Hindu’s’ dominance has led to premium pricing. Once competition brings down advertising rates, the size of the market is bound to expand.”
Even if it does, not everyone will get more advertising revenue. Murali says that when it comes to advertising, historically, the winner takes all.
Still, “Deccan Chronicle” might be able to piggyback on its strength in its home market, Hyderabad. “It might have an edge because of the add-on rate it offers to all its advertisers using the Hyderabad edition,” says Satyanarayana.
For the moment, while circulation figures and the likely impact on the advertising flow are unclear, what does seem plausible is that “Deccan Chronicle’s” rock bottom cover price has begun expanding the market for English newspapers.
Another piece on the ad wars: DC claimes ad revenue rise
Sunday, May 01, 2005
Newspaper-War Correspondent: 01/05/05
TOI Incursion Soon?
Perhaps The Hindu should start polishing its weapons of war? News from the Agencyfaqs! website:
May is going to be one hot month down South. Apart from other reasons, The Times of India is set to launch its all-colour Chennai edition by end-May, 2005. According to sources, Vikas Singh, Senior Assistant Editor with TOI, Delhi, will take over as Resident Editor of the Chennai edition.
M Venkatraman, corporate director of TOI Group, said: "We have already ordered for the printing machines and hope to get it within a few months. So, the launch will only happen till the end of May 2005."
Even as the TOI group readies for the Chennai launch, there’s some amount of nervousness within TOI about Hindustan Times’ proposed Mumbai launch.
"Can TOI fight battles at two fronts? What if our Chennai launch coincides with HT’s launch in Mumbai?" asks a TOI insider. It’s hard to hazard a guess, but HT may not be able to launch its Mumbai edition before June 2005. That should give TOI some breathing space. When asked whether the launch will start a price war in Chennai (as has been the case with TOI across cities), Venkatraman said, "I will not like to call it a price war. At the same time, with The Hindu already having a stronghold in the Chennai market and another major player, Deccan Chronicle, planning a Chennai edition, TOI will certainly be priced very strategically."
"But the final decision will only be taken prior to the launch, depending on how Deccan Chronicle prices itself," he adds. Incidentally, both The Hindu and Deccan Chronicle have been under constant pressure in Hyderabad from TOI, which launched its edition about five years back.
Although Venkatraman did not reveal the initial print run, sources say the Chennai edition will start with a circulation of one lakh. "The group will continue with its aggressive marketing strategy even in Chennai," Venkatraman concluded as a warning to prospective competitors.
Link:
(False?) Sense of Security: Moneycontrol.com
Perhaps The Hindu should start polishing its weapons of war? News from the Agencyfaqs! website:
May is going to be one hot month down South. Apart from other reasons, The Times of India is set to launch its all-colour Chennai edition by end-May, 2005. According to sources, Vikas Singh, Senior Assistant Editor with TOI, Delhi, will take over as Resident Editor of the Chennai edition.
M Venkatraman, corporate director of TOI Group, said: "We have already ordered for the printing machines and hope to get it within a few months. So, the launch will only happen till the end of May 2005."
Even as the TOI group readies for the Chennai launch, there’s some amount of nervousness within TOI about Hindustan Times’ proposed Mumbai launch.
"Can TOI fight battles at two fronts? What if our Chennai launch coincides with HT’s launch in Mumbai?" asks a TOI insider. It’s hard to hazard a guess, but HT may not be able to launch its Mumbai edition before June 2005. That should give TOI some breathing space. When asked whether the launch will start a price war in Chennai (as has been the case with TOI across cities), Venkatraman said, "I will not like to call it a price war. At the same time, with The Hindu already having a stronghold in the Chennai market and another major player, Deccan Chronicle, planning a Chennai edition, TOI will certainly be priced very strategically."
"But the final decision will only be taken prior to the launch, depending on how Deccan Chronicle prices itself," he adds. Incidentally, both The Hindu and Deccan Chronicle have been under constant pressure in Hyderabad from TOI, which launched its edition about five years back.
Although Venkatraman did not reveal the initial print run, sources say the Chennai edition will start with a circulation of one lakh. "The group will continue with its aggressive marketing strategy even in Chennai," Venkatraman concluded as a warning to prospective competitors.
Link:
(False?) Sense of Security: Moneycontrol.com
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