NYWHERE ELSE in the world an attempt by three industry players to gang up would have raised eyebrows.
The competition watchdog would have jumped into action and rivals would have cried foul calling it an attempt at cartelisation. Not in India, though. For the Indian media industry already has a monopoly situation, parallels of which can’t be found anywhere in the world. India’s largest media house, Bennett, Coleman & Co Ltd (BCCL), has more than 30 publications from broadsheets to dailies to magazines besides television channels, radio stations, online channels and outdoor media. Besides flagship English daily, The Times of India, and the country’s top business daily, The Economic Times, it has tabloid Mumbai Mirror, Pune Mirror, Ahmedabad Mirror and Bangalore Mirror. The media behemoth also owns Eisamay, a Bengali newspaper, Kannada daily Vijay Karnataka, Marathi daily Maharashtra Times, Hindi daily Navbharat Times and evening tabloid Sandhya Times. Last year BCCL entered the Gujarat market with the launch of NavGujarat Samay. Its subsidiary World Wide Media publishes glossies such as Filmfare, Femina, Grazia, BBC Good Homes, while the broadcast business under Times Television Network runs English news channels including Times Now and ET Now in addition to movie channels Movies Now, Romedy Now and Zoom, a Bollywood channel. The group also is the owner and organiser of popular events such as Filmfare Awards and beauty pageant, Femina Miss India. That makes BCCL strong enough to have a de facto monopoly in the market. The move by six broadsheets?Hindustan Times, The Hindu and The Telegraph and their sister publications, Hindustan and The Hindu Tamil and Ananda Bazar Patrika ? to set up OneIndia, a combined space selling platform for display ads on a national level,needs to be seen in this light.
OneIndia defends the move as an attempt by three diverse media houses to present a unified front for advertisers wanting a pan-India reach. ?Unlike television viewership, print readership is very regular and consistent. So the platform will provide a huge reach to advertisers, along with a single window service, and they will be able to communicate with the right target group of consumers at one go,? said Benoy Roychowdhury, executive director, HT Media Ltd. He adds there is no scope of cartelisation as advertisers are free to ink any kind of deal with one or more newspaper. ?Advertisers can strike independent deals with newspapers in question or use the OneIndia platform for a composite reach. There are no conditions attached nor is OneIndia the only way to buy space on these papers,? he said.
To be sure, this is not the first time that media companies have joined hands to take on BCCL. In fact, a few years back Hindustan Times had tried selling advertising space in partnership with The Hindu group, and with the latest move the partnership has only expanded in terms of readership numbers. ?We have earlier seen a few players trying their hands at this model but it failed. Initially the model may work in major markets such as Delhi and Mumbai, where they may be able to give a tough competition to The Times of India (BCCL) group. But this is only possible if they work in sync with each other. The model?s success depends on many factors,? said Timmy Khandhari, managing director at Sapphire Professional Services, a boutique financial advisory services firm.
OneIndia claims that together it has a readership base of 6.5 crore, compared to BCCL?s total readership strength of 2.94 crore. ?While we do compete in the same space, the idea is not to wage war against the Times of India group. At the same time, the cumulative reach of all the six newspapers is much more than the newspapers of BCCL. Also, the alliance provides access to regional editions, which are the leading papers in their respective regions. This will give us an upper hand, as BCCL does not have a very strong regional presence,? added Roychowdhury.
However, industry experts point out that reach is not the only criteria. ?For the longest time brands have used traditional media for advertising but now with the evolution of media and with the advent of digital and mobile, a medium is used for its strength and not for its reach. From an advertiser’s point of view the reach of a medium no longer plays an important role when it comes to media planning,? said Ruchira Jaitly, senior director, carbonated soft drink category (CSDS), PepsiCo India.
Arunabh Das Sharma, president of BCCL, calls the alliance a desperate attempt by the competition to take on the market leader. ?Rather than calling it OneIndia, the partners involved should have named it ?One Multiple Region? as the platform would provide reach to select markets that include Tamil Nadu, West Bengal and four other regions where Hindustan Times is present. We should not forget that brand The Times of India has 50 editions and if we add other regional papers that we have which includes The Navbharat Times, Vijay Karnataka, Maharashtra Times, Bengali paper Eisamay?the accumulated reach of the newspaper brand is much more. The attempt is laughable,? said Sharma.
OneIndia argues that the sole objective of the alliance is to bring back advertisers who have moved to other media such as television and radio. For instance, fast moving consumer goods (FMCG) category which has an ad spend of around R20,000 crore spends a mere 2-3% of it on print. As per the Pitch Madison Media Advertising Outlook, after a long time, FMCG has become the largest contributor to print and TV, overtaking auto and education. The share of FMCG companies in the print advertising pie was 12.3% in 2013, significantly higher than its share of 7.2% in 2009.
?While industries such as FMCG and banking and financial services (BFSI) have once again started to use print as a medium of advertising, television and digital still account for a large part of their ad budgets. We want to change that and want companies to use print to deliver complex messages,? said Roychowdhury.
PepsiCo?s Jaitly, however, says a medium is selected on the basis of its ability to target the consumer. ?The game is about customised messaging. Each region has to be handled differently and therefore each media vertical too has to be used efficiently. For example, we are using regional print extensively in the southern and eastern part of the country to promote brand 7Up,? added Jaitly.
FMCG brands typically select television first, followed by print, and then outdoor, digital and radio. Marketers mainly use print for product and campaign lead advertising and even in print, the dependency on regional newspapers is more compared to national newspapers. ?A large part of FMCG shoppers are home-makers, mainly women, and there are many other cost-effective mediums which can be used for communication. For example, recently in Bihar we had used local newspapers to release an activation based campaign. The main idea is to pay for relevant eyeballs,? said Anuradha Narasimhan, director, marketing, Britannia Industries.
Interestingly, Britannia is one of the FMCG companies which have used the OneIndia platform for its NutriChoice range of biscuits. ?As the idea was to reach out to cosmopolitan
people living in the metros, we decided to use national dailies to promote the brand?s proposition,? added Narasimhan.
Whether the alliance will be able to impact the current ad rates is the moot question. Ad rates for newspapers and magazines are based on readership and circulation numbers. For example, the cost of a full page advertisement on the front page of a national daily such as Hindustan Times and The Hindu varies from R75 lakh to R1 crore. Similarly, a full page advertisement on the front page of a regional paper such as Ananda Bazar Patrika costs between R60 lakh and R80 lakh, whereas the cost of a full page ad on the front page of 24 editions of The Times of India is R1.5 crore to R2 crore. The ad rate can go up to R2.5 crore when an even larger number of editions including regional newspapers from the group is part of the deal.
Roychowdhury, however, says that OneIndia?s ad rates will be cost-effective vis-?-vis television, BCCL and even other media. ?As we are trying to bring advertisers back to print advertising, we are aware that the ad rates have to be cost effective for them to invest in newspapers,? he added.
Media planners warn that in its effort to offer competitive ad rates, the platform may end up offering lower rates. ?Ad rates differ from market to market, therefore pricing and packaging will play an important role. Also, advertisers will be on the lookout for cost-effective solutions. So OneIndia?s rates have to be cost-effective,? said PM Balakrishna, chief operating officer, Allied Media, the media planning and buying arm of Percept Group.
Moreover, too much of bundling can lead to further reduction in ad rates. For example, the cost of a full page ad in a national daily in a market like Delhi is higher than that in Kolkata, but when bundled together, the price will be lower. ?So we can expect deep discounts in the future,? said a senior media planner who did not want to be named. In such a
scenario the focus will shift to acquiring volume of ads but that too will be difficult as it would mean increasing the number of pages and this in turn will lead to a hike in production cost.
Sharma of BCCL, however, says that the formation of the platform will have zero impact on BCCL?s advertising rates. ?Media planning and buying in today’s world is based on scientific parameters and even media planners are well aware of the real situation. So such alliances will have no impact on the group,? said Sharma.
Regional newspapers such as Lokmat, Dainik Jagran, Dainik Bhaskar who till now have commanded higher ad rates compared to national players such as Hindustan Times and The Hindu are also expected to feel the heat. ?While the alliance has been formed mainly to counter The Times of India group, regional newspapers in markets such as Bihar, Jharkhand and Uttar Pradesh will feel the heat because of the kind of presence Hindustan, the Hindi daily from HT Media, enjoys,? said a senior executive of a Hindi daily who did not want to be named.
However, Arun Anant, director, revenue and strategy, HT Media, says that the platform is not competing against regional players. ?While marketers will use OneIndia to build a brand image at a national level, regional newspapers will be used to promote local initiatives like local variants and local campaigns,? he said.
Jehil Thakkar, head of media and entertainment, KPMG in India, says the alliance will have to face many operational challenges. ?The five to six newspaper groups have different ways of functioning. Starting from their sales strategy to the different kinds of advertisers they target, the platform will have to overcome all the challenges in order to be a sustainable business division,? he said.
OneIndia is also open to more players joining the platform. ?We are open for more alliances, as it will allow us to provide a bigger reach to marketers,? said Anant.
However, BCCL?s Sharma says that if more players join the platform, ad rates will fall further and the number of pages will have to be increased to accommodate the increased flow of ads. But that will increase the cost of production. ?With more players joining the group revenue share pattern will get further complicated,? said Sharma.
Roychowdhury, however, claims that the group has already found a solution to the problem of revenue sharing. ?We have decided to share revenue on the basis of readership and circulation numbers. Moreover, no two OneIndia members will go after the same advertiser. For example, The Hindu group handles a solar energy client based in South India, while HT Media?s team handles Adani Group in Gujarat,? he said.
Thakkar of KPMG in India, says that while currently HT Media walks away with the lion’s share of revenue, this may not be possible if other newspapers join the club. ?The question is that if another strong regional newspaper joins the group, whether HT Media or The Hindu will be ready to give away its share of revenue,? said Thakkar.
