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Demonetisation: Print media is hit and some scars might remain

BestMediaInfo speaks to media experts who are running the show and third-party observers to analyse how demonetisation has hit the print industry and how it plans to deal with the situation

Raushni Bhagia | Mumbai | November 30, 2016


Did you notice the double jacket ads in leading English newspaper on Sunday? Both ads were from players of an emerging category – online wallets. Looks like a good news, right? But did you also notice mere eight pages in Delhi Times and six in HT City in last Sunday’s edition? That too is a rare sight, isn’t it?

So, is it actually good or bad news? Well, the popular sentiment is that it is bad news. Demonetisation has jeopardised quite a lot part of the economy and so is the effect on advertising. Print has had its share of losses in the course of action. On several fronts, right from advertising, which is an important revenue stream, to classifieds, which is the most talked about one and the circulation monies – everything seems to have been affected in the print sector and how.

BestMediaInfo has tried to analyse it by speaking to players in the industry and to media experts who are third party observers.


Impact on print

So, how exactly is demonetisation affecting the print medium in terms of advertising revenues? While retail, realty and other sectors are affected, isn't it being balanced out by the Paytms and freecharges of the world?

Well, the answer is no. The amounts invested by Paytm and similar players in advertising on the print platform are nowhere close to the losses incurred by the other categories, which have exited from the platform.

Benoy Roychowdhury Benoy Roychowdhury

Benoy Roychowdhury, ?Executive Director at HT Media Ltd, said, “I can talk about TV and print put together. Certainly there is a negative impact from certain categories like retail and FMCG. A lot of supply chains have been broken because the transactions were done in cash. So, we are hoping that things will improve once more cash comes into the system and at the same time people move to cashless payment systems. But as of now, the impact is severe, especially in the smaller towns.”

Along with Roychowdhury, another senior official from Bennett, Coleman & Co. Ltd (BCCL) agreed that the set of categories going out is too large and the new set (e-wallets and increased BFSI), which is the opportunist set, is too small. “And it’s not about what balances out what. There are certain sectors of the economy which are seriously hurt. May be in a while, the banks will have more money and they will advertise for bank loans, housing loans and even car loans, but the impact on FMCG and retail sectors will still be huge. The revenues have gone down in these categories and have increased in the online wallets category, however, the overall picture will be clear in some more time,” added Roychowdhury.

E-commerce players had to suspend a lot of cash on delivery options. As a result, their advertising is also hit.

Jwalant Swaroop Jwalant Swaroop

An experienced hand in the print medium, Jwalant Swaroop, currently CEO of Happinessinfinite Solutions, says that the basic premise of advertising is the growth of the economy and if that is hampered, then the ad growth will also be hampered.

“The ad spends are very objective, which means if market consumption happens, brands spend in advertising. That’s how festive seasons like Diwali see a spike in advertising. The current situation is not good for print – both English and regional publications. Many brands have cancelled their bookings. While IBF (television) has been aggressive in convincing clients to not cancel deals, the print sector is still unorganised on this front and hence, there have been a lot of cancellations where release orders have also been taken back. Ads that were pre-booked as a part of series campaigns (scheduled advertisements into series) and scheduled for multiple editions have also been hit badly.”

The other categories of advertisers that are hit in their own business and hence decreased advertising budgets include education, automobile, realty and jewellery. All of these categories involve huge cash transactions.

Anita Nayyar Anita Nayyar

Anita Nayyar, CEO India and South Asia at Havas Media, mentioned how the sales for a lot of brands have gone down. “However, it is not applicable to all the categories of advertisers. If you consider the mobile wallets, e-banking and BFSI sector, these are the ones who should be seeing some heyday, there might be incremental spends. But having said that, one is also seeing that the clients are cautious. So there’s more postponement than cancellations.”

Nayyar has a feeling that clients are waiting and watching till November-December, which otherwise are good months for the industry and many close their accounts in January-December, “For them, there will be a significant impact. So, what everyone in the industry is saying is true that November-December is hit and for those closing January-December, it is a tough time. Today, what we are looking at is barring BFSI and Paytms of the world, we are seeing a dip in the ads.”

Rishi Darda Rishi Darda

Rishi Darda, JMD, Editorial, Lokmat Media, said, “Demonetisation added with the recent increase in the dollar conversion rate has impacted the industry this quarter. Quarter three, which otherwise sees a high inflow of advertisements, is seeing stagnations or even postponement of advertisements in certain categories.”

A senior official in BCCL and a regional publication voiced a common opinion that the couple of jackets that have appeared will never be able to cover for real estate, retail, consumer durables and clothing.

Pradeep-Dwivedi-nl Pradeep Dwivedi

Pradeep Dwivedi, CEO, Sakal Media Group, commented, “The impact of demonetisation has a direct bearing on both consumer economics – ‘ability to spend’, as well as consumer sentiment – ‘propensity to spend’. While the former has been impacted in the immediate aftermath, and has dampened demand, the real concern is the latter. This in turn has an adverse bearing on advertiser sentiment and the print business is not immune to same. The opportunity-led campaigns of m-wallet and e-payment-based BFSI sector clients are hardly an offset to the print volume loss, which is real and causing overall business decline in all mediums.”

Circulation is hit?

Is circulation also bearing the brunt of demonetisation, since most of transactions on this front happen in cash? Well, has your newspaper vendor started accepting cheques or payment through online wallet? Have you been able to spend Rs 5-7 change every day to buy a newspaper off the stand lately?

Roychowdhury agreed that demonetisation has created some problems in the circulation system, but it is more of an operation issue.

Swaroop, however, explained how the impact will reflect on revenues. “When you sell the newspapers to the vendors, there’s a cycle when the consumer pays back to the hawkers which is a small amount and smaller notes and currency is being exchanged. This flow of money is jeopardised right now also, including the monthly bills of those who subscribed to it. Even if the publications start a credit system for the news agent and the hawkers, it will be very difficult to track them since it is still an unorganised sector.”

Publications that are already ready with their digital platforms have an upper hand. But some voices in the industry agreed there is a fear of shifting preferences from print to digital readership. Once a person reads a newspaper or magazine on digital for a month, they might get a habit of continuing to do that, since they have possibly become comfortable with the screen reading.

Darda explained, “Immediately credit was extended to our vendors to support their working. We have installed credit card machines at our offices across Maharashtra. We had organised a Readers Demonetisation Summit with finance experts at few of our key centres. We are exploring more options of creating awareness and de-mystifying demonetisation with digital payment among our readers, especially in rural Maharashtra and in other location across the state.”

Dwivedi, however, said that as of now there’s no impact on circulation. He explained, “Our industry pricing on subscription/circulation has always been very aggressive from our perspective and modest from our reader’s perspective and we still remain the most credible medium for them to get daily news and views.”

Classified is an import revenue stream. Is that hurt too?

A senior official of TOI, a leader in the English newspaper market, on condition of anonymity said, “Classifieds too are affected. They are all transactions in cash and brokers and agents are hit. The consumer sentiment has also gone down also because PM is also giving a statement every day. Logistics issues like lack of hard cash will get resolved in its own time.”

Swaroop added, “Classifieds run completely on cash. A person walks into your counter and gives cash and books a classified ad against a receipt. So while it is accounted for money, people don’t have that cash to come in and book an ad there. This component is as much as 25 per cent of the total billing for many of the publications.”

Darda too agreed and suggested that the losses can come down to as much as 50 per cent, but he is also optimistic that the same should start picking up in a matter of weeks.

Dwivedi too agreed that classified advertising has seen a dip but it is widely believed that it is a temporary issue and should get resolved in due course, as it has an ‘immediate-need-based’ advertising trigger for the advertiser, rather than as a part of any wide-ranging brand building or impact campaign, which is true of display advertising.

Temporary or permanent

How temporary is this effect? Is the effect limited to the current financial year and will March 2017 see an end to these losses?

One section of the industry suggests that since an advertiser X has earmarked say Rs 100 for the 2015-16 financial year, and has held back say Rs 30 since November, the advertiser will make sure to finish off the Rs 200 marketing budget by March 2017 simply for the ease of balance sheets. So, one section is expecting bombardment of ads in February and March once the consumer has the purchase power to spend on the advertisers’ food in the market.

Another section of the industry comprising some major players counters the theory, pointing out how the ad inventory caps are troubling both the major media platforms – TV and print. Hence, reaping benefits of excess bombardment of ads might be tough. While TV has a government regulated capping, print has a self-capping since the pages have to expand and that is where the limitation comes up.

Swaroop suggested that it might take a long time, till the first quarter of the next financial year, for things to stabilise for the print industry. He said, “There will be advertising impact in short and medium terms, which will remain for a quarter or two odd quarters, but it might take some more time to stabilise. As of now there is enough cancellation of deals in print and the trend is growing, which is pulling it back. TV is bought in a different metrics altogether, the print metric is allowing that to happen, because print is more tactical to use.” He also said that March 2017 is too early to expect settlement.

Dwivedi however felt that one might have to wait till the next financial year for stability. “We believe that once we have Q3/FY17 quarter ending numbers for listed companies coming in by late Jan/early Feb 2017, and there is substantive data on the churn and deposit levels of float cash in the economy from the banking system, better clarity will prevail and hence more robust projections can be made at that time. We have insufficient information at this stage to make any predictions on advertising volumes and revenues.”

Nayyar, just like another senior media observer, suggested the industry should wait a while before deciding on the stability time. “If you look at all the reports, the currency being printed is not in tune with the demand. It is not that people will stop buying soaps or shampoos, but FMCGs have advertised enough to remain in the consideration list for the consumers. So, no hell will break lose if they don’t advertise for a month or two. There is a certain media objective that they work with and there is a certain share of voice that needs to be bombarded in the market and to my mind that is where they are going slow. If everything goes right, I am sure the regular ad monies will come back – if not more than the regular. The marketers might come back with this money in February or March but nobody can be sure until the flow of cash is normalised,” said Nayyar.

Darda feels that the effects could last longer than that. “It’s a psychological shift in spending. While urban economy might start to see normalcy by March, semi urban and rural markets could take as much as one year before you see growth. If interest rates come down, that will surely help real estate, automobile and two wheeler segments. This in turn will help in sales.”

A senior official in Dainik Jagran, who requested anonymity, was quite optimistic. “The hit is not major as far as Hindi publications are concerned and hence, the revival will not take much time. As I see it, things will be set right by December.”

Concluding the discussion on an optimistic tone, Swaroop rightly puts it, “It is a challenging time but not yet a doom’s day. Those who can invent their strategies right, they can still excel in this environment from the opportunities.”

It is a nasty situation for the print medium for now but then, just as any other industry, the print media too will come out of it for sure and rise as a more confident one.


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