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Media
India
Demystifying IRS 3Q 2010 Part 2: AIR versus TR. AIR (average issue readership; only
loyal/regular readers) is a better measure of the performance of a newspaper versus TR
(total readership; includes casual/occasional readers). More important, we view the
large gap between TR and AIR (between casual and loyal readers) as the potential
opportunity for Hindi/regional players. MPCG, UPU and BJH (along with Orissa) feature
at the top the list of high-potential markets with robust presence of DBCL, JAGP and
HMVL. Competition will likely spur readership growth driven by (1) improved quality
(content and presentation) and (2) lower cover prices.
AIR a better currency versus TR, in our view
The debate between AIR (average issue readership) and TR (total readership) is clearly weighted in
favor of AIR, in our view. AIR measures the regular, loyal readership of a newspaper even though
there is considerable occasional, casual total readership as well (during weekends, borrow-andread etc). Our discussion with media buyers/planners also supports the view that AIR (loyal
readership) is a better measure of the performance of the newspaper and of greater value to
advertisers though TR (casual readership) may be an additional useful benchmark for large
campaigns. This is supported by data from the broadcasting segment as well where appointed
viewing (in case of GECs) is clearly favored over snacking channels (Cinema, Music) with the
differential visible in their advertising rates or CPRP (cost per rating point).
TR does showcase the potential of the market
Total readership (which includes both loyal as well as casual readers) does showcase the potential
of the market, in addition to the print penetration (readership as a percentage of literate
population); Exhibit 1 presents the key readership statistics in various Hindi/regional markets.
Madhya Pradesh (MPCG with Chhattisgarh), Uttar Pradesh (UP with Uttaranchal), Orissa and Bihar
(BJH with Jharkhand) are the markets with the highest potential for readership growth; conversely,
Kerela, Gujarat and Rajasthan present the potential of long-term print media in regional markets.
However, 25%+ print penetration and 50%+ loyal readership can be considered good mediumterm (5-year) targets for incumbent as well as emerging players in under-penetrated markets. The
long-term potential for Hindi/regional print remains with (1) ability to establish itself in a strong
position in a certain geography by (2) penetrating and converting these casual readers into regular
readers being the key success factors for a print brand.
MPCG an interesting case study; UPU and BJH may follow
Exhibit 2 presents the readership trends in under-penetrated markets such as MPCG, UPU and BJH.
We do not view CY2008-09 as the ideal period to gauge the readership trends in Hindi markets
since most print players had shelved their expansion plans given (1) high newsprint environment
and (2) weak advertising environment on account of the economic downturn. Nonetheless, MPCG
presents an interesting case study as an example of the market that has seen significant increase in
readership over time despite the natural distribution barrier in the form of a large low-populationdensity area. The competition played an important role in readership expansion in the MPCG
market (only Hindi market with monopoly leader in the form of DBCL but moving towards an
oligopoly market among the Tier-II players). The competition has also helped expand the MPCG
market (1) by providing alternative points of view in news, (2) reduced cover prices (improving
affordability) and (3) improving quality (content and presentation).
Monetizability in semi-urban/rural areas is on the rise…
The urban centers in Hindi/regional markets have high print penetration with further
penetration opportunity in semi-urban (small towns) and rural areas of these markets. Thus,
the print players need to balance the opportunity of increasing penetration with improving
monetization since the per-capita income and discretionary spending in these areas is clearly
lower versus that of urban center population. Exhibits 3-4 present evidence of rising
prosperity in semi-urban/rural areas of India irrespective of agricultural income (rising MSPs –
Minimum Support Prices of agricultural produce) or non-agricultural income (NREGS –
National Rural Employment Guarantee Scheme). The initial benefits of higher rural income
may have gone towards satisfying the demand for necessities (such as food, also on account
of rising CPI inflation); however, discretionary goods and services are seeing improved
demand from rural areas now, as discussed in the next section.
…advertisers are following the shift in consumption patterns
Consequent to rising prosperity in semi-urban/rural markets resulting in higher discretionary
spending, the consumer market for certain key advertising categories such as FMCG and
Telecom (notably low-unit-price categories with price points
growth (see Exhibits 5-6). This compares with relatively high penetration and maturity of
these categories in metro and urban centers. Thus, key product and service companies are
looking at still under-penetrated semi-urban and rural markets for growth and shifting their
incremental advertising spends towards these markets, which can be most effectively
covered by regional/vernacular media platforms. The advertisers need to spend on
developing the markets given the under-developed nature of these consumer markets, as
well as their brands. Even categories such FMCG (national and regional players), which have
traditionally been large advertisers on C&S TV, are including print as part of their media
plans to target consumers in specific under-performing markets.
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