The Hindu Business Line : Mumbai's rate race

YOUR seven minutes will help create Mumbai's own newspaper,' claims DNA (Daily News & Analysis), the soon-to-be launched daily from Diligent Media, the joint venture company floated by the Zee Group and Dainik Bhaskar. With intentions of giving Mumbaikars `the newspaper they can create,' the new daily has been circulating questionnaires to find out just what city readers need. The impending entry of DNA along with Hindustan Times and Bombay Mirror (the Times of India's tabloid version pitted against Mid-Day) is expected to drive down the ad rates of English dailies in Mumbai, the country's biggest ad market for the print media.

According to AdEx India, a division of Tam Media Research, ad spends in the print media, pegged at nearly Rs 5,450 crore, grew at nearly 15 per cent in 2004. The Mumbai market has the potential, with its 1.7 crore people, to absorb more dailies as most of the metros have at least two strong morning newspapers. With TOI and Mid-Day commanding a major part of the print advertising pie, the scales will now temporarily tilt in favour of the new dailies waiting to enter the market. As the print media gets fragmented in the city, advertising budgets will split more and the near monopoly in the print media market is going to crumble. .

In fact, the big fight for ad revenues has already started. Mid-Day has already taken the lead to protect its bottomline. "We would like to raise rates now before competition arrives. Once the new newspapers are launched there will be downward pressure on advertising rates, claimed Tarique Ansari, Managing Director, Mid-Day Multimedia Ltd, at an analysts' meet recently.

The timing may be just right with the new English dailies poised to make an entry into the Mumbai market. "If one is considering a rate hike, it is possible now," says Ansari. The Indian Express group's 10 per cent equity stake in Mid-Day Multimedia, he explains, has two benefits — enhancing volumes and preventing the chances of being overlooked by advertisers.

Giving an insight into the emerging scenario for the media market in Mumbai, Anupriya Acharya, President, The Media Edge, says: "This is going to fuel competition, mainly for existing English readers. If at all there is an overall increase in the English newspaper-reading universe, it may not be substantial. Hence, there will be some fragmentation and a minuscule population that will be reading multiple dailies. From the advertiser's perspective, it is good as they get an option of getting into a vehicle which may not have as high a reach as the leading daily but is also not as expensive. So, the cost of entry into the English reading population becomes lesser (even if it is for lesser absolute number of readers). Currently there is no such option. On the other hand, for larger advertisers, it may end up in increased overall spends as they will need to be on multiple vehicles to reach an adequate number of people."

Says Meenakshi Madhvani, Managing Partner, Spatial Access, a media audit firm: "The new entrants will definitely generate interest, leading advertisers to depend less on TOI for Mumbai. Advertisers will experiment with these new publications to take advantage of the buzz around the aggressive launch plan. Also due to the publications' dominance and capability demonstrated in their respective markets. And, of course, for better package deals (though HT and DNA have not come out with their rate cards, rates will in all probability be lower than in TOI)."

However, the surplus ad space generated as a result of the entry of the new publications is not expected to upset the ad rates of the stalwarts in the business. Observes Lynn De Souza, Director, Lintas Media, "At the moment TOI is unassailable, followed by Mid-Day. The Indian Express and the others are not quite there. Initially, all the new papers are likely to give away free space and will have some schemes in place to encourage both readers and advertisers. But no one will strike long-term deals and it all depends on the staying power of these new publications."

Besides, the media planner's job might just get easier with further fragmentation within the print media. Media wastage might just get controlled in a more fragmented media scenario in the city. "Audience targeting might just get better where it has been an issue since media audiences are consolidated with a few brands. In a non-fragmented market, media wastage is usually high," claims Atul Phadnis, Vice-President, Tam Media Research.

Meanwhile, every media professional is likely to have a field day with the multiple choices on offer. They are expected to get better value and reach for their money spent compared to now when an almost monopolistic situation exists for the print medium in the city. Observes Siddharta Gupta, Director of Jagran TV, owned by the Dainak Jagran Group, "There has been a virtual monopoly in the Mumbai market which will now be challenged by the entry of the players. Everyone is expected to benefit except the monopoly player."

Describing the emerging scenario as simply the laws of supply and demand where the price is automatically brought down by excess supply, Lakshmi Narasimhan, National Director, Central Trading Group, Group M, claim: "It's simple. Ad rates are not going to hold and will definitely go down. The rate of return of investment will get adversely affected as the cost per contract goes up." In fact, media fragmentation in the short run is bound to get inflationary for advertisers but in the long run can prove beneficial as monopolistic practises end.

"It is definitely going to make life more difficult for advertisers and the cost per contract will go up, which is generally the rule with fragmentation of media," explains Himanshu Shekhar, Investment Director, Mindshare Fulcrum. Agrees Jasmin Sohrabji, President, Mediacom, South Asia, "Unlike in the case of a new television channel, a new newspaper will take time to get established. Yes, in the immediate short term there will be a reduction in ROI. Media buyers will buy in terms of investing for the future." Likewise, Ambika Srivastava, CEO, Zenith Optimedia, says, "Competition always helps in lowering rates but having said that whenever there is fragmentation advertisers do end up paying more."

But, the ROI will depend on the success rate of the new print media brands. As Spatial's Madhvani observes, "ROI is a function of the market investment and the reach/awareness delivered. Reduction in the overall investment will definitely lead to higher ROI if the publications are able to gain ground. Also, it will give the advertisers options and will help provide a surround sound effect to the print campaign." Adds Sandeep Tarkas, CEO, Media Direction, "The ROI will not go down although the cost per contract is like to go up in the short term. The new publications will grow the market and the competition will benefit everybody."

With a wait-and-watch approach, media planners and buyers will for the first time see a non-monopolistic print media market emerging in Mumbai. They will be experimenting in the initial stages of the launch of these new brands. "It's going to be a new market for all of us since this is the first time in Mumbai that we are seeing so many print media brands," says Sohrabji.

By looking to clip the wings of the market leader, which no longer will be able to hike ad rates at random, more players are expected to make life easy for advertisers for a while. As Suresh Balakrishnan, Head (Sales & Marketing), Diligent Media Corporation, claims, "Random rate hikes will stop." Adds Sohrabji, "The market leader will get cautious and its ad rates will depend on how close it comes to the new competitors."

In fact, the market leaders could well hold on to their shares and revenues by doling out more benefits and value additions while making deals. As Zenith's Srivastava says, "Newspapers are not like television channels. Just because there are more papers does not necessarily mean that people will stop reading the existing paper." The new print media brands will continue to get challenged by the market leader and vice versa, while advertisers and readers make the most of Mumbai's soon-to-be fragmented print media market.

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