Analysing the developments that led to phenomenal growth in the media and ad industries.
Atul PhadnisATUL PHADNIS
As 2005 comes to an end, there would be people in the media jubilant over what they have achieved. In the backdrop of a fantastic 2004, which recorded double-digit growths in advertising spends, 2005 was going to be a quieter year. TV and print, which together account for more than 85 per cent of the ad industry spends, were under tremendous pressure to keep up the momentum this year.
While 2004 saw serious revenue coming in from cricket, especially the India-in-Pakistan Samsung series, and the general elections, 2005 did not have an impressive event line-up.
Obviously, the big question at the beginning of 2005 was how would the year be? And which quarters could growth come from?
Let's look at the key developments during the year in revenue terms ...
Record-breaking growth for ad industry
Hiking the growth rate at 14.1 per cent is clearly a spectacular achievement! And that too genuine growth, not riding on any one or two events ... reflecting the mood of the economy.
The 14.1-per cent growth took the advertising industry's turnover to a smart Rs 13,200 crore, up from Rs 11,600 crore last year.
While radio, press and Internet ad spends increased from last year, TV and out-of-home spends marginally dropped. The drop in TV spend is primarily due to a slower growth rate.
Internet and radio record impressive gains
Internet and radio in 2005 became the fastest growing media, albeit on a smaller base. While radio, with a share of 2.4 per cent, grew by 44.5 per cent, Internet with a 0.8-per cent share grew by a whopping 78.3 per cent. It should be mentioned here that radio today earns more ad revenues than all television music stations put together!
Press grows faster than television ... again!
Last year, press grew faster than television, a rare feat in the 15 years of private satellite television. No one believed print could pull it off yet again. Some sceptics on the TV side dismissed last year as a `freak' year. Others felt print had been lucky in 2004, when it netted all the election money, which legally political parties could not spend on electronic media.
But print has done it yet again! And not only that, it has actually managed to increase its distance from the TV growth rate. This time there was no luck involved. A strong economy, micro editions, falling entry cost outlays on print, movement of SMEs from classifieds into display and edition cost bundling are just some of the reasons that propelled the print growth rates.
Mumbai print war
One of the most significant stories in the media in 2005 was perhaps the Mumbai launch of Daily News and Analysis or DNA and Hindustan Times as the two challenger dailies to The Times of India. In 2004, the total worth (ad + subscription) of the Mumbai newspaper market was pegged at a whopping Rs 1,050 crore (as per ADEX NRT-1)! That's 12 per cent of the total Rs 8,860-crore industry. No wonder then that the fight for a share in the newspaper space of Aamchi Mumbai is so desperate ...
The launches spurred outdoor advertising in Mumbai. There were also innovations in terms of cover prices and subscription fees. One can see from the NRT subscription estimation the effect the Mumbai launches have had, in the marginal rise in subscription revenues for newspapers as a whole.
Display ads grow vis-à-vis classifieds and appointments
Buoyed by sectors such as retail, properties/real estates and education, newspaper display revenues grew faster than appointments and classifieds. As a result, display's share within newspaper ad revenues went up from 78 per cent to 80 per cent.
Ad share grows for newspapers as subscription share reduces
The 2005 ADEX NRT report finds that for newspapers, while advertising revenues have been growing in double digits, the subscription (or circulation) values have been stagnating. As a result, in 2005, the ad share improved to 58 per cent from last year's 54 per cent.
News stations continue their rise
News channels have been the darlings of the television industry for the last three years. Their growth - both in viewership and revenue terms - has been a topic of many debates. This year too we saw improvement in that critical industry component. News channel viewership share (terrestrial + satellite audiences, four years-plus) went up from 5.4 per cent last year to 6.5 per cent in 2005, whereas revenue shares climbed to a new high of 11.9 per cent - up from 10.3 per cent.
Rate corrections in Hindi films and regional stations
For too long, Hindi film channels have been used by media planners to bring down campaign cost per rating points. Historically, film channels would be paid far lesser for their viewership compared to general entertainment channels. This is despite the fact that their viewership at times comes close or even more than that of the general entertainment channels (GEC) station. Ditto for regional language stations.
2005 saw corrections and rationalisation as both these genres increased rates as well as inventory in select cases, resulting in improvements in their revenue shares. While the regional channels' share went up from 20.4 per cent to 24.8 per cent, Hindi film channels improved their revenue share from a mere 3.7 per cent to 5.6 per cent.
GEC - A tale of two `Ones', a Big B and an Idol
General entertainment channels (GEC) saw two relatively new players - Star One and Sahara One - trying new means to sway viewers. Woh Rehne Wali Mehlon Ki and The Great Indian Laughter Challenge were deviations from earlier programming formats. Their success raked in revenues, thereby helping the GEC category.
Also, for GEC, Amitabh Bachhan and Abhijit Sawant with KBC2 and Indian Idol, respectively, brought in more eyeballs and moolahas newer and newer formats were tried by all three GEC players - Star Plus, SET and Zee TV, across the year.
Radio ad revenue breaches Rs 300 crore, Internet Rs 100 crore
Radio in India makes more money than all music TV channels put together! And this equation does not change even if you take All India Radio's revenues out.
With radio breaching the Rs 300-crore revenue mark, the launches expected with the new licence regime in 2006 assumes importance.
At the same time this year, Internet crossed the magical Rs 100-crore mark.
As you can see, the ad industry, at Rs 132 billion, looks buoyant with Rs 16 billion under its belt. Largely driven by new advertisers and first-time advertisers, it offers a lot of hope as well as food-for-thought to its professionals as they step into 2006.
(Compiled by Atul Phadnis, chief evangelist, Media e2e, for ADEX India, a division of TAM Media Research. Media e2e is a strategic media studies group committed to understanding ROI in the media business, strategic media planning, media management and broadcast management. The rates used are realistic market rates obtained from the industry.)