Will old ad pie sustain increased print appetite?

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: Media buying houses across the country are rubbing their hands in glee. The reason: They expect ad space rate in print media to come down in the future. They will now be able to offer their clients, the advertisers, lower rates for reaching out to a larger number of people across several print media options. The new print players have already begun negotiating on reduced ad rates.

Nirvik Singh, president, South East Asia, Grey Global group, confirms: “Yes, the new entrants are already talking to agencies and advertisers, actively scouting long-term deals and commitments.”

The static print media market in the country has witnessed hectic activity in recent months. Many new players are entering new turfs to shake the established market players out of their apathy.

While DNA, Hindustan Times and Times of India are slated to slug it out in Mumbai, the southern markets have the Times of India taking on the Hindu empire. Indian Express has recently launched new editions from Kolkata and the Delhi-based Pioneer has started editions from Bhubaneswar, Bhopal and Kochi.

With so much competition, print players are facing rising costs. Shortage of adequately trained manpower with intense competition for it from new mediums such as television and radio have pushed up manpower costs. The cost of newsprint is expected to rise from Rs 500 to Rs 1,000 per tonne. The cost of printing paper is also on the rise. The cost of brand-building and employee retention in an intensely competitive scenario are also set to increase.

This increase in costs comes at a time of revenue streams not growing at the same pace. Advertising revenues contribute up to 80 to 85% of a newspaper’s revenues. With such large dependence, any reduction in ad rates will make a major dent in a newspaper’s bottomline.

This may well be the case. At present, the print cost per target (CPT) is already 20 times that of TV. Most media houses say this will have to come down.

A majority of the advertising industry expects the ad space rates to come down with more print media options in the market. Punitha Arumugam, CEO, Madison Media Group says, “more options increase the scope for negotiation.” Preet Bedi, president, Rediffusion DYR agrees: “I think effective ad rates will come down and newspapers will reduce tariffs.”