The world's largest lockdown has been extended by another 19 days, now set to end on May 3, and the effects on the Indian economy are straining every sector. The size, demographic, and geography of India exacerbates ongoing challenges due in large part to the country’s uniqueness.
For the media, the struggles continue.
Despite being termed an essential service since the lockdown began on March 25, and with distribution challenges said to be mostly resolved, the long-term impact of COVID-19 has severely impacted revenues. And — with stress on profitability, sustainability, and even in some cases viability of traditional media sources — the media sector is bracing for the repercussions and preparing innovative strategies, both collaborative and inward looking.
Advertising takes unprecedented hit
The biggest concern today remains the steep decline in advertising revenue. In India, newspapers have a business model wherein newspapers sell at a much lower price than the actual cost to produce. The dichotomy is rectified by advertising revenue, with advertisers effectively offsetting the losses from print dailies in terms of cost to the subscriber and further becoming profitable through advertising revenue.
Now, however, there is a shortfall. A recent article pointed out how some brands are said to have already reduced ad spends by nearly 60% for the April to June quarter, while others have put all spends on print and radio on hold. And this, it is feared, is just the start.
For newspapers operating in the Hindi belt and regional languages, a large majority of advertising comes from local advertisers with these brands counting on local readership with TV being too expensive. The expectation is that once businesses start to recover, these brands will again look to newspapers to get their messaging across, especially targeting those readers from Tier II and Tier III cities, who are not on digital media and depend on newspapers for information.
It goes without saying that in these times of uncertainty, marketers also are doing their bit to put out messages of empathy, awareness, and reassurance. Dinamalar has taken a slightly different approach, offering free ads to advertisers from March 25 through April 30.
Even before the pandemic, there were challenges globally on falling advertising revenue. In a report by E&Y released on March 27, 2020, titled “M&E: Key Trends In 2019,” print readership in India fell marginally in 2019 and consequently witnessed 3% revenue de-growth, with advertising revenues falling 5% (subscription revenues increased by 2%). Now, the anticipation is of a much graver reduction in advertising.
Revenue declines, cutbacks, staff morale
One fear is that the increased duration of the lockdown will cause discretionary spending to go further down, in turn adversely impacting newspaper revenues amid a downward spiral. Almost immediately, this will lead to organisational priorities shifting their focus to ensuring cash flow and how best to manage it efficiently.
There is an immediate and gravely concerning impact on advertising revenues. Several of the leading dailies have reported a major reduction in advertising, and, accordingly, print editions have reduced the number of pages by 50% in some cases. The corresponding cost-cutting that will be required will merit a slew of revisions to standard practices and solutions that can accommodate change without it having a major impact on quality and presentation.
Within media organisations, the first cost-cutting measures being adopted include reducing colour pages and incorporating editorial changes in product to optimally impact staff considerations, which may in turn lead to layoffs. The focus now for most legacy media houses in India is on reassessing and evaluating existing processes and structuring a way forward.
With all the challenges — both economic and emotional — a sustained lockdown amidst this pandemic can cause, media houses are introducing measures to keep employee morale up through constant communication, Webinars, and meetings. Hindustan Times has announced a corporate insurance cover extendable to employee families, while Dainik Bhaskar is regularly conducting Webinars for employees to remain connected and keep employee morale up.
With the option of digital not yet in position to be able to replace print media, the challenge of immediate and long-term viability is a serious one. And it will require across the board cost-cutting. Leading publications are actively exploring revised pay packages which either leads to salary reductions of up to 30%, or shifting a percentage of salaries as variable components based on resource or entity performances. Some organisations have, in fact, had to take even more serious measures such as furloughing employees without pay, and in the worst case, laying off members of their staff.
Searching for a digital path forward
Collaborations between organisations and dialogue between publishers and agencies have also become crucial. Yet for now, the biggest issue is that an immediate and adequate recovery may not be in the cards for this financial year. This has led to the Indian Newspaper Society (INS) reaching out to the central government asking for an increase in government advertising by 80%-85% and a request to waive the import duty for printing ink from the current 10% to help weather the situation.
But even that may not be enough. So now, publishers are working extensively on how best to acclimatize, adjust, and accelerate their growth in this changed environment. The way forward is likely to see an enhanced use of technology and digitisation. Options are already being explored on how to implement digitisation of existing processes in legacy media companies with the goal to simplify them. Another focus is the role of technology in helping marketing teams cut costs and increasing efficiencies in the ad sales process.
What publishers feel today is that in the immediate future, it is useful to understand the large-scale adoption of technology for meetings, given that travel budgets could see a major reduction.
Organisations are also focusing on training, such as The Hindu ideating on how best to specifically equip pre-identified groups with new skills that will be needed going forward. Larger decisions are also being considered in terms of balancing budget allocations between marketing and editorial.
In terms of the pivot to digital, there are various considerations. While traffic to digital news sites is increasing across the board, the digital CPM is dropping and is a cause of concern. At the same time, programmatic advertising is under threat. Digital news outfits that have so far not gone behind a paywall nor offered a subscription model are sure to be researching consumer behaviour as to if, and the extent to which, consumers will be willing to pay for digital news.
This is even more difficult to introduce, since almost all newspapers are offering their e-papers for free. A possible silver lining to this could be that if paid digital subscriptions gain traction, then the dependence of the publishers on advertising could reduce, helping hedge the risk. Another possible option that may emerge over time could be a model similar to Magzter for newspapers.
These are the most challenging times that the news media have faced in several decades. And while the setbacks are visible and expected, it is encouraging to see many of the leading media houses are treating this adversity as an opportunity to restructure, expedite the expansion of digital, while introducing technology for game-changing solutions.
Yes, this will be a difficult time with the absence of advertising revenues and short-term distribution challenges. The entire media industry will be put to the test. One hopes it regroups and recalibrates strategies that revolutionise media for long-term growth and success.
Banner image courtesy of Suvajit Roy from Pixabay.