Research decodes consumer, advertiser sentiment in South Asia post-COVID

By Shelley Seale

INMA

Austin, Texas, United States

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In these “unprecedented times,” as Nimisha Jain, managing director and partner at Boston Consulting Group, and many others have described them, news media companies must look at five “shocks” that came together. These created a self-induced coma of the media publishing industry:

  • Health pandemic.
  • Oil price shock.
  • Expansion of monetary tools.
  • State and private over-leveraging.
  • New cold war.

During an INMA members-only Webinar on Thursday, Jain led participants through a deep dive into the fast-evolving advertiser and consumer sentiments and the impact of that on spend patterns for South Asia media players. She also shared the key imperatives for news media players to emerge as winners in a post-pandemic environment.

News publishers should ask themselves these 5 key questions.
News publishers should ask themselves these 5 key questions.

News publishers must ask themselves five key questions:

  1. What will the length of the “flatten” period be? What are the preconditions to this transition, and when will publishers achieve them?
  2. What will be the depth of the economy drop during the flatten period?
  3. What will the length of the “fight” period be? What are the preconditions to this transition, and when will publishers achieve them?
  4. What will the depth of the fight period be? What level of recovery does the economy achieve during this period?
  5. Where does the economy return to, relative to the pre-COVID area in the future?

Jain took a look at past crises for comparison reference. During the 2008-09 global financial crisis, 18% of the top 1,000 public companies in India improved both sales growth and margin, while 37% declined in both. Most strikingly, the performance gap between them was substantial.

18% of India's top 1,000 public companies have improved sales growth and margin during COVID-19.
18% of India's top 1,000 public companies have improved sales growth and margin during COVID-19.

“What will it take, for you as a news media company, to be one of that 18%?” Jain asked.

Consumer behaviour shifts

Consumer behaviour has been rapidly shifting to digital, driven by mobile usage. Ad spend has following this growth. A 10% increase in consumer usage resulted in a 25% increase in ad spend share. Over the last few months of the global pandemic, news media Web sites have seen massive spikes in traffic. Online subscribers have increased, while print sales have declined.

“What is worrying is that we see significant monetisation challenges, both in digital and traditional media,” Jain said.

Advertising revenue is down, particularly in the hardest-hit sectors.
Advertising revenue is down, particularly in the hardest-hit sectors.

This is even more acute when divided into advertising sectors. Those such as travel, restaurants, retail, finance, and auto are the most adversely affected, with advertising revenue down by 50% or more. Sectors such as food, personal care, technology, and the government/public sector have remained relatively stable.

Advertisers have increasingly cancelled, paused, adapted, or deferred their campaigns, Jain said. This is particularly troubling in India, because unlike most other countries, the lion’s share of revenue in India still comes from advertising rather than reader revenue.

Revenue in India is still largely derived from advertising rather than consumers.
Revenue in India is still largely derived from advertising rather than consumers.

“Consumers today are a lot more willing to purchase content online,” Jain said. “Finding ways to capture that and tap into that is going to be very important.”

Key to this will be finding the “winner categories” in which consumers are willing to pay, such as in-home entertainment and health/wellness. Low-income cohorts are likely to increase spends only in preventive healthcare, mobile services, insurance, and education. “Loser categories” come with significant cutbacks in leisure, travel, and automobiles across income cohorts. Categories such as mobile, fashion, and electronics are more resilient within the affluent market.

“We are seeing a significant recession coming,” Jain added. Because of this, many consumers are cutting back on discretionary spending.

There has been a massive increase in digital adoption throughout India, though the extent varies by town class. Large towns have higher adoption of digital media, digital learning, e-commerce, and digital payments.

India is experiencing significant new digital adoption, especially in larger cities.
India is experiencing significant new digital adoption, especially in larger cities.

Digital news consumption has also grown across channels:

  • Overall: +25%
  • App: +11%
  • Web: +25%
  • Video: +62%

Most new digital adopters plan to continue consuming news online going forward in the future, Jain said.

Advertising shifts

Advertising has also been significantly impacted by COVID-19, particularly in print sales. “Almost 40% of ad revenue is under significant threat,” Jain said. These are advertisers in the “loser categories,” such as travel and out-of-home activities.

Boston Consulting Group (BCG) talked to several major advertisers to glean some findings on what is happening now. Four key themes emerged:

  • Performance marketing. Companies are focusing on what is important to the consumer.
  •  E-commerce surge.  Even in traditionally offline industries, e-commerce is increasing.
  • Optimising spend. Advertisers are re-evaluating OOH placements and increasing investment in digital channels.
  • Amplifying for the rebound. Searching for cost-effective ways to come back stronger.

“Advertisers are cutting back from broad brand investments,” Jain said. “Digital spending is going to grow.”

Pre-COVID, the digital ad market was expected to grow from US$3.5 billion in 2019 to between US$9-US$12 billion by 2024. Jain said post-COVID numbers are likely to be much higher than that.

The digital ad market in India is expected to increase four-fold by 2024.
The digital ad market in India is expected to increase four-fold by 2024.

Seven key imperatives for news media players

Jain laid out seven crucial areas that BCG suggests news media companies focus on.

  1. Become more audience-first.
  2. Transform ad sales.
  3. Invest in marketing tech.
  4. Build scale quickly through alliances.
  5. Radical cost optimisation.
  6. Accelerate to consumer pay models.
  7. Leverage analytics to differentiate.

When it comes to moving to an audience-first strategy, Jain said there were several key younger audience trends. The demand for new formats is rapidly increasing, desktop is becoming the print of digital with usage decreasing, and publishers’ content and branding are often disconnected. She pointed to The New York Times as an example of a publisher that has reacted successfully to these trends.

“They really understood how they [younger audiences] consume content differently. It’s mobile-first, it’s about certain types of content.”

The New York Times does a good job of marketing to its younger audience.
The New York Times does a good job of marketing to its younger audience.

Key questions to build an efficient and effective ad sales organisation

Jain shared six questions that organisations should be asking to improve their advertising sales teams going forward. The first four are marketing focused, and the last two are talent focused.

  1. Account management: How do we align sales efforts to value? What are the highest priority accounts to service?
  2. Pricing: how should we adjust rate cards and discount levels? Where should pricing decisions be made?
  3. Product needs: What is the full suite of products, as well as data related to selling those products? What product should be developed to capture new ad spending?
  4. Creative solutions: What are the clients’ needs for creative solutions? What can uniquely differentiate us?
  5. Talent management: What is the role of compensation in motivating our sales force? How should we change compensation structures to meet goals and culture?
  6. Skills and training: How do current sales force skills measure up versus the required skills?

“There is a big opportunity to really rethink cost structures across the entire print value chain,” Jain said.

Advanced analytics are another powerful tool. She shared three of her favourite examples of ways to leverage analytics to improve subscriber conversions and the advertiser value proposition.

  • Dynamic paywalls driven by behavioural analysis of users.
  • Perspective targeting — ad placements based on emotional resonance of the user.
  • Custom audiences and segments for brand advertisers.

Jain concluded by sharing a quote from Frank Blake, chairman of Delta Airlines, and his five takeaways on business response during a crisis.

Frank Blake's key takeaways on business response during a crisis.
Frank Blake's key takeaways on business response during a crisis.

“I started this presentation by asking how you could be one of that 18%,” Jain said. “I end by saying, while it feels like these are difficult times, it truly is a time where you could think about doing things constructively by changing conventional wisdom.”

Banner image courtesy of StockSnap from Pixabay.

About Shelley Seale

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