Heather Goldchild, managing director, media & entertainment, Standard & Poor’s, New York, and Sudip Sural, head of Crisil Ratings, say US companies are looking at the opportunity in new media, as they are looking at investing in the online space in India. Swarup Chakraborty spoke to them on the common media trends in the US and India. Edited excerpts:
What trends are you are observing in ad spends in the US and India?
One cyclical trend has been a decent recovery in advertisement spends by companies. The economic downturn had caused a moderate decline in the ad revenues of magazines and newspapers but that is improving. A structural change in the US has been the shift of advertisers’ preference for the online medium against conventional media. Since online advertisement provides a greater degree of measurability, as advertisers can know the demographics of the online user and cater to him, it is being preferred. However, a problem with online advertisement is its inability to command a premium at par with the conventional mediums.
Do you think the US trend will be followed in the Indian market?
Historically, a long-term trend has been that Indian media follows the US media trends, be it in print, radio, out-of-home or Internet. Though online advertisement in the US has already overtaken magazines and radio, it might still take some time to happen in India. However, we expect healthy growth in online advertisement, as the front (home) pages of popular websites will get higher rates.
Since print media in the West has seen de-growth, some publications (Wall Street Journal, Financial Times) have launched Asian editions. Is that a trend?
Actually, US publications are rolling back their investments in India and focusing on TV and new media.
There is vigorous competition in the Asian markets, as the print market is very crowded. Companies would have to think hard about their revenues, as having a publication would not only have content cost but other logistical issues as well.
Also, the entry barriers are too high, as only 26 per cent FDI (foreign direct investment) is allowed in print media. Whereas new media is a relatively cheaper business, with better profit prospects.
Films, television and new media will be the three segments that will attract maximum investments from US companies in India in the near term.