Hike in print media ad rates will boost industry: Study

The hike in print media ad rates will give a fillip to the industry, according to Care Ratings.

The Information and Broadcasting Ministry on Tuesday had announced a 25 percent increase in the rates for newspaper advertisements by the Bureau of Outreach and Communication (erstwhile Directorate of Advertising and Visual Publicity).

The rates which came into immediate effect will be valid for three years.

The last revision in advertisement rates took place in 2013 when an increase of 19 per cent was announced over and above the rates of 2010.

The move will directly boost revenue of print industry, which was valued at around Rs 31,800 crore in FY18. After the TV segment, with about 37 per cent, print is the second largest contributor to the advertising industry's revenue at around 35 per cent.

 

"This decision is expected to benefit the companies operating in the Indian print industry, which have seen a fall in operating and profit after tax margins, since the December 2017 quarter. The first half of FY19 experienced decline in revenues due to limited advertising revenues owing to shifting of the festive season to the third quarter of the year with muted ad spends in auto, education and retail industries, rise in newsprint prices coupled with rupee depreciation," it said.

The agency also noted that the move will raise the advertising rates offered by the government, which earlier were much lower at about just around 10 per cent of the commercial ad rates on print, but contributed around 15 per cent of the total advertising expense of small and medium sized papers.

"About 70 per cent revenue of a daily newspaper comes from advertising. This move to hike advertising rates will bring a rise in operating revenues of newspapers, especially regional and small players which rely heavily on advertising," it said.

The expected heavy spend in advertising from the government during FY19, due to the general election season, will act as a catalyst for the revenue jump of the print industry during the year, it added.