As the first two quarters for the fiscal year 2023-24 come to a wrap, news publishers are not only experiencing tectonic shifts in their print and broadcast media business, but their digital arm too is facing dynamic consumer shifts.

In an increasingly converged world, besides making sense on ROI matrices, digital offers extended reach at a very low cost, an ability to engage with the viewers in a two-way conversation, co-opt them into the content creation process, empower them by giving them a voice and retain them. The cost and business efficiencies clearly operate at many levels, says Sanjay Trehan, a digital and new media advisor.

According to a study by Reuters Institute, India is a strongly mobile-focused market where 72 percent readers access news through smartphones and just 35 percent via computers. However, despite the glittery user penetration numbers, advertisers, it seems, are not finding it worth investing their money in digital news publisher platforms.

For NDTV, the revenue was down by 35 percent in Q1 of 2023-24 due to lower advertising spends both on broadcasting and digital. Nevertheless, despite low advertisement spends, digital business remained profitable. For Network18 as well, revenue was flattish during the quarter as a weak advertising environment had an impact on the digital segment.

Jagran Prakashan Media’s Q1-24 digital revenue stood at Rs 14.43 crores as against Rs 16.78 crores in Q1-23. Mahendra Mohan Gupta, Chairman and Managing Director, Jagran Prakashan Limited, stated in the financial results that “Digital business had nearly the same revenue as in Q1 of the previous year partly because of unfavourable market conditions and partly because of inability to monetise the consumer base to the expected level.”

The Indian Express experienced a slowdown in ad revenue in the last two quarters but subscribers and events business performed well, according CEO Sanjay Sindhwani.

Focussing on sector-wise advertisers, Sindhwani underlined that the IT sector, which spends majorly on digital, has been severely impacted in the economic slowdown. The auto sector has supply chain issues where their order books are full but delivery is an issue. Now, because they are overbooked, advertising is not required for them, he said. Edtech is somewhat tumbling now, which has also resulted in layoffs and cost-cuts. In fact, the whole startup sector has been cost cutting heavily. Gaming was still big but has not seen much growth in the recent past due to regulatory issues and their restrictions on advertising.

For Republic, over the past year or so, there has been a significant shift in direct advertising towards digital publishers along with the always-growing network demand, shared Tapan Sharma, Head of Digital, Republic. The network’s revenue has also grown alongside the continuous growth of revenue in the industry.

Sharma believes the drop in advertisers is happening because advertisers and agencies have now become more aware, vigilant, and methodical with digital ad spending and campaign management. They are looking for better Return on Ad Spend (ROAS) and improving campaign efficiency.

“As a result, publishers who have not prepared themselves well to address the ever-evolving media planning and buying environment may be facing the challenges of monetising via advertising,” added Sharma.

Digital business sustains on two factors - Advertisers and subscribers. On one hand, where the advertisers are declining, publishers are generating quality content to increase their subscriber base who are ready to pay for paywalled content.

Trehan added, “For content behind paywalls to work, it has to be exclusive, differentiated, value-added and premium in nature viz. data and research. The more one has this kind of content, the better will be their subscription traction. Based on this Karmic principle, NYT today has about ten million subscribers, perhaps the most of any publisher in the world.”

The advertising revenue is further split into two - direct and programmatic. Publishers who have been heavily dependent on the latter have faced declining revenues because they have lost the traffic due to certain changes in Google and Facebook’s policies.

Pradeep Gairola, Business Head- Digital, The Hindu, has seen a positive growth in subscription revenue but not a large one. Fifty percent of their revenue comes via subscriptions and paywall content. The direct to programmatic advertising ratio for Hindu currently is at 70:30 split.

But there are obstacles for publishers who are more dependent on subscribers than advertisers too. Major one being, the subscriber revenue is not about acquisition but retention. And, Indian publishers have retention rates much lower than international publishers.

Gairola highlighted, “When we approached the business ages ago, we lacked the wisdom that this is not an acquisition business but a retention business. Retention depends a lot on what kind of audience you have been able to acquire. Secondly, what have you done to ensure that the audience builds a relationship with you and builds a habit around you.”

It is a pertinent industry problem because Indians are accustomed to free content. Unlike other countries, news in India has always been fragmented as an industry and has never charged a penny to its readers. This is also why The New York Times, The Guardian, and other international publishers have higher retention rates.

According to Sharma, the newspaper industry has not really made any significant increment in the subscription fee for the past many years. Whereas a digital news consumer was never asked to pay anything to read or watch news by Indian digital news publishers at large.

“Additionally, the sheer amount of content we are generating, we are not able to communicate or showcase the same to the reader. We haven't been able to establish to the reader how we add value,” shared The Hindu executive.

Further Sindhwani added, as a news publication, if one has to do credible content then it costs money. Customers need to appreciate and value good content in order to be able to pay money for it. The sooner the audience will understand that, the sooner they will be able to differentiate between free content and paid quality content.

Trehan also observed a trend of upward revision of subscription rates for digital when bundled with other value offerings. As more and more products are being bundled along with the main offering, rates are being hiked. Games, puzzles, premium content, exclusive videos are now becoming a part of the 'All Access' subscription.

Sharma believes news subscriptions in India will see significant growth over the next two to four years and publishers will certainly need to focus on offering discrete quality content consistently for paid users.

“The Indian digital news readers are now much more evolved and so is the industry. Within the next few years, the industry will experience habit creation amongst the users of paying for a digital news subscription. This has already started happening in the metros and will further grow in the rest of the markets,” he added.