TOI Finds A New Threat In Newspaper Inserts: It’s A Battle It Can’t Hope To Win
The real message from the rising incidence of insert advertising to the newspaper industry is simple: your ad rates are too expensive.
A major newspaper chain today warned guerrilla advertisers that “newspaper inserts are unethical”, not to speak of being “illegal and an unfair trade practice prohibited by the laws of our country.” For good measure, it added that such inserts may damage the brand, since readers may perceive the companies or businesses doing these illegal insertions as “fake” or “fly-by-night”.
Full marks to the newspaper group for trying to warn readers against those daily slips of paper we get asking us to order food from local restaurants, buy cheap properties, get a haircut or facial done at a new Unisex salon, or some such everyday appeal for custom. The warning, issued by The Times of India (TOI), will be watched with great interest by rival newspaper chains, who too have been quietly gnashing their teeth against illegal inserts that cost them advertising revenues.
But these efforts will probably fail. The TOI, remember, is probably the world’s most profitable newspaper brand,
and if it is worried about small-time advertisers who try and get hawkers to
insert slips of glazed paper or handbills to reach out to potential customers,
it must be worried.
It should be. The fact that TOI
has a near monopoly in the major advertising markets of India cannot blind us
to the fact that newspaper readership in general is under pressure from digital
media, and print advertising costs are unaffordable to most businesses that
need localised exposure.
Just as piracy is the market’s answer to overpricing, clandestine
inserts are the advertiser’s answer to unaffordable advertising costs. So while
the TOI can chase these guerrilla advertisers
and take legal action against some of them, the real war it will be fighting is
with its own distribution network – the hawker base.
Today, the principal value in a newspaper is not necessarily its
content, but its distribution network. The main reason why people buy
newspapers in the digital age, where news is instantly available on your
smartphone anywhere, may well be inertia and the fact that it is delivered to
Ask yourself: how many people, whose lives or careers don’t depend on being
up-to-date on news, will buy newspapers if they had to pick it up from a vendor
instead of the vendor delivering it at home? Most people may prefer to read
newspapers in offices.
The reason why we have illegal inserts in newspapers is because hawkers
find this to be an additional source of income, over and above the commission
given by newspapers for deliveries. Without this additional moolah, hawkers may
need more commissions, which would skew the costs further against publishers.
Today, a TOI costs around Rs
4.50 a copy, excluding the hawkers’ commission and other distribution costs, but
the printing and paper costs alone may range from Rs 15-20 per copy, depending
on the number of pages printed on any given day. This loss can only be made up
with high advertising rates, which again are counter-productive, since this
drives potential advertisers to other media or towards casual inserts.
To sum up, the reasons why newspapers are on a losing wicket with
inserts include the following:
One, to defeat the
inserters, a newspaper company will have to take on its own hawkers, who make
money from it. The only way they can win is by raising commissions, but even
then they will have a tough time policing inserts. Higher commissions will not
guarantee hawker compliance.
Two, newspapers are
very bad at microcasting advertising messages. Even though TOI and other print publications have lower rates for urban
localities and suburban areas, the rates still don’t make sense for, say, a new
beauty salon which focuses on 30 building complexes in a metro town for
Three, advertisers also
worry about the fact that TOI is
almost a monopoly in many markets. Its private treaties and market share
agreements with big advertisers ensure discounts for loyalty, but the small
advertiser is usually left out of this largesse.
Four, TOI is also in a bind. It cannot cut
rates too much unless it also raises its subscription rates. But doing that
means losing out on readership, which is what delivers the advertising. It is a
Catch-22 situation from which there is no easy way out.
The real message from the rising incidence of insert advertising to the
newspaper industry is simple: your ad rates are too expensive.
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