ASIA: PRINT PROSPECTS - Kelly Clark, the chief executive of MindShare Asia-Pacific, discusses how Asia’s recession-hit newspaper industry has battled to revive its once shaky fortunes

What a difference a year can make. Only 12 months ago, in the midst of a devastating economic crisis that gripped most Asian countries, the newspaper business must have seemed a very depressing business to be in.

What a difference a year can make. Only 12 months ago, in the midst

of a devastating economic crisis that gripped most Asian countries, the

newspaper business must have seemed a very depressing business to be

in.



Declining readership and slashed advertising revenues led to reductions

in both staff numbers and corporate earnings. Publishers were

questioning the long-term viability of their business models and some

were even considering shutting up shop.



But today, a different story is rapidly unfolding. In some markets,

readership has returned to pre-crisis levels and, in a few, has even hit

all-time highs. Ad revenues have rebounded significantly across the

region. Many publishers are aggressively exploring new frontiers in

printing and distribution.



And a rapid move to the internet - seen as a complement to existing

business practices, rather than a threat - is, in some instances,

redefining the economics of the newspaper business. How did we get here,

and what will the future bring?



The economic turmoil that hit most Asian countries in 1997 dramatically

affected all categories of consumer spending. This included the smallest

expenditures, including the purchase of a daily newspaper. In almost all

markets across Asia, newspaper circulations took a dive in 1998 as

consumers reduced their ’discretionary’ spending.



MindShare conducted a series of consumer focus groups across seven

countries in Asia in late 1998 to explore the effects of the economic

situation on people’s media consumption habits.



Almost without exception, people told us they had either reduced the

frequency of daily newspaper purchases or had eliminated them

altogether. ’I can get my news for free on TV,’ one Thai housewife told

us resolutely. ’Why should I buy a newspaper when I need money for other

things?’ We received similar explanations across the region. As

household budgets were pinched, newspapers were often viewed as a

’luxury’ purchase.



But this is now changing. As economies have rebounded, purchasing power

has increased. Newspapers have made a comeback in a number of markets as

a result. Even in markets where daily readership was down in 1999 versus

1998 early indications in 2000 show growth to ’pre-crisis’ levels,

according to MindShare research. And, as readers have returned, so have

advertisers.



Most papers across Asia experienced a severe downturn in advertising

expenditure from late 1997, which continued through 1998. Markets such

as South Korea and Thailand suffered year-on-year decreases of more than

40 per cent in 1998.



But during the second half of 1999 significant gains were realised in

all markets (excluding Japan). Renewed growth was generated by the

return of big-spend categories such as retail services but also by

strong growth from ’new’ areas such as telecoms, financial services,

healthcare and pharmaceuticals, and, of course, dotcom advertisers.



Perhaps the largest factor contributing to the resurgence, however, was

classified advertising. As economies strengthened, recruitment

advertising returned with a vengeance in most markets - much of it

fueled by those same dotcom companies.



Another important contributing factor to the growth in ad revenues in

1999 was a greater willingness by publishers to accept more innovative

uses of the newspaper medium by advertisers. Nike, for example, moved

significant budgets out of TV and other media to capitalise on creative

opportunities put forward in markets such as Hong Kong and Taiwan.



As we continue into 2000, the fundamentals have returned to a reasonable

state of health and Asia’s newspaper industry is turning its attention

to other challenges and opportunities.



As a result of tumultuous technological change, and not for the first

time, the future of the newspaper format is being questioned. Some say

that the internet will stop the printing presses. But, when speaking to

publishers across Asia, one sees a strong conviction that there is a

great deal of life left for well-managed papers.



Newspapers are broadly in the business of delivering news, comment and

analysis and the best-managed newspapers in Asia have realised this

means delivering their content in many forms - both printed and

electronic.



This is happening in every country across Asia but perhaps the best

demonstration of how this new thinking is being put into action is from

the South China Morning Post, Hong Kong’s leading English-language

daily.



SCMP has moved aggressively to the web, building www.scmp.com into one

of the most visited sites in Hong Kong. Much of the site’s popularity is

due to original news content and an innovative approach to online job

recruitment (building on SCMP’s dominance of printed recruitment

advertising of Hong Kong). It also helps that the site has a

comprehensive horseracing element to satisfy Hong Kong’s voracious

gamblers.



SCMP is also moving aggressively into new ’space’, having recently

launched a wireless edition of scmp.com for hand-held computing devices.

Moves such as these - using new technologies to build on established

franchises rather than hand-wringing over perceived threats - will lead

Asia’s newspapers into a more secure future.



One year ago, the picture for newspapers in Asia must have seemed bleak

to many observers. But, in keeping with the true character of this

region, publishers have adapted quickly. They have re-built the basics

of the business: loyal readership and committed advertisers. And, more

importantly, they are quickly embracing new technologies and business

models to build strong franchises for the future.



LEADING DAILY NEWSPAPERS BY MARKET 1999

Country        Newspaper             Average daily     % Change

                                        readership      vs 1998

                                            (000s)

China          Beijing Wanbao                3,059          +14

Hong Kong      Oriental Daily News           2,551          +21

Indonesia      Pos Kota                      2,633          -12

Japan          Yomiuri Shin Bun             27,600           +1

South Korea    Joongang Ilbo                 4,198           -6

Malaysia       Berita Harian                 1,679          -11

Philippines    Manila Bulletin                 778           -1

Singapore      Straits Times                 1,361           +4

Taiwan         Liberty Times                 3,618            0

Thailand       Thai Rath                     8,219          -12


NEWSPAPER ADVERTISING EXPENDITURE BY MARKET 1999

                    Advertising          % Change

                    expenditure           vs 1998

                USdollars(000s)

China                 1,723,863                +4

Hong Kong             1,106,238               +26

Indonesia               524,827               +37

Japan                11,370,000                -2

South Korea             484,600               +27

Malaysia                339,040               +17

Philippines             275,440               +16

Singapore               358,456                +6

Taiwan                1,017,105                +3

Thailand                417,833               +32

Source: AC Nielsen/MindShare estimates



ASIA’S NEWSPAPERS: COUNTRY BY COUNTRY



China



In 1998 there were 740 million daily papers in China, the bulk of which

had a local distribution. Aggregate numbers are on the way down,

however, due to the Chinese government’s quantity control policy.

High-selling newspapers include Beijing Wanbao and the tabloid Reference

News, both of which have circulations of around three million. Another

popular paper is People’s Daily. Arguments over reach are common as

there is no independent organisation to audit circulation figures. The

electronics giant Philips is one of the region’s largest print

advertisers: it spent RMB77,768 in newspapers in 1998. Two recent

launches include Beijing Morning Post and New Express.





India



More than 9 billion papers are sold in India every day and their number,

circulation and advertising revenues are all growing. The press accounts

for 56 per cent of the total 93,344 million rupees spent on advertising

in India. The two most successful papers are Times of India and Malayala

Manorama,which both have circulations of more than one million.

Corporate image advertisers are the largest advertising category in the

press with BPL India and Unit Trust of India the two biggest

spenders.





Indonesia



Indonesia’s 50 million households were served by 79 daily newspapers and

88 non-dailies in 1998. Recent years have seen a marked increase in the

circulation of regional non-daily papers - between 1997 and 1998 the

total number in circulation jumped 49 per cent from 1,287 to 1,918. The

country’s two leading papers are Kompas and Pos Kota, both broadsheets

with readership in excess of two million each. Vehicle advertising

accounts for 10 per cent of the total spent, with Suzuki one of the

country’s top newspaper advertisers. Total advertising expenditure

across all media is only expected to return to its 1997 high of 5,094

billion rupiah in 2000 after plummeting by 39 per cent to 3,654 billion

rupiah in 1998.





Japan



Newspapers were hard hit by Japan’s recession. Advertising revenues and

copy sales have fallen as have profits at newspaper publishing

companies. Radical structural reforms and cost-cutting measures have

been the order of the day over the past few years. There were 108 daily

papers in Japan in 1998, 92 of them regional. Advertising expenditure is

forecast to be in the realm of 4,406 billion yen in 2000, a slight

increase on 1999, but a fall from its 1997 high of 4,517 billion yen.

Yomiuri Shinbun and Asahi Shinbun are the country’s leading dailies and

Toyota is one of the country’s top-ranked advertisers.





Malaysia



The press continues to dominate total ad expenditure in Malaysia with a

58 per cent share in 1998. Ad revenues for 1997/98 plunged by 22 per

cent at current prices down to 1,052 million ringgit due to the

recession. Nearly a quarter of press advertising is accounted for by

classified services. Malaysia’s 10.8 million-strong population was

served by 33 daily papers in 1998, 15 of which are national, and just

one non-daily. The three biggest papers by readership are Berita Harian,

Utusan Malaysia and The Star.





Philippines



Advertisers across all media slashed their budgets by as much as 40 per

cent in the Philippines at the height of the region’s economic crisis.

Concurrently the press has been losing out to TV and radio - it accounts

for just 30 per cent of adspend. The shake-out has been severe - 20

daily and 196 regional non-daily papers closed between 1995 and 1997.

The Philippines’ top ten dailies include Manila Bulletin, People’s

Journal, People’s Tonight and The Philippine Star. The communications

sector is one of the strongest advertising categories in the press and

one of the country’s top print spenders is the Philippine Long Distance

Telephone Company.





Singapore



Singapore’s modest population of less than three million is served by

eight daily, two non-daily and three Sunday papers (1998). Circulations

have remained relatively stable as has advertising expenditure in the

press. Zenith forecasts a total adspend of Sdollars 1,248 million for

2000, Sdollars 601 million of which will be accounted for by newspapers.

This represents a 14 per cent increase on 1999’s total. The Straits

Times boasts the country’s largest readership (1.3 million) while other

popular broadsheets include Lianhe Zaobao and Lianhe Wanbao. Department

stores such as Courts lead the advertiser rankings.





South Korea



The newspaper industry in South Korea was badly hit by the Asian

recession with ad expenditure being cut back by as much as 40 per cent

in some cases. Total expenditure across all media was 4,744,488 million

won, down from 6,116,323 million won the year before. Forecasts for 2000

show a gradual recovery to 5,632,655 million won, according to Zenith.

Joongang Ilbo is the country’s biggest paper by readership. Other

well-read dailies include Chosen Ilbo and Dong A Ilbo. The country’s

leading brands, including Samsung, SK Telecommunication, Daewoo and

Hyundai, are among its top advertisers in the press.





Taiwan



Taiwan has a population of 21 million. In 1998 it recorded a total of

149 daily and 211 non-daily papers. Advertising expenditure across all

media has shown a steady rise since the early 90s. In 2000 it will total

NTdollars 161,033 million, a 10 per cent increase on 1999. NTdollars

69,141 million of that - 43 per cent - will be taken by newspapers. The

country’s leading paper by readership is Liberty Times (3.6 million).

Other popular papers include China Times and United Daily News. Property

advertising accounts for more than 20 per cent of display revenue in

newspapers.



Tracey Taylor.



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