Terms of Reference Feasibility study of audience research as a commercial service in Nepal

Transcription

1 Terms of Reference Feasibility study of audience research as a commercial service in Nepal 1. Introduction Samarth-NMDP is a five year DFID (UK Department for International Development) funded market development programme that aims to reduce poverty in Nepal. The programme takes a Making Markets Work for the Poor approach to improving the performance of key market sectors that benefit the poor. These include sectors in agriculture and tourism. Samarth is also embarking on work to improve the operations of mass media in Nepal. The media sector is critical for the flow of information and also to voice and accountability. It is a key potential driver of change within market systems. 2. Background to the analysis Samarth-NMPD undertook an initial scoping study into mass media in September 2013 and has had approval to embark on work commencing January The importance of radio to Nepal The preliminary scoping highlighted the continuing importance of broadcast media in Nepal, particularly to Nepal s rural population which accounts for over 80% of the country s population. Both radio and TV appear to have significant reach, but radio is the preferred channel for information among the majority and particularly for poorer households. This preference is a result of lower ownership of television sets in poorer households, but also a result of Nepal s ongoing electricity problems and major load shedding in drier seasons. It also appears to be a result of households perceiving TV as primarily a channel for family entertainment, rather than information. Radio- a large but dysfunctional industry Nepal s radio industry is surprisingly large. In 2013, it was estimated to comprise of around 369 stations of which 1 is a national state broadcaster, 243 community radio stations and 125 fully commercial stations. The industry was liberalised in 1997 and this sizeable industry has therefore emerged only in the last 16 years and much of the growth has been within the last decade. The initial analysis undertaken by Samarth-NMDP on the Nepalese radio industry identified significant problems within the radio industry. Profitability and therefore quality was a major problem for many stations and the industry is suffering from a chronic lack of competitiveness. The revenue base for the industry is extremely low, accounting for only 17% of the total advertising revenue which is significantly less than print media at 47% (see annex 1 for information on advertising expenditure in Nepal). Radio in Nepal suffers from a chronic low level of revenue in comparison to other developing economies of a similar size and demographic characteristics (i.e. rural population). For example, radio in Nepal relies on 7% of the revenue of Uganda which has a similar population, size of economy, level of development and also has a vibrant radio industry (of over 250 stations). In Sri Lanka, a smaller but

2 wealthier country, the much smaller radio industry is based on a revue base which is 11 times the size of Nepal s (US$ 84.7 million compared to Nepal s US$ 7.38 million) and broadcast accounts for 85% of spend on mass media compared to 37% in Nepal. Despite higher literacy levels and a relatively vibtant print media, Sri Lankan advertisers allocate less than 15% of their spend on print compared to Nepal s 47%. The result of this low revenue base is low profitability and investment in broadcast generally and an industry that appears to be in decline. Audience research is a key driver of a competitive broadcast industry The analysis undertaken by Samarth-NMDP highlights a number of fundamental constraints to the effective operation of radio and the broadcast industry as a whole in Nepal. A fundamental constraint is the lack of effective audience research / ratings. In almost all countries where there is a liberalised, diverse and sizeable broadcast industry, there is an allied commercial service of audience research and ratings. This forms the basis on which advertisers and communicators spend and therefore forms the competitive foundation for the industry. This includes developing countries with a similar size of economy as Nepal (for example Uganda). The regularity of such research is dependent on the size of the advertising industry (advertising expenditure) and, for example audience research is released annually in Uganda, quarterly in Kenya and monthly in Nigeria and South Africa. A failed service undertaken by Nielsen Nielsen was running an audience service in Nepal but this research lost credibility, subscribers and ceased in The reasons for this failure, will be part of the analysis undertaken under this TOR. Small sample sizes, alleged inconsistent findings (e.g. that the programme on a station that had been closed for some time indicated high listenership in a Nielsen report), and poor responsiveness from Nielsen to concerns from subscribers were highlighted as reasons for this failure. Nielsen also struggled with the unlicensed dissemination of its research findings. Demand from major advertisers and advertising agencies Despite the collapse of the Nielsen service, Samarth-NMDP identified strong demand for the resumption of an audience and ratings service in Nepal. This demand is from advertising agencies, the Advertising Association of Nepal (AAN) and major advertisers (such as Unilever and NCEL the largest telecommunications company). The lack of adequate, regular and reliable media research is recognised as a major constraint to the growth of the advertising industry and impacts significantly on the ability and cost effectiveness of advertising and communications. 3. Purpose of the research Samarth-NMDP is therefore exploring the potential to support the resumption of a commercially run audience research service in Nepal. As a preliminary step, Samarth-NMDP is commissioning a study into the feasibility of a commercial audience research service. The purpose of this feasibility study will be: To identify the reasons for the failure of the Nielsen audience research service. Appraise the commercial viability of different models to re-establish audience research services. Make recommendations for the resumption of commercial audience research in Nepal. This feasibility study will therefore form the basis for subsequent work which Samarth will undertake to facilitate the resumption of audience research in Nepal. Samarth intends to support the resumption of

3 audience research in Nepal with technical and organisational support where required but aims to leverage private sector investment into this service. 4. Scope of work and methodology The analysis will therefore have 3 areas of focus: 1) Investigating the reasons for the failure of previous audience research in Nepal 2) Appraising the viability of different models for the resumption of a commercial audience research service in Nepal. 3) Developing recommendations for Samarth to support the emergence of a commercial audience research service in Nepal. 1) Investigating the reasons for the failure of previous audience research in Nepal - Nielsen and their past clients (advertisers and advertising agencies) and past potential clients will be consulted. - Where possible, examples of the research data will be gathered and assessed. (Note: Samarth- NMDP was able to collect some of the data print outs from advertising agencies) 2) Appraising the viability of different models for audience research in Nepal There are possibly 5 different potential models for the resumption of audience research in Nepal: 1. Nielsen Nepal re-launches their media research service: Nielsen appeared to damage their credibility and reputation in this field. The consultant would assess whether this reputation could be restored and under what conditions Nielsen would consider reinvesting in and resuming this service. 2. An international company with expertise in media research invests in establishing a branch in Nepal e.g. IPSOS: The consultant would appraise whether this is a viable option with respect to the relatively small size of the country, economy and advertising industry (although it should be noted that the small size of the advertising industry is partly a result of the lack of market intelligence data for advertisers the industry is likely to grow with the emergence of a viable and credible service). A market analysis and consultation with international and regional research organisations will be undertaken as part of the assignment. 3. Major advertisers and advertising agencies invest in the set up of a media research company: This model has been applied in South Africa and Nigeria. Major Advertisers and advertising agencies come together to invest in a jointly owned research company/foundation (named SAARF in South Africa South African Audience Research Foundation). This company/foundation undertakes regular research as a syndicated survey (similar to that undertaken by an independent company). The consultant will assess whether such a model could be initiated in Nepal. 4. A joint venture is formed between a local and international research company

4 A local company alone may struggle for credibility in the current Nepalese market and a collaboration with an international company may assist with credibility and in developing robust approaches and systems built on international experience. The potential for such a joint venture would be appraised. 5. An existing local Nepalese company invests to establish the service It may be feasible for a local company with an already established track record to expand their current services to include audience research. In such a scenario, the level of technical assistance required would need to be assessed. 5. Activities The consultant will be the team leader in this analysis and will be supported by the Samarth-NMDP media team. The following envisaged activities are for guidance purposes only and will be finalised in a work-plan by the consultant in consultation with Samarth-NMDP Preparation desk based Review of background documents: Samarth-NMDP will provide the consultant with key project and background documents which will act as a background for the work. A short consultation with Samarth-NMDP s international media adviser (Gavin Anderson) will be undertaken. If possible/required: consultation will be undertaken with international researcher organisations (IPSOS) to understand their interest and potential constraints to investing in Nepal. If possible/required: investigation of the advertiser led model that has been rolled out in South Africa and Nigeria will be undertaken. Consultation would be required with the South African Audience Research Foundation (SAARF). Liaising with Samarth-NMDP media staff to develop a shortlist of required meetings and a preliminary workplan for the fieldwork. Samarth-NMDP staff will pre-organise meetings to ensure maximum efficiency during the in-country assignment. In country fieldwork The fieldwork will be undertaken with the support of Samarth-NMDP staff. Nevertheless, the consultant will be the team leader in this analysis. Travel to Nepal for 2 weeks to undertake direct analysis and consultation Consult on a one-to one basis with advertising agencies and major advertisers in Nepal and the Advertising Association of Nepal (AAN). Meet with leading research companies in Nepal as potential investors and service providers in audience research services. Meet with AC Nielsen, their past clients and past users of their research.

5 Where appropriate, meet with media houses in Nepal 1 and the broadcast associations ACORAB (association of Community Radio Broadcasters) and BAN (Broadcasters Association of Nepal commercial radio). Present the preliminary findings of this analysis to Samarth-NMDP for discussion. In collaboration with Samarth-NMDP, present and discuss the preliminary findings of this analysis at a local stakeholder workshop. Post fieldwork desk based Consultation by phone and with international research organisations as required. Preparation of a draft assignment report which will be finalised following comments and feedback from Samarth-NMDP. 6. Management The consultant will act as Team Leader for this analysis. Samarth-NMDP will provide support to the assignment and the fieldwork will be undertaken in collaboration with Samarth-NMDP media staff. The outputs and overall assignment oversight will be undertaken by Samarth-NMDP 7. Outputs Assignment report Full list of the names and contacts of those consulted during the assignment 8. Expertise required The consultant will be expected to have the following experience and expertise: - Have significant experience of audience research, preferably within a variety of country/market contexts. - Have worked within the commercial audience research industry, or be able to show a detailed understanding of the commercial operations of audience research. - Ideally have work experience (e.g. short assignments) within countries with weaker media markets. - Have undertaken short term consultancy and advisory assignments for other clients. 9. Timing and anticipated inputs It is anticipated that fieldwork would be undertaken in March or April and the assignment completed by 20 th April It should be noted that some of the national broadcasters, as well as Network broadcasters, actually partially benefit from the lack of audience data. Advertisers tend to use national broadcasters due to the lack of data on local broadcasters who, from fieldwork, appear to be significantly more popular outside the Kathmandu Valley.

6 Activity Days Timing (tentative) Preparation desk based 5 days March 2014 Fieldwork (including travel days) 14 days March April 2014 Post fieldwork desk based 4 days April 2014 Report preparation 2 days By 20 th April 2014 Total 25 days 10. Application Interested consultants are required to submit a short letter of interest with complete resume by e- mail to recruitment@samarth-nepal.com. The deadline for the receipt of the proposal is the 7th of March 2014.

7 Annex 1: Extract from the Samarth-NMDP Sub-sector analysis and vision for media This is an extract of a longer and more detailed analysis of media in Nepal. It has been included as preliminary background information and he whole report will be made available to the consultant who undertakes this research. 1. Sub-sector structure and performance The Radio sector in Nepal Radio broadcasting in Nepal began in 1951 with the establishment of the state broadcaster Radio Nepal. It remained a state monopoly until 1997 when the first private radio license was granted to the Kathmandu community radio station Sagamartha. This heralded the widespread liberalization of radio in Nepal and over the next decade and a half the sector grew significantly, primarily through the granting of local FM 2 licenses. There are no definitive sources of information on the number of radio stations operating in Nepal (even government statistics show licenses granted and not stations on air), but the analysis undertaken by Samarth in September 2013 suggests that there are around 369 radio stations in the country. These can be divided into three sectors: State media The State Broadcaster radio Nepal continues to operate in Nepal and has moved from MW broadcasting into the higher sound quality FM broadcasting frequencies. They currently operate 14 repeater stations broadcasting one channel on 14 FM frequencies through masts located across the country. Radio Nepal is estimated to have the highest reach (those who can access the signal) in Nepal. While radio Nepal is often presented as a public broadcaster, it is not perceived to have the separation from the state which makes it independent and impartial to the prevailing ruling party.. Box 2: The Radio sector in Nepal 369 radio stations in total: 1 state broadcaster broadcasting through 14 repeater stations 243 community radio stations 125 commercial FM stations 89 of which are outside the Kathmandu Valley Community Radio Since the launch of the first community radio station in 1997, Nepal s community radio sector has grown significantly. The Association of Community Radio Broadcasters in Nepal (ACORAB) state that there are 243 community radio stations operating in Nepal. The community radio sector in Nepal perceives itself as a leader in South Asia, pioneering the first South Asian community station and now having the largest number of community stations per capita in the region. Commercial Radio 2 FM (Frequency Modulated) radio is low cost to run and is effective for broadcasting signals up to km depending on topographical factors, mast location and height and transmitter power. SW and MW have greater reach but have a much poorer quality (and mono) signal and are not picked up by many new radio receivers (e.g. mobile phone based radio)

8 The liberalization of radio in 1997 also resulted in the granting of commercial licenses to companies and groups of shareholders. The commercial radio sector also grew significantly after liberalization and the Broadcasting Association of Nepal (BAN representing commercial broadcasters) has 125 members, 89 of which are located outside the Kathmandu Valley. Almost all of these stations broadcast on one frequency and are effectively local broadcasters. The one exception is Kantipur FM which aims at almost national coverage with 8 FM repeater stations located around the country. An additional area of broadcasting is the emergence of network broadcasters who produce content but do not broadcast themselves, but work through a network of existing broadcasters. This is predominantly undertaken on a pay-to-play basis whereby broadcasters are paid to air content. Examples include Ujyaalo Network 3 (a company) and development organizations Equal Access and Antenna Foundation. Comparative competitiveness of radio in Nepal Broadcast media is used on a weekly basis by almost double the number of people as print media. Nevertheless, broadcast attracts a lower share of advertisement compared to all other mainstream media (see figures 3 and 4). The radio sector has grown significantly over the past 10 years, but without a corresponding growth in the revenue base which supports the industry. This low share of advertising revenue combined with the increasing competition among greater number of stations has resulted in negative competition and a reduction in advertising rates. Most radio stations in Nepal suffer from low profitability (many are survivalist) and have minimised staff, wages and investment in programming while increasing the proportion of airtime devoted to pure advertisement. Figure 3 : Advertising spend in Nepal 1% 15% Print 47% TV 17% Radio Digital 20% Others Figure 4: Advertising revenues in spend on media in Nepal (in million NPR) Overall Print TV Radio Source: Advertising Association of Nepal (AAN) no figures available after Ujyaalo is a network broadcaster but also has its own FM station (Ujyaalo FM 90)

9 The low advertising revenue being allocated to radio by advertisers highlights a weakness both in the radio sector and the advertising market. To highlight the level of weakness within the radio market, it is useful to compare Nepal to another country with a vibrant radio industry. Uganda, despite its different topography and culture, has a similar national income, population, literacy and rural population (Figure 5). The advertising industry in Uganda is estimated to have been 4 times that of Nepal in 2010 to 11. Unlike Nepal, the Ugandan radio industry receives by far the largest proportion of this advertising spend (58.8%). Despite its larger size, the radio industry in Nepal therefore receives 7% of the revenue that the Ugandan radio industry receives (7.38 million US$ compared to million US$). Running a radio station in Uganda can be a profitable business whereas in Nepal it is hard to survive in the industry as it currently stands. Figure 5: Comparison of Nepal and Uganda related to the radio and advertising industry Overall statistics Nepal Uganda Population (2012 estimates 4 ) 31.0 million 35.6 million Size (area) 140,800 sq km 236,040 sq km Rural population % 84.0% GNI per capita in PPP terms 6 1,137 US$ 1,168 US$ Literacy % 73.2% HDI ranking (UNDP 2012) Media statistics related to radio Number of radio stations (approximately) Reach of radio 80.5% 9 98% 10 Estimated advertising spend million US$ million US$ 12 % advertising spend on radio 17% % Advertising spent on radio 7.38 million US$ million US$ Approx price for 30 second advertisement on rural radio station 0.05 to 2.50 US$ (5Rps to 250Rps) to US$ UNDP Human Development Report (although for Nepal this appears at odds with the Nepal Living standards survey/ 2011 census data which states that the population is 26.5 million) Human Development Report, UNDP Human Development Report, UNDP Human Development Report, UNDP Human Development Report, UNDP 9 USAID/OTI Media survey of Adults, IPSOS Uganda, Advertising Association of Nepal (AAN) figures (these are the most recent available) 12 Uganda All Media Product Survey (UAMPS) 2011, IPSOS Uganda 460 Billion Uganda Shillings (exchange rate US$1= 2580UGX) 13 Advertising Association of Nepal (AAN) figures (these are the most recent available) 14 Based on field visits undertaken by SAMRTH in September 2013

10 Figure 6: Proportion of advertising spent on various media in Nepal and Uganda 80% 60% 40% 20% 0% 58.8% 47.0% 22.7% 20.0% 16.9% 17.0% 16.0% 1.6% Print TV Radio Other Nepal Uganda One factor that contributes to the difference in overall spend on radio between the two countries is the difference in advertising rates. The advertising rate charged in Uganda is substantially higher than in Nepal. A 30 second advert on a local FM station in Nepal is charged between US$0.05 and $2.50 whereas it is charged in Uganda between US$15.00 and $34.00 (6 to 300 times more). The Nepali market has become a buyers market whereby the number of competitive suppliers is forcing down prices and reducing advertising rates to levels which is undermining the sustainability of the sector. This suggests deeper systemic problems within the radio market in Nepal which is creating negative competition and a downward spiral. Constraints analysis (extract) Many of the supporting functions in the media market are weak which is inevitable in a market in which the majority of the players are struggling for survival. The current market system is so weak that the opportunity to develop sustainable informative programming at local level is limited. Without improvements in the overall profitability and competitiveness in the market, investment in programming and human resources will remain low and radio programming will remain dominated by entertainment, advertising, cheap studio based formats and paid for content. Low profitability and negative competition therefore needs to be addressed to lay the foundations for improving informative programming for the poor. The advertising market a critical interconnected market for radio in Nepal: The analysis undertaken by Samarth identifies the problems related to the interconnected market of advertising as being a key cause of weak profitability and therefore under-performance in Nepal s weak radio sector. Increased advertising revenue needs to flow to radio (local radio in particular) to allow the industry to develop and improve. Perhaps more importantly, these advertising revenues need to flow to the most successful radio stations, i.e. those that are most popular among audiences, while poorer performing radio stations are either forced to compete or are forced out of the market. In reality, the number of radio stations in Nepal may reduce but quality and competitiveness would rise. As noted earlier in the comparison to Uganda Nepal s radio sector, despite its reach and importance, is significantly underperforming in revenue terms. This highlights the unattained potential of radio in Nepal. The central importance of audience research (ratings) to improving profitability in the radio market: A well functioning audience research service is pivotal to the advertising market and therefore to the performance of the radio sector. In Nepal this service was established by Nielsen on a commercial basis but ceased in The research was weak with only 8 subscribers initially which reduced to 4 by It appeared to have little credibility

11 among advertisers, subscribers and media actors. It also appeared highly urban focused. This dysfunction in the audience research market has some clear impacts on revenue: - Reducing advertising revenues overall: The lack of reliable data on audience preference creates higher risk for advertisers and a reluctance to spend on media based advertising. - Reducing revenue to broadcast specifically: The number of radio stations and therefore the fragmentation of broadcast means that radio is likely to be the biggest loser in reduced advertiser confidence. The print media on the other hand can, to some degree, prove print runs and distribution and as a tangible physical product is not so reliant on audience research. This is likely to be a key reason why as a share of advertising revenue, radio in Nepal is so much lower (17%) compared to Uganda (58.8%) where there is a highly functional audience research service operating. - Increased direct marketing (below the line BTL marketing): Direct marketing (direct to consumers and therefore outside the mass media channels) was the dominant approach for advertisers to reach rural consumers before radio grew in dominance after a wave of liberalisation in Asia (and Africa) from the mid nineties. In many countries, BTL reduced as revenues were redirected to the growing radio sector. In Nepal, BTL remains strong and is increasing due to the low advertiser confidence and understanding of mass media (and radio). It is interesting to note that the proportion of advertising spent on other advertising channel (which is predominantly BTL) was 16%, almost the same as that spent on radio overall) in comparison to Uganda at 1.6%. - Increased advertising on urban biased media: The decentralised and rural focused media is the most difficult for predominantly central, urban based advertisers to understand. Lack of data therefore results in advertisers channelling money towards the media they understand i.e. that which they consume or operate in localities they are aware of. Some advertisers undertake their own ad hoc and often weak analysis which often involves consulting suppliers and retailers who are also urban biased and often in a weak position to understand rural media consumers. - Increased advertising on national (centralised media): the confusion around the media habits of rural audiences often results in advertisers taking the easier option of focusing their revenue on media that is perceived to have national audience. This for example benefits Radio Nepal, Radio Kantipur and network broadcasters. While anecdotal evidence suggests national radio actually has quite low listenership in rural areas (compared to the local FM stations), they benefit from the weak information within the market. Media monitoring contributing to advertisers lack of confidence in radio: There is no media monitoring service operating in Nepal and advertisers cannot verify whether they are receiving the services they pay. This gap will be contributing to lack of advertiser confidence on broadcasting and is therefore a contributing factor in low advertising spend on radio.