Making media markets work in Nepal
Private sector audience research and its role in building media markets
Audience research is not just about understanding audiences. Data on what people are reading,
watching, listening to or interacting digitally with influences media content and investment.
Audience research is therefore fundamental to media industries, forming the incentives and
competitive drivers of a media market. Those working in media development need to recognise the
pivotal role that audience research plays. They need to understand how audience research both
supports and undermines the positive development of media industries.
This paper describes the philosophy behind and approach of work being initiated in Nepal to
stimulate the set up of regular national audience research. It explains how lack of regular audience
research is stifling the effective growth of a whole media industry. An industry which comprises not
only of for-profit media, but also Nepal’s substantial but struggling community broadcasting sector.
The paper highlights the need for work on developing a sustainable audience research service and
the requirement to collaborate with non-traditional development partners to make media markets
work better. The paper has relevance not only to Nepal, but in all developing countries with a
diverse liberalized media environment and highlights key challenges for development actors to
engage with the burgeoning media markets across the developing world.
BACKGROUND
Why are media markets important?
It is uncommon in development to consider media as a ‘market’. But media is an industry that is
becoming increasingly diverse, liberalised and competitive in large areas of the developing world.
Media liberalisation across Africa, Asia and Central and South America has resulted in an explosion in
broadcasting while developments in ICT have offered diversity in access to information. Never
before have ordinary people across the developed world been offered with more information
choices or access. Never before have media outlets been so competitive in trying to attract audience
and the advertisers which are critical to this growing industry.
A market is a competitive exchange of goods and services and media has become and is increasingly
a competitive market. The media as service providers are competing for audience and competing for
advertising revenue to support the industry.
This perspective is not based on an ideological position, but a pragmatic one. If the development
sector wants to improve the performance and role of media in development, then we must
understand media markets and the way in which they work and do not work effectively. These
competitive markets are not just of relevance to the for-profit media sector but also to the not-for
profit media houses. Analysis in Nepal showed that 85% of the revenue of community radio stations
came from commercial sources (advertising and programme sponsorship) with only 12% community
donations and fundraising highlighting this sector’s involvement with advertising markets. Public
and community radio also need to compete for audience with other media service providers. A
media market is therefore a market of both for-profit and not-for-profit service providers competing
over audience and advertising revenue.
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The importance of audience research in media markets
In a functioning competitive media market, media houses are rewarded for popular content with
increased interest from advertisers and therefore increased revenue. For this commercial incentive
to work, advertisers need to have access to good ‘market intelligence’ in the form of audience
research data (ratings). Important demographics, e.g. the poor, rural, women, the youth, need to be
well represented in sampling and disaggregated in audience data so that ratings do not result in a
single winner takes all outcome, but a situation where the media can build a competitive advantage
around specific demographics. Research also needs to be nationwide to allow decentralised media
to establish a local niche.
As such, audience research is a key driver of the competitiveness of media and actually places the
audience at the centre of competition. This competitiveness around audience can be used to
leverage investment in programming and, if tapped into effectively, to develop popular, quality and
developmental media content.
For this positive commercial, dynamic to work, there needs to be independent research that gives
advertisers information on audience ratings. Without audience research media industries can be
caught in an uncompetitive cycle which reduces investment and undermines media content and
quality.
As the next section shows, Nepal is a classic example of an industry that is being stifled by lack of
competitiveness and investment and one which is suffering from lack of regular and effective
audience research.
THE MEDIA SECTOR IN NEPAL
The Media industry in Nepal
Following broadcast liberalisation in 1997, the media industry in Nepal has grown hugely and now
comprises of around 370 radio stations (around two thirds community radio stations), 28 TV stations
and 400 daily and 2000 weekly publications.
Over 2800 broadcast and print media channels are therefore serving a country with 40% of the
population and land area of Germany. Nepal’s media industry is therefore substantial but there are
indications of significant problems within the sector. A survey of radio broadcasters undertaken in
March 20141 found that:
-
1
4 in 10 radio stations reported reduced profitability over the past 5 years
More than half of stations had reduced staff numbers in the past 5 years with an average
reduction of 14 staff
More than half of all radio stations believe radio is not a profitable sector to be in.
More than two thirds of stations believe that their profitability will decrease in the next 5 years
43% of commercial radio stations believe that it is possible that they will close down in the next
5 years.
Samarth NMDP research with 20 radio stations in 10 districts of Nepal.
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This low level of confidence of radio managers in Nepal is resulting in lack of investment and the low
profitability is clearly impacting on reinvestment in the stations and staffing levels and wages. This is
clearly having an impact on the quality of programming and journalism and therefore on listenership
and audience satisfaction. Radio in Nepal is perceived by the industry itself, the audience and by
external analysts as a sector that is in crisis and decline.
This decline is despite the fact that radio remains the most important media for information for the
majority of Nepal’s population. For example, in a survey in 2014, 73% of farmers said that radio was
a preferred media for agricultural information whereas only 23% chose TV. There is high demand in
Nepal for agricultural information (87%) but low awareness (41%) and listenership (27.5% and
12.3%). The quality of agricultural programming was also assessed in Nepal and found to be of very
low quality and not responding to audience demand and interest.
Radio remains a critically important industry in Nepal, a country with 83% of people living outside
the urban areas. Quality radio programming is in demand but the low profitability of the sector is
impacting on the ability of the radio sector to supply the types of programmes Nepalis want. The
radio sector is showing serious signs of decline.
Comparing Industries
A fundamental problem of Nepal’s radio industry is one of profitability. The media sector has grown
without a corresponding growth in the revenue base to support the industry. Advertising is low in
Nepal compared to other countries and particularly low for radio.
The advertising industry (Adex – advertising expenditure) is only 0.23% of the GDP in Nepal
compared to 0.7% in Sri Lanka and 0.89% in Uganda (a country with the same GDP as Nepal). The
comparison of Uganda reinforces the revenue base problem for the Nepal radio industry. Uganda is
a country with almost the same population, income and human development ranking. It also has a
vibrant radio industry with over 250 radio stations but a larger advertising industry (US $178 million
compared to Nepal’s $43 million)
From an advertising and broadcasting perspective though, the contrasts are particularly stark. The
radio industry in Uganda attracts almost 59% of the advertising revenue due to the importance of
radio to the highly rural population of Nepal. Revenue to radio therefore amounts to almost $105
million in Uganda compared to $7.4 million in Nepal (17%). In other words the radio industry in
Nepal is operating on 7% of the revenue base as those in Uganda. Ugandan radio stations are
charging between 300 to 700 times more for advertisement space than stations in Nepal.
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Figure 5: Comparison of Nepal and Uganda related to the radio and advertising industry
Overall statistics
Population (2012 estimates2)
Size (area)
Rural population3
GNI per capita in PPP terms4
Literacy5
HDI ranking (UNDP 2012) 6
Media statistics related to radio
Number of radio stations (approximately)
Reach of radio
Estimated advertising spend
% advertising spend on radio
Advertising spent on radio
Approx price for 30 second advertisement on rural
radio station
Nepal
Uganda
31.0 million
140,800 sq km
82.7%
1,137 US$
60.3%
157
35.6 million
236,040 sq km
84.0%
1,168 US$
73.2%
161
369
80.5%7
43.39 million US$9
17%11
7.38 million US$
0.05 to 2.50 US$
(5Rps to 250Rps) 12
250+
98%8
178.25million US$10
58.8%
104.81 million US$
15.00 to 34.00 US$
The audience information deficit in Nepal
Why is the revenue base for radio and media overall so low in Nepal? While part of the answer may
be infiltration of Indian media into Nepal and Nepal’s turbulent recent political history, these are not
the key reasons cited by advertisers and advertising agencies in the country. It is the lack of credible
data on media habits in Nepal that creates uncertainly and confusion. One advertising executive
stated that spending money on media advertising in Nepal is like ‘throwing money into a black hole’.
Advertisers therefore tend to spend on media which they know and interact themselves and
therefore predominantly urban based and print media. Many are unwilling to spend at all on a
confusing, fragmented and unproven media sector. Advertising revenue in Nepal is therefore stifled
by uncertainty and less likely to flow to the decentralised and broadcast media which is the main
and often only media accessed by the majority of Nepalis.
This is a key difference to a country like Uganda where there is an annual AMPS (All Media and
Product Survey) which provides data on audience habits and media consumption. These surveys
have made advertisers recognise the importance of decentralised and broadcast media and resulted
in increased revenue to the network of rural radio stations across Uganda. In Nepal, even the most
successful radio stations outside Kathmandu struggle for revenue and to prove their popularity.
2
2012 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)
3
2012 Human Development Report, UNDP
4
2012 Human Development Report, UNDP
5
2012 Human Development Report, UNDP
6
2012 Human Development Report, UNDP
7
USAID/OTI Media survey of Adults, 2009
8
IPSOS Uganda, 2012
9
Advertising Association of Nepal (AAN) 2010-11 figures (these are the most recent available)
10
Uganda All Media Product Survey (UAMPS) 2011, IPSOS Uganda – 460 Billion Uganda Shillings (exchange
rate US$1= 2580UGX)
11
Advertising Association of Nepal (AAN) 2010-11 figures (these are the most recent available)
12
Based on field visits undertaken by SAMRTH in September 2013
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In a media industry which is struggling to survive, it is almost impossible to undertake effective and
sustainable media development outside the few large urban media houses and network
broadcasters13. Journalism and programme content cannot improve when media staff are barely
paid and are often unpaid. Programming cannot improve when stations are unable to invest in
programme development and equipment.
Donors funding these stations or buying equipment for these stations is a short term elastoplast
solution to a fundamental problem within the industry. The revenue base of radio in Nepal needs to
increase and credible and regular audience research is required to unlock growth of revenue in
radio.
AUDIENCE RESEARCH
Audience research in Nepal
Audience research has never been effectively undertaken on a regular and national basis in Nepal.
The local branch of the international company Nielsen ran audience research on a syndicated basis
(commercial subscribers paying for the research). This research was limited primarily to the
Kathmandu Valley (Nepal’s most urban and populated area) and lost credibility with subscribers
and collapsed in 2012, the limited nature of the research, its low credibility and limited circulation
meant that the Nielsen research did not solve Nepal’s audience information gap. Furthermore, the
research did nothing to provide clarity on media habits outside the populated Kathmandu valley.
With 83% of Nepal’s population living in rural areas, this meant that the research was irrelevant to
understanding the habits of the majority of Nepal’s population.
This urban and wealthy bias is a natural bias in commercial advertising. But it is not true that
commercial buyers of research are uninterested in rural audience research. In a country like Nepal
where the rural and poor population are the vast majority rather than the marginalised minority,
many communicators and advertisers are interested in understanding and reaching this group. While
poor people buy less, their numbers make them a critical part of the market. In commercial terms
this is called ‘bottom of the pyramid marketing’14 and is employed by many commercial companies
including those in telecommunications and fast moving consumer goods companies (e.g. Unilever)15.
It is therefore clear that the interests of commercial companies such as those in telecommunications
and FMCGs (fast moving consumer goods) overlap with those of public and development
communicators and those interested in media development when it comes to understanding
13
Networks which use the rural radio stations to rebroadcast centrally produced content.
See for example The Fortune at The Bottom of the Pyramid, CK Prahalad 2005
15
The development community is often split on this ‘commercialisation of the poor’ with some viewing it as a
useful dynamic and others as an existing and potential exploiting factor. Nevertheless, the poor are part of
markets and becoming ever more so, as can be seen in the uptake of mobile phone services and increased
access to fast moving consumer goods. Using this market dynamic to increase the flow of finance and
resources to media that targets the poor while at the same time using this increased finance to improve
journalism and quality of information for the poor is an effective and pragmatic strategy for sustainable media
development.
14
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audience interests. The Nielsen service in Nepal and its urban bias and ultimate collapse highlights a
clear market failure in rural audience research, but it is a market failure that commercial, public and
development actors have a vested interest in solving.
The Audience Research models
Regular audience research exists in most countries where there is a diverse and liberalised media. In
most countries this has evolved from within and is run purely by the commercial private sector.
Development actors and public and development communicators (despite their often substantial
spend on public service announcements etc.) have seldom been a core part of the evolution or
development of audience research services and have had little influence over it. Audience research
services have therefore naturally become stronger in wealthier and larger economies with larger
populations and are weaker in smaller and poorer countries. Nepal is a relatively rare example of a
country where there is no regular research at all.
The models that have evolved can be broken into two broad areas:
1) Research company controlled service: A research company invests in audience research and
signs up subscribers to the research (syndicated research). In such a service the research
company owns and controls the research and has proprietorial control over methodologies –
often resulting in some lack of transparency in the methodology behind the research.
Nielsen’s research in Nepal is an example of such a service.
2) Industry Controlled service: The key industry stakeholders (advertisers, advertising agencies
and the media) come together to agree a methodology and funding mechanism for audience
research. In some countries (e.g. South Africa) this can be a levy on advertising. In others
(e.g. Nigeria) this can also be a syndicated research with subscribers. A joint industry body is
established to tender the research work to research companies and oversee quality and
effective dissemination. In this model the research company caries out the research on a
contract but the industry maintains control and supervision as well as ownership of the
research.
THE SAMARTH NMDP INTERVENTION IN NEPAL
Samarth NMDP (Nepal Market Development Programme)
Samarth NMDP is a 5 year UK DFID (Department for International Development) funded project that
focuses on poverty reduction through rural income development. Samarth NMDP recognised that
lack of information is a key constraint and the mass media, particularly rural radio, is critical to
improving access to information on agriculture and small business. The programme therefore began
developing a component in late 2013 to work in rural information and media.
Despite Samarth not being a media development project, the programme recognised that rural
information could not improve without a growth in the revenue base for rural radio and media more
generally. In January 2014, Samarth NMDP embarked on work to improve the role of rural radio in
delivering information and providing platforms for discussion on rural business and agriculture. This
work involved working directly with stations, but also involved addressing the underlying causes of
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low profitability in rural radio. A key focus of this work is to look into the potential for facilitating the
launch of an audience research service that can provide the information that can bring greater
transparency and competitiveness to the Nepalese media industry.
It may appear unusual for a rural development programme to take such an approach with media,
but Samarth NMDP, is a market development project and focuses on making rural markets work for
the poor (M4P). M4P aims at addressing the underlying causes of poor performance in markets and
works as a catalyst (or facilitator) to support change in markets so poorer people are better served.
Taking a more sustainable and systemic approach to media was therefore core to Samarth’s overall
approach to bringing about sustainable market change that benefits the rural poor.
The Samarth Intervention in audience research
The Samarth intervention is in the early stages and is currently a one year pilot to explore the
potential to be the catalyst for establishing an industry funded audience research service in nepal.
The work has involved:
Feasibility study: Bringing international expertise in audience research (Paul Haupt of Pan African
Media research Organisation - PAMRO and ex South African Audience Research Foundation – SAARF)
to undertake an analysis of the failed service and the feasibility of establishing a new service in
Nepal.
Catalysing the industry: Bringing together the key stakeholders in the advertising and media industry
to formulate plans for the potential launch of national audience research in Nepal. From a
development perspective (as well as a market monopoly perspective) the preferred option would be
to stimulate the development of an industry run service.
Providing international technical support to plan audience research in Nepal: It is intended that the
industry will establish a Joint Industry Committee which will co-ordinate the planning of the research
service. International expertise would be offered to this committee to develop research plans and
draw up a tender for research.
The intervention is therefore reliant on private sector buy in and the role of Samarth is as a
facilitator and provider of technical support. Samarth will neither fund nor undertake research.
Another key role of Samarth is to link public and development actors into the audience research
work and also ensure that the commercial actors that have an interest in understanding rural and
poorer audience are effectively represented and influential in the design and planning of the
research service. Samarth is therefore aiming to build the stakeholder group that will counter the
potential urban and wealthier bias of a new, emerging audience research service.
The future: Progress and outlook for research in Nepal
It is not always easy to persuade donors to take a deeper and more systemic approach to
information and media in interventions which are not specifically media focused. It is more common
for such projects as rural development programmes to use the media as a tool rather than develop
its capacity sustainably. It is even rarer for such programmes to focus on solving the deeper
problems facing the profitability of a media industry. The Samarth NMDP intervention is therefore
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unique in many ways, but not without substantial challenges not just in working with the private
sector but persuading donors of the merit of such work
The Samarth project was given a one year window by its donor DFID to explore the potential for
media development in Nepal and it is therefore not assured that this work will move forward after
mid 2014. Samarth has highlighted the need, demand and potential for audience research as well as
the interest in investing in such a service within the private sector, it will only become clear in early
2015 whether the donor community are willing to work in the longer term in this non-traditional
area.
It is clear that audience research will re-emerge in Nepal without donor support, but when and how
is less clear. Without donor support, it is likely that research will emerge in a way where rural and
poorer audiences are less represented and with a strong urban bias. It is also likely that significant
further damage will have been done to Nepal’s broadcasting sector reducing decentralisation and
diversity in media and it will be difficult for the industry to effectively recover.
CONCLUSION
In the 2006 FoME symposium entitled Money Matters; how Independent media manages to survive,
the symposium summary stated the following:
There is, of course, a difference between the U.S. American philosophy of leaving the media
entirely to market mechanisms and the European approach of considering public service
broadcasting a constituent of democratic societies, safeguarded by fees against purely
commercial interests.16
This paper suggests that this is a false dichotomy between media left entirely to market mechanisms
at one side and funded public service at the other. The paper has presented an interventionist
approach to media markets that would be anathema to pure free market ideology. This paper
presents an approach that recognises the market within media industries but also understands that
pure market or commercial forces often do not work well when left entirely to market mechanisms.
The approach suggested is for development actors to intervene in markets and mould and support
them to work better for the poor, for governance and for overall development. This stand point was
expressed succinctly by a Prof. Guy Berger, Head of Rhodes University School of Journalism and
Media Studies in South Africa at the same 2006 Fome symposium:
“media markets cannot be taken as given, or as if they had only to be ‘exploited’ or ‘tapped
into’. They have to be built”
Like it or not, media is predominantly a market. If donor funded development is going to be relevant
to the liberalising and diversifying media markets of the developing world then we must be able and
willing to intervene and support these markets to grow. Working outside markets has some but
limited and diminishing relevance within a global trend of reducing funding to non-profit and public
media. From an audience research perspective, paying for or undertaking audience research while
16
Money Matters: How independent media manage to survive, 2006 FoME symposium paper.
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ignoring the research being undertaken within the private sector will provide limited glimpses into
media habits, but will never have the potential to influence and change an industry... and changing
media industries for the better is what media development is aiming towards.
Emerging experience in Nepal shows that this approach requires new skills and methods as well as
non-traditional partnerships to overcome the weaknesses of markets and begin to build stronger
media industries.
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