KOLKATA: Marketers could capitalise on increasing literacy which has resulted in the circulation of India's newspapers spreading to smaller towns and more rural areas.

Media groups have noted that newspaper penetration in the countryside can be as low as 5%, against 70% in cities, but, as DD Purkayastha, chief executive of ABP, told the Financial Times: "Those people are getting literate and they have started reading newspapers."

Consequently, distribution is being widened and new publications are appearing in local languages.

In the latter case, newspapers have sought to attract readers through a focus on local affairs. "The strength of vernacular dailies in India is the strength of the coverage given to districts, which is not done by the English dailies," said Manas Ghosh, editor of the Bengali-language edition of The Statesman, a Kolkata daily.

And these newspapers are regarded as being less at risk from the growth of the internet than their English-language counterparts.

Newspapers have also benefited from an unexpected finding. As the number of television channels grow so too do the number of newspaper readers, in what PN Vasanti, director of research group CMS, has dubbed "the appetiser effect".

"People who go and watch television more go back to check facts in print. That's a very unusual phenomenon that doesn't happen anywhere else in the world," she said.

Newspaper business models, however, are precarious, and growing circulations may not be enough to offset a rise in the cost of printing, given that cover prices are very low. Profits are overly reliant on advertising income, although Purkayastha noted that advertising growth had been "fairly handsome in the past decade."

It is forecast to continue to be healthy in the medium term, with a report from KPMG and the Federation of Indian Chambers of Commerce and Industry indicating that print advertising revenues forecast will grow at more than 10% annually.

Data sourced from Financial Times; additional content by Warc staff