FM channels foresee big profits as ad revenue soars

June 4th, 2008 - 12:09 pm ICT by IANS  

By Radhika Bhirani
New Delhi, June 4 (IANS) The Rs.6.2 billion radio industry has emerged as a mainstream medium for advertising, but it will take almost five to seven years for it to acquire an adequate share - over 10 percent - in the total media spend, say industry experts. Prashant Pandey, CEO, Radio Mirchi, said: “Radio has already achieved the position of being a mainstream medium for advertising. But what remains is for it to achieve its rightful glory - a share of 12-13 percent of media spends.”

This, as Pandey foresees, should be accomplished over the next five to seven years.

The growth of radio advertising in terms of media spends, creativity and impact has been very optimistic and encouraging over the past five years, feel experts.

“To quote percentage-wise, radio spends have increased by a whopping 87 percent in 2005-07,” Ashit Kukian, executive vice president and national head (sales) Radio City 91.1 FM, told IANS.

Harrish M. Bhatia, chief operating officer, My FM 94.3, a regional FM station, explained that the media buying pattern had evolved over the years.

“In the year 2005-06, the ad share of radio rose from 2.4 percent to 3.1 percent and it is expected to reach six percent by 2009. The growth of ad revenue in radio was also maximum during this period, beating even internet advertising,” Bhatia said.

Even though the share of radio advertising has escalated by almost 87 percent over the last two years, the money spent on it is still very less compared to what advertisers shell out for television.

“Definitely, a less amount is spent on radio. We believe that in a country like India where music is so strong and the youth quotient is so high, the rightful share of radio is 13 percent of all media,” Pandey said.

Radio is an effective medium for more localised advertisements as every region has a separate radio station unlike the centralised television studios in the country.

“With radio, advertisers can make different ads for different parts of the country. Besides, radio does not aim to replace TV. It is like the cement in a concrete mix - added in small doses. Without radio, a media plan is plain sand,” Pandey quipped.

According to a recent study by the Indian Market Research Bureau (IMRB), adding radio to an existing TV campaign gives it a 15 percent multiplier effect. Which means if 10 percent of a given TV budget is re-deployed on to radio, the efficiency of the campaign in building awareness increases by an average 15 percent.

Contrary to the traditional perception that rural audience forms the primary listenership of radio, the latest round of Indian Readership Survey (IRS-2008), says Kukian, reveals that radio has a footprint of about 19 percent of the Indian rural population while the figure in urban India is 23 percent.

Radio Mirchi’s Pandey says the perception that radio is ‘rural’ is misplaced. “I consider radio as the ’sexy’ medium and its audience is urban, affluent and sexy.”

Kukian says besides plain vanilla product promotions and contests, radio now also includes value-added propositions such as content integration, brand mentions woven into radio jockey’s scripts and ground activation directly involving the listener.

And as Kukian points out, “Internationally, radio comprises seven to 15 percent of the overall advertising pie. In India, it varies from 3 to 3.5 percent (approximately Rs.7.5 billion), which clearly shows the full potential of business yet to be explored.”

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