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In-depth: Small towns to play a major role in radio ad rates recovery to pre-pandemic levels

Radio platforms have been able to withstand the streaming app storm both in terms of listenership and revenues. What helps them be an attractive proposition still for both listeners and advertisers? BestMediaInfo.com finds out

No medium has ever fought as many battles for survival as the good old radio has. It withstood the onslaught of TV channels in the 80s and the 90s. And for the last half-a-decade or so, it has been competing with music streaming apps. 

Despite stiff competition from digital audio platforms, radio channels have remained relevant for both advertisers and listeners. 

So much so that Prime Minister Narendra Modi has a dedicated radio programme- ‘Mann Ki Baat’, that uses this highly powerful medium of communication and reaches millions across the country, including the media dark areas.

Sunil Kumaran

Sunil Kumaran, COO-Big FM, said, “The fact that radio has survived for centuries is the testimony that it is going to survive. There are fundamental questions as to why radio will survive and will thrive. This includes the very nature of what radio brings to the table when it comes to a listener or an audience unlike any other medium radio is your companion.”

GroupM has predicted advertising on radio to reach Rs 1,657 crore in 2022 in India.

According to Tam AdEx cross-media report, radio is growing 20% year-on-year with the services, BFSI and FMCG being the advertisers with the highest shares. India's radio industry was valued at around Rs 16 billion at the end of 2021. Experts forecasted the sector to grow at a compound annual growth rate of 9%, with its value increasing to Rs 21 billion by 2024. For the factors that fuel this growth, radio needs to keep working on the format, the content, the style and various aspects.

Nisha Narayanan

Nisha Narayanan, COO at Red FM and Magic FM, said that the consumers' trust in radio as a medium has been growing. 

She commented, “I would like to highlight that besides music, a new genre has now picked up as part of the content basket and many more brands are also wanting their product to be integrated into storytelling formats. The new-age audience is looking at platform-agnostic content. Audio-on-Demand and digitisation will add to the potential to make more revenues.”

Kartik Kalla

Kartik Kalla, Chief Creative Officer, Radio City, said, “During the pandemic, Radio City continued to strive and deepen the audience’s trust by providing them with credible Covid-related information. Our RJs also started gaining higher visibility on social media by adorning an influencer tag which has made them more viable for collaboration with brands and advertisers.”

Ad rates to touch pre-Covid level this festive season

Similarly talking about the ad rates coming back to pre-Covid level, Narayanan of Red FM said, “In most of the markets, we are back to 70% of pre-pandemic rates and by festive season we are hopeful to bridge the gap as volumes have surged and we will be having limitation to serve the inventory to a certain level.”

Kumaran of Big FM also seconded this and said that the last 6 months have been good and an upwards graph has been noticed. He said that in the next two quarters they should reach the pre-pandemic level.

While according to Rahul Namjoshi, CEO, MY FM, it is too early to comment on this as only the first quarter has gone by. However the market sentiments are optimistic, and they look forward to crossing the pre-pandemic revenue during this financial year.

He further said, "The rates vary from market to market, hence there is no average rate. The range is between Rs 150 to Rs 500 per 10 seconds depending upon the market. Prime time is charged at a premium rate."

Ad growth coming from small towns

Navin Lalchandani

Navin Lalchandani, Senior Vice-President - Buying at Starcom India, said, “The trend for advertising has shifted somewhat for radio - from 70% in metros and 30% in small towns, now it is 40% in metros and 60% in small towns. We are seeing a strong regionalisation story across mass media. Radio being a local medium also benefits from this trend of media consumption in local languages.”

“In many areas, smaller towns were less impacted by pandemic-driven exigencies and hence returned to normalcy faster. There are also nuances like commute time at play – a lot of metro consumption of radio happened in commute times and with hybrid working there is bound to be some loss in listenership for the medium in metros. Reverse migration of the workforce, especially youth, into the regional strong non-metro markets would have also fuelled listenership,” he added.

Getting additional revenues from podcasts & branded content on digital

Radio platforms have been going big on podcasts and have started collaborating with other streaming platforms and brands resulting in increased revenues.

Talking about the digitisation of radio brands, Kalla of Radio City said, “As radio has fundamentally been an audio platform, the way forward for the industry is to integrate digital formats while upholding the core essence of the business. Digitisation has created synergies in the radio industry to amalgamate audio and digital by making it more accessible to a larger set of audiences. Termed ‘Radigitalization’, Radio City is focused on broadcasting its flagship radio shows on audio streaming platforms to further augment the convergence of radio with digital. Radio City's podcasts, web radios, polls, quizzes, digital solutions, and creative content is aiding its digital footprint to rise.”

Speaking on the increasing growth of podcast, Narayanan said, “The segment is growing and along with that there is an understanding of making its best use by advertisers. There is a very good market where clients are checking on how to make the best use of this storytelling medium and thus price points are evolving almost on daily basis. We have one of the most extensive and interesting catalogues on wide-ranging subjects covering almost everything which listeners want to consume.”

Scaling and measurement remain two major challenges

Every medium has its own challenges. The major challenge when it comes to radio as a medium is the scalability and measurement of the medium. While there are measuring tools available for other mediums, radio becomes difficult to measure. Radio Audience Measurement (RAM) is one of the ways to measure, but that is only available for a few metro cities. 

Kumaran said, “The data and measurability of the medium is one of the challenges and limitations, but what most brands and players are doing to overcome this problem is to offer what goes from radio to digital and the digital aspect of the communication becomes very easy to measure.”

While on the other hand, Narayanan recollected two major challenges that the industry faces. “On policy front – high license fee and other annual costs – other than FM, which is just 2.5% of the media pie, no other medium in media has to pay such fee and sustain purely on ad revenues. Radio doesn’t earn from any subscription fee and is the only free-to-air media today but it is bound by lots of regulations and limitations as against Print, TV or Digital. Apart from that, there is a substantial cost for music royalty that goes for the content. We definitely require support from the government both on advertising and policy matters. Some of our smaller stations/ city today need special support to sustain looking at the current scenario. Limitations like restriction for entering into the live news is also affecting the prospects of growth of the medium.”

“We are one medium which can be blended well with all other media – Print, TV or Digital to amplify the scale and reach for advertisers. FM radio is known to be the best media multiplier. However, there is extraordinary pressure on the yield and as an industry, we are not able to stand collectively to maintain basic entry points. While healthy competition is always welcome, the industry’s long-term interests also need to be aligned,” she added.

Info@BestMediaInfo.com

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