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Radio channels demanding advertisers to return to pre-Covid ad rates

As per the latest EY Report on the M&E sector, radio segment revenues grew 29% in 2022 to Rs 21 billion but it was still just 66% of the 2019 numbers. Ad volumes increased by 25% in 2022, as compared to the previous year, although they remained 20% below the 2019 levels

While ad volumes on radio platforms are nearing pre-Covid levels, their struggle to demand the desired hike in ad rates continues. They have started demanding advertisers return to pre-Covid ad rates. 

Despite this, radio channels are optimistic about ad rate recovery, leveraging innovative solutions and digital touchpoints to meet client expectations. 

Nisha Narayanan

Nisha Narayanan, COO and Director, Red FM and Magic FM, said, “While it’s safe to say that the ad rates have somewhat flared, this can be accredited to the withdrawal of some schemes or offers, which had surfaced during the pandemic to support our partners when they were facing challenging times in sales and recovery of money from the market.”

She added, “While our volumes have recovered to almost pre-Covid levels, our rates continue to struggle in reaching the desired level.” 

She further said that the rate of recovery for radio seems pretty grim at the moment. She said that it could soon become difficult to continue operations on the old rates. 

“While a significant increase is not in sight in the immediate future, we are hopeful that post-June we might witness an 8-12% hike on the ongoing rates in some regional markets and a crucial elevation in metro and mini-metro cities,” she said.

Although, she added, “It is encouraging to note that our partners recognise the urgency of revising our pricing structure,” she said.

Hema Malik

Hema Malik, Chief Investment Officer, IPG Mediabrands India, said that radio stations have requested to return to the previous pricing, except for major cities such as Delhi, Mumbai, and Bangalore, as well as a few prominent channels. 

Narayanan further said that in recent years marketers have developed a habit of seeking discounts, while sellers are not aligned with their demands for better pricing. 

As per the latest EY Report on the M&E sector, radio segment revenues grew 29% in 2022 to Rs 21 billion but it was still just 66% of the 2019 numbers. Ad volumes increased by 25% in 2022, as compared to the previous year, although they remained 20% below the 2019 levels. As a result, many radio companies are looking at alternate revenue streams to grow faster. 

Recently, Fever Network announced a price hike to the tune of 25% across all its radio brands. As per the network, a price hike is needed as the industry volume returns to pre-Covid levels.

Ramesh Menon, CEO – Radio and Entertainment, HT Media, and Next Mediaworks, said, “Advertiser’s confidence, on Radio in general and Fever network in particular, is back and that has resulted in higher inventory demand in most of our markets. We are committed to providing the best advertising environment to our customers without compromising on the content experience of our audience. The ever-increasing demand for inventory has thus necessitated the need for price increase across our markets.”

For Big FM, the company’s emphasis is on delivering greater value and not on ad rates.

Abraham Thomas

Abraham Thomas, CEO, RBNL, said, "At Big FM, we have very strong, long-term strategic relationships with our clients, who are increasingly seeking solutions for their marketing challenges. The emphasis is on delivering greater value and not on rates. Yes, in the last two years, we have been able to consistently increase our yields year-on-year on the basis of delivering better solutions and better outcomes for our clients.” 

Thomas further said that post-Covid, radio channels have been able to get the ad rates high in a consistent manner. He said, “In the last couple of years, the industry has witnessed many new trends. There has been an emergence of multiple revenue streams for the medium - such as digital products, influencer marketing, solutions, activations and events which have contributed to a significant share of the revenues for the sector. Additionally, emerging markets are growing at a higher rate and various regional IPs are gaining traction."

Harbir Singh Rai

Harbir Singh Rai, President – North, Havas Media India, said that post-covid while the rate structure in terms of rate per 10 seconds has remained largely unchanged, what has changed is the bonus element in the deals being offered. This results in a lower Effective Rate (ER).

"The rate structure has remained more or less flat, and ERs have gone down due to bonusing. Metro stations are commanding a higher premium as compared to the smaller cities. Currently, radio is a buyer’s market and there is scope for negotiations and extracting value add-ons in order to achieve a desired ER," he added.

The challenges such as measurement limitations and the infinite inventory nature of radio are significant hurdles in the way. The future of ad rates depends on various factors, including regional market conditions and the diversification of revenue streams. 

“One challenge that radio has always faced is the lack of measurement. Increasingly in a scenario where we are becoming more digitised and where questions on measurement are concerned, that's a big challenge that we face on radio as a medium and we need to find a solution to it. Whatever is available is not satisfactory for the clients to consider that level of money,” Malik added.

Furthermore, she went on to say that during the COVID-19 pandemic, the media industry faced significant challenges, with television being the quickest to recover due to its limited and finite inventory. However, the situation was different for radio, which possesses an infinite inventory and thus is always open to accepting new business opportunities. Advertisers are aware of this characteristic and continue to exert pressure on radio platforms, knowing that their advertising requests will never be turned down, unlike television.

“The only good thing that I see this year is that some of the sectors which are high on radio, like real estate, are doing very well now. Especially this year and next year are going to be good for radio because it will be election time and political parties are very big on radio,” Malik stated.

Despite the road to full recovery being a gradual one, radio channels anticipate positive outcomes, particularly with the upcoming general elections and the support of sectors like real estate.

Radio companies are focusing on integrated solutions, including content production, event IPs, social media, commissioned podcasts, audio stories, influencer marketing, etc., to their retail advertisers as a one-stop shop.

There is a need to address issues relating to listenership measurement, implementation of digital radio, and mandating the inclusion of FM receivers in smartphones, for the sector to achieve its true potential. 

"Unless the above issues are addressed, we expect revenues to recover to Rs 26 billion by 2025, of which around a fifth will be non-FCT revenues," the EY report stated. 

According to Thomas, the outlook for radio channels in terms of ad rate recovery is positive, as the market has responded well to the rate hike. Radio as a medium is continuously evolving its delivery through digital touchpoints. 

“Our clients are no longer satisfied with only spots, they are looking at innovative solutions from us. They want a bigger value addition which we can offer, given our expertise in the space. The solutions we are curating are radio plus digital, incorporating newer tools such as AI, bots, gamification, etc. This belief system is visible as more and more digital brands in sectors like online gaming, Fintech and EdTech are riding on the radio for wider reach and enhanced engagement,” he added. 

Vinita Pachisia

Vinita Pachisia, EVP – Investments, Amplifi, Supply side of Dentsu International, said that during the first year of the pandemic (2020), traditional radio ad spend declined substantially. High discounts and extension of low rates helped radio as a medium to gain volume from the last quarter of 2021. 

Post-pandemic, as soon as people could freely move around, the market started recovering and radio gained further momentum in 2022. Radio is also used as a reminder medium by most brands who want to remain on top of consumers’ minds, she added. 

Pachisia went on to add, “However, with the invention of newer audio platforms like audio OTT platforms, podcasts, and music apps like Spotify and others, the growth of the radio stations has been highly impacted within the industry on yields and the low pricing continues to affect the overall revenue growth on the medium. Radio stations have been forced to reinvent themselves, for the brands to continue to associate with them and to communicate with their target group.”

She believes that despite radio channels experiencing increased volumes, it will still take a considerable amount of time for the business to fully recover. “Considering radio as a medium, it is important to go beyond the traditional approach of purchasing 20 or 30-second advertising slots and instead explore beyond the regular inventory. Therefore, it is necessary for them to enhance their focus in that particular area.”

“There is an overall slowdown in offline media so it will have its own set of challenges. Radio was never an independent media but an add-on media. FMCG, auto or telecom categories are not considering radio at all right now. However, retail, political parties, government advertising and real estate will definitely look at this medium,” Malik stated. 

According to Rai, radio as a medium did take a significant hit during Covid and for rate recovery to take place there needs to be a reinvention in the way the medium is sold. There needs to be a bundling of offerings given that radio encompasses multiple touchpoints including experiential as well as digital, especially now with RJs turning into major influencers on social media. With the increasing digital focus and convergence, there needs to be a recalibration of the metrics used for this medium.

“A major constraint when it comes to radio is the relative lack of data and measurability. Currently, software only maps the listenership for a few metros while the smaller tier 2 and 3 towns are untapped. As a   result, most evaluations happen basis of perception and gut feeling - which is not ideal,” he added.

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