The second fastest growing industry after Internet, radio has now strongly established itself in the industry. According to the PwC Report 2008, the radio industry is expected to grow at a compounded annual growth rate (CAGR) of 24 per cent over the next five years and reach a size of Rs 1,800 crore by 2012. However, growing competition with the entry of new players in the market and a double-digit inflation are some of the big concerns in the industry today. exchange4media finds out if such circumstances are forcing the radio players to hike their ad rates.
Red FM is the latest to announce its decision to increase its ad rates. The FM station plans to hike its ad rates by 15-20 per cent, which will come into effect from October 1, 2008.
Others who recently hiked their ad rates include My FM and Radio Mirchi. While My FM increased its ad rates by 15 per cent in the first quarter of FY09, Radio Mirchi hiked its ad rates by 15-20 per cent, which came into effect from September 15.
Speaking on the impact that this hike would have on advertisers, B Surendar, National Sales Head, Red FM, said, “A lot has changed in the markets in the past one year; the erstwhile perception-based market leaders have been toppled over and there is greater accountability with the entry of RAM. We have rationalised our rates. Our advertisers understand the value proposition we offer and come to us because of a proven track record, our leadership in market shares, and our strength of providing 360-degree communications solutions.”
Harrish Bhatia, COO, My FM (Synergy Media Entertainment Ltd), said, “My FM had hiked its advertising rates by 15 per cent in Q1 FY09. This came close on the heels of achieving a higher reach and listener connect in the market, thus providing much better deliveries for the advertisers. My FM provides umbrella coverage for its advertisers since there are multiple My FM stations in the seven states where we are present and the station has reached a position where it can command a better rate from both national and local advertisers.”
Kaushik Ghosh, National Sales Head, Radio Mirchi, said, “September to December represents a four-month period of heightened retail sales across categories due to festivals and the marriage season. Radio is a medium that has a finite inventory since too many ads spoil the listening experience. Radio Mirchi has always kept both listener and advertiser interest in mind by providing the best and least cluttered environment among all radio stations. The pricing structure is designed to maintain the low clutter on our station.”
Having a different take and declining any ad rate hikes, Pallavi Burman, National Sales Head, Fever FM, said, “We at Fever do not operate on a standard rate card. Rate increase ideally should be linked to the dynamic positions of the station. Unfortunately, that does not happen in reality. Most large corporate deals, which are agency-based, are with long term rate lock-ins and, therefore, are not subject to any movement. The revenue impact, therefore, is driven from volumes and innovation. At Fever, we focus very strongly to go beyond the ordinary 10-second rate card and create customised solutions to the client’s needs in order to drive our revenues.”
While some FM stations are contemplating on the hike, the two significant FM stations – Radio One and Radio City – were not available for comments.