According to data released by TRAI, the reported advertisement revenue during the quarter ending September 2016 for 259 private FM radio stations stood at Rs 502.13 crore as against Rs 468.08 crore for 244 private FM radio stations in the previous quarter. The information is based on the details of Advertisement Revenue submitted by the FM radio service providers to TRAI.
This means that revenue per station saw a slight increase in Q2, standing at approx Rs 1.94 crore as opposed to approx Rs 1.92 crore per station in Q1.
Radio, like most other sectors, usually sees an increase in ad revenues towards the latter half of the year, especially peaking in the last quarter. However, the government’s demonetization drive, announced in early November, might have put a spanner in the wheels this year.
"The impact has been very severe. A lot of advertisers have put their campaigns on hold. A few campaigns that were in the final stages of negotiations have also been deferred. The good news is that everyone believes this is temporary and the campaigns will come back," says Prashant Panday, MD & CEO, Radio Mirchi, speaking about the impact of demonetization in an earlier interview. He further added that there was still an element of doubt about ad spends in Q1’17 as it would depend on how clients have managed to handle the slowdown though the general feeling was that clients would once again become aggressive in Q1’17.
The mid-year Pitch Madison Advertising Outlook suggested that ad spends on radio had seen an increase of 13 per cent in the first half of the year as compared to a full year prediction of 18 per cent increase in ad spends. This would mean that ad spends would be around Rs 1,823 crore by end of 2016. According to the TRAI estimates, FM radio has already seen 1,484.96 crore ad revenue by the end of September. If we go by these estimates then FM radio seems to be well on track to meet the Pitch Madison projection despite monetization fears. For example, according to TRAI data, FM radio had earned ad revenues of Rs 533.7 crore in the last quarter of 2015.
The MD of a publically listed radio operator said that there is generally a fall in ad revenues post Diwali so it is difficult to determine whether and fall in revenue could be attributed to demonetization or this trend. “There has been some impact (of demonetization) though how much this finally impact ad spends remains to be seen. There are always other avenues for ad revenues and we also feel that this might just be a temporary phase,” the person added.