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Radio ad spends in South expected to end on a high note in Q3

Radio ad spends in South expected to end on a high note in Q3

Author | Deepa Balasubramanian | Wednesday, Dec 10,2014 7:57 AM

Radio ad spends in South expected to end on a high note in Q3

The year 2014 might not have been exactly a joy ride for the radio broadcasters, but they have managed to sustain. While 2014 appeared to be quite promising, it was a tough in terms of the delayed rollout of Phase III. Certainly, during 2013, radio spends grew at close to 18 per cent over the previous year. This year it is estimated that advertising spends on radio will register a 15-20 per cent growth. Radio players such as Radio Mango and Club FM witnessed inventory going up by 50- 70 per cent.

Also, the spurt in advertising business that the radio players experienced during Onam has continued in the third quarter as well, though the ad inventory consumption has come down post Diwali.

George Sebastian, Senior General Manager, Mathrubhumi Group which has Club FM in its stable said, “The on-air contests and activation campaigns have helped to continue brand associations well into this quarter. CLUB FM in particular is popular with regular advertisers for the ‘consumer connect’ that we provide through on-air and on-ground activation. In fact this association adds value to whatever vanilla advertising they do on our network.”

Ashit Kukian, President & COO, Radio City said, “The industry has definitely managed to maintain a steady growth rate. The festive quarter certainly has restored positivity in the industry & we expect the upward trend to continue for some time now. Our inventory has been running full in most of our markets. Clients are open to experimenting & innovating new ideas & this is always rewarded in case of ad spots on radio. I am very sure we will close the year on a high note.”

He also feels that radio advertising has gone beyond pure FCT sales into the domain of integrated advertising. A well-executed consolidation of on-air and on-ground elements ruled the roost, bringing in many first time advertisers on board.

He added, “For us, at Radio City, one of the most important aspects is to tap the high potential markets & at the same time tailor the content to suit the sensibilities of the specific geographical location. Most of the advertisers have realised the potential of the medium. The innovations in radio advertising along with growth of the industry and the positive vibe surrounding it have made sure that advertiser can no longer afford to take the industry frivolously. We have taken a conscious effort to make this changed attitude get reflected in the ad effective rates (ERs).”

Ashwin Padmanabhan, Business Head, BIG FM said, “Big FM is currently clocking about 25 per cent of advertising revenue over the last year. Q 3 has been a good quarter, could have been better especially in the south, this is the quarter with big festivals like Deepavali and Christmas. I say it could have been better since this year we have not seen retailers advertise aggressively. The sentiment for Q4 is very positive, across south we expect the BFSI clients to become active, also with Pongal and Sankranti in this quarter we should see big spending. We should see new movie releases around Sankranthi and promotions of the same taking place. I expect Christmas and new year to have an approx five per cent spends of the full year.”

Finance, banking and insurance, automobiles, textile, jewellery and lifestyle are the key sectors who have been the top contributors for the radio ad spends. Traditional retail also has spent considerably. E-commerce has been a big spender for a few months now. FMCG & consumer durables are expected to pick up speed close to Christmas & New Year. While the government ads are concerned, the MIB is yet to act on the industry`s request to restructure DAVP rates which also have not been revised in six years.

Prashant Pandey, MD & CEO, ENIL said, “There is a feeling that the mini-metros do better than the metros, but that is entirely because radio caught up in these markets late. So there is still a fair amount of inventory still available there. But there is also good growth in the metros. So it's really not much different. Maybe the smaller markets have a little advantage.”

He further added, “In Q2 when we grew by 21 per cent, our pricing contributed about 15-20 per cent of this increase. Rest was because of volume growth. But pressure on pricing continues.”

While Padmanabhan feels that metros continue to attract 60-80 per cent of spends of a campaign for a large brand. But at the same time the non-metros continue to attract spends from regional brands that today are challenging national brands in the smaller markets.

Sunoj George Abraham, Head- Business Operation, Radio Mango said, “We have had an increase of 15- 20 per cent in our prices this year, by sticking to our strong fundamentals of giving highest possible value for our clients. We keep our focus on listeners always and this ensures that advertisers benefit from being with us.”

Club FM has managed to effect 15 per cent increase in ad rates after five years.

Expectation for Q4

The last quarter of the year is always the most challenging, as there is pressure to achieve targeted revenue.  Good revenues from commercials and on-ground activations in the last quarter are expected and if the hope created by the new government translates into action on the ground, there is a reason for the radio players to be optimistic.

Specifically during February if an interest rate cut takes place, it should spur advertising growth in consumer segments like auto, durables, real estate, etc. Banking, insurance and automobiles are supposed to be the leading categories during the last quarter. So, experts expect a good season, but with a high base existing last year, it remains to be seen how much growth actually happens this year. However, overall, the sentiment remains circumspect.

Can radio expect better appraisal in 2015?

With the kind of performance witnessed in radio in the last two years and increments in radio being better than in other sectors, experts expect a continued growth. The pie for radio has been increasing. Phase lll is expected to open up more markets and change the medium’s position from the advertiser or listener point of view. Experts feel radio will be positioned as a medium offering enviable reach in the most cost-effective manner.

Vineet Singh Hukmani, MD & CEO, Radio One said, “As an industry the only expectation we have is that the government give clear responses on the future of private FM radio as licenses are expiring in March 2015. Even after Mr Jaitley has taken over as minister of information and broadcasting, there is no clear direction. The players are supremely concerned and investors are worried.”

This being the third quarter of the calendar year, sentiment in the industry is positive. The PM Narendra Modi himself has been a huge votary of the Radio Medium and the industry is witnessing more and more brands recognizing this and increasing spends on Radio. The industry is hoping that RAM will cover all of South India this year and break some more myths.

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