On the back of a successful 2015 in terms of ad spends, new content properties and the expansion of radio to new networks through the first stage of Phase III, leaders from the radio industry said the sector was on track to see a 14 per cent growth in 2015.
The radio sector has been steadily growing year-on-year and the positive economic climate and long awaited Phase III expansion have also given a shot in the arm to the sector. In the Advertising Outlook for 2015 released last year, Pitch Madison report said that radio’s contribution to the overall ad revenue pie would decrease slightly to account for 3.3 per cent in 2015. One way to look at this could be that the report expects the digital medium to be a major contributor to overall ad spends.
Some of the heads of radio stations, view this number as conservative. For example, Prashant Panday, MD & CEO of ENIL, which runs Radio Mirchi, opines, “Radio could grow by between 12 and 14 per cent in CY2015. Radio companies report their numbers in “net” terms, while the trend in the media industry is to show revenues in “gross” terms.”
According to Ashwin Padmanabhan, COO of Reliance Broadcast’s BIG FM, the year 2015 started well with healthy ad spends, followed by the announcement of Phase III auctions in September and would end on a positive note following the announcement of the hike in FDI cap for FM radio.
“The radio industry has been estimated to have grown at about 17 per cent in 2015 and we expect as a share of total advertising to be about 4.5 per cent. Further, with the new stations becoming operational in 2016, advertisers will now be able to reach a large audience pan India. This will definitely help increase ad revenues. On the back of increased reach and expansion, the ad rates will be increased by networks across the industry,” he said.
In the festive period between September and December, ad spends grew by 20-25 per cent according to some estimates.
FM festive adex expected to rise by 20-25%
“Radio business has been positive in 2015, we have seen increased spends by categories like Automobiles, Lifestyle, Real Estate. Internet companies and e-commerce as a new category which has started advertising on radio in our market though spends are not that huge as compared to metro markets,” adds Harish Bhatia, CEO of MY FM.
The industry sectors contributing to ad spends
E-commerce has emerged as one of the main spenders on e-commerce. The spending by the likes of Amazon, Flipkart and others is expected to have gone up by as much as 300 per cent over last year according to an estimate by Pitch Madison in its Advertising Outlook for 2015. Apart from e-commerce, other sectors like automobile, retail, real estate, consumer durables, etc. have been the other big spenders.
In fact, many of the radio players we spoke with agreed that e-commerce would continue to remain a major contributor to ad revenues in coming years. Padmanabhan agreed that the e-commerce culture is flourishing in India and the industry is booming rapidly. He said that though the radio sector is seldom dominated by one sector, this segment has emerged as one of the biggest spenders on radio advertisement this year and with e- commerce companies having huge advertising budgets, the expectations are certainly high from them to be one of the biggest spenders in 2016 also.
“The economy continues to remain sluggish and so there are a lot of consumer promotions that companies keep mounting. That helps radio directly, because radio is the last medium consumed before a customer enters a shop.
The government also has been a big spender, especially on radio. Conventional brick-and-mortar stores are starting to spend more, again partly in competition with E-commerce companies and partly because there is increased footfall starting to happen. Apart from these, the auto sector is spending significantly on brand building, as more launches take place,” said Panday.
Another reason, why radio has seen growth this year, points out Bhatia, is the impact that the Prime Minister’s regular radio show, called “Mann Ki Baat” has had on the medium. “Radio is now integral part of all marketing plans, If a marketer doesn’t realize now, he will lose out big time. RoI and seamless integration possible on the medium has built faith in marketing teams, we have seen increased spends in categories like automobile, lifestyle, real estate and now internet is expected to be big,” he opined.
Giving another example of why radio has emerged as a more likely candidate for marketing plans, Padmanabhan said, “Advertisers now seek integrated solutions where multiple mediums like radio, television and digital are all leveraged simultaneously.” He gave the example of a recent campaign conducted by Big Fm for Hike Messenger, which was carried out across radio, TV, Digital and on-ground.
Other industry players also agree that 2015 has seen a lot of 360 degree marketing campaigns with radio as a prominent piece.
Rewind 2015: Radio will become a 360 degree medium, say regional players
For example, Jimmy Tangree, head of Friends 91.9 FM, opined that the time has come for that radio stations should have a strong 360 degree roadmap, which includes on-ground activities and digital.