2012 was not one of the best years for radio broadcasters. One, because the story would have been completely different with the Phase III rollout and second, because tough economic scenario created quite a serious impact on the advertising activity.
While, retailers coming on board and a surge in the OND (October, November, and December) period saved the day, radio still grew only three per cent as opposed to the projected growth of give per cent (according to the Pitch Madison report). However, with better inventory levels and increased innovation the situation across radio looks different at the end of the first quarter of 2013 (calendar year).
“First quarter looks better than last year. The four metros are seeing higher rates of inventory. Retail clients are spending heavily and there has been a surge of radio advertisements from sectors such as jewelry and real estate,” said Amin Lakhani, Principal Partner, Mindshare India.
Nahar Builders and Developers, Lodha Group, Voltas, McDonald’s, Domex and ICICI Bank are some of the brands across sectors that have been seen spending heavily on radio. Most of the radio advertisements now have some extra element such as peer influence or story telling technique so as to balance quality and volume.
“In last one year we have been going full in all our big stations, in fact that is the reason we have increased the rates right now. There is a demand and supply issue and our advertisers are seeing value in it. We gave them a clutter free environment. One part of it is that we are trying to rebalance this volume-value equation,” said Apurva Purohit, CEO, Radio City.
Radio One also increased its advertising rates by 30 per cent this year. Vineet Singh Hukmani, MD, Radio One, explained that rise was a result to the extensive demand for its on-air inventory in the metro markets and also to maintain the comfort level of the listeners and the advertisers in the super prime time.
As most of the national players have recorded better growth in the first quarter, regional players too show high growth level.
The quarter had a lot of activations and events and thus was good from the revenue perspective. We also had a lot of sponsors coming on board for Rubab (a rock band competition) this quarter,” said Monica Nayyar Patnaik, Joint Managing Director, Eastern Media Limited.
Patnaik further added that a lot depends on the roll out of Phase III this year. With the auction of 839 new stations in Phase III and the promise of providing FM services in all towns with a population above one lakh in the Union Budget of 2012, there is a lot in store for Tier II and III cities.
2013 - Can radio expect better appraisal?
With the kind of performance witnessed so far, can it be said that 2013 will give a better appraisal or increment to radio players as compared to the previous year?
While most of industry experts state that the industry is looking at an average appraisal this year, it should be better than 2012.
“I would say the media industry will grow in high single digits. Radio could grow three to four per cent higher than print, television and outdoors, but slower than digital. Assuming that the economy will recover at least partly, if that happens, core radio should grow faster. I also believe the six state elections in the rest of the year will help the radio industry. Over the years, political parties have found radio extremely effective,” said Prashant Panday, CEO, Radio Mirchi.
According to the Pitch Madison report, radio’s share in the advertising pie is expected to drop from 3.2 per cent (in 2012) to 3.1 per cent in 2013. As marketers now seek refuge with digital, the investment in radio is likely to get affected. However, advertising trends highlighted by marketers show unlike.
“Our performance is close to what we were aiming to achieve. Thus, we expect a decent appraisal, it may not be as high as expected – but that is not only with radio, but will all the other sectors. It is a little early to say, but I think the industry should grow by eight to 10 per cent,” said Ashit Kukian, President and COO, Radio City.
The regional radio ecosystem differs from the national players’ at quite a few places and also holds better chance of growth this year. Patnaik remarked that though not much of growth is expected in terms of advertising revenues, they are still looking at an appraisal of around 16 to 17 per cent.
This being the first quarter of the calendar year and the last quarter of the previous financial year, the predictions and estimations are subjected to a number of changes. However, with the expected government support, a favourable economic scenario and increasing creativity, 2013 seems way more promising than the previous year.