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Radio remains optimistic in face of tough economic scenario

Radio remains optimistic in face of tough economic scenario

Author | Saloni Surti | Thursday, Aug 29,2013 8:04 AM

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Radio remains optimistic in face of tough economic scenario

Beginning of 2013 was a different story with all sectors in high spirits. While television was digging up opportunities in digitisation, radio was gearing up for Phase III. Digital, which managed to see a 50 per cent growth in 2012, also had a lot to look forward to in 2013. It was only print that was staring at circulations dip, but this medium too found solace in increasing digital subscription.

However, this optimism was short-lived as the economy began to slide into one of its worst phases, with the GDP falling to 5.3 per cent and the Indian currency now set to breach the Rs 69-mark. While many are hoping that the economy will shrug off its current sluggish phase soon, the radio medium is particularly looking for that ray of optimism.

What does the slow economy mean for radio?
The dip in economy has affected the media industry in a number of ways. While radio has been keen on hiring, it has not seen any slowdown in its operations or AdEx yet. “We are yet to face the perceptible effects of a slowing economy. In fact, the sluggish economy has resulted in an increase in the ad spends on FM radio, thus increasing its share of the advertising pie. Coupled with this is the inventory crunch that we have been facing in several of our markets like Mumbai and Bangalore,” explained Ashit Kukian, President and COO, Radio City.

Kukian pointed out that Radio City took the natural step of increasing the ER value, which worked well for the station.

“Radio is doing far better than print and TV. In fact, radio finds better favour in a weak economic environment. Most radio players have learnt the game to keep costs low, thereby protecting profits,” expressed Vineet Singh Hukmani, MD and CEO, Radio One. According to Hukmani, the local element of radio marketing is working well for brands that expect high brand value from the medium.

Also, general panic at the stock market has failed to impact consumers, thus not affecting media spends of most of the brands. “Retail shops are full of consumers,” noted Prashant Panday, CEO, Radio Mirchi. “Retail companies have declared very good same-store growth rates. Brands are spending more on consumer promotions, and that is driving footfalls into stores. It is also helping radio advertising.”

Boon of BTL and campaign-based marketing
The ‘localness’ and the secondary nature of radio have attracted more marketers in this period. While there is no negative impact on AdEx, the methodology has witnessed a shift. Amit Tiwari, Director & Country Head - Media, Phillips said that marketers have moved on from vanilla FCT to activations to create a better impact on consumers in this period. “Nature of radio advertising has now changed. Because of the regional nature and power of penetration, activations are a lot more powerful and hence, marketers are investing in it.”

Kukian also added that new advertising options, including road blocks and below the line activities, have done a world of good to the medium in terms of attracting advertisers.

While the share of radio in the marketing pie has seen a northward trend, it still continues to be a secondary medium, used for targeted marketing and thus, changes the game for radio, pointed out Bharat Dhuppar, CMO, Omkar Realtors & Developers. “Considering this logic and also the relevance of the medium from a project-centric perspective, the impact could be minimal.”

Festive season to bring cheer
Increasing ad spends during the festive season last year came as a good corrective measure for the private FM industry. “We are expecting a boost in government advertising, especially for tourism, in the festive season,” added Kukian.

Similarly, Hukmani shared that while no major growth has been forecasted for the festive period, the 2014 Lok Sabha Elections and government advertising is expected to change the situation.

Panday indicates that demand for radio will remain strong in the festive season; however, there shall be a few issues that need attention. “FM radio will have to take a price hike in the second half since there is no volume left. But then, all media are taking price hikes. I think we will still remain very high value for money for clients.”

However, Prem Kumar, COO, Chennai Live explained that it is too early to say how the industry is impacted by the current situation. “All brands want to expand their sales in the festive seasons and thus, that is a time when one gets true indication of how the situation is impacting radio.”

Attribute it to the localness or the low advertising cost, radio as of now has not been impacted immensely by the economy. However, Phase III would definitely have been an additional strength in this scenario. Anil Cheriyedath, Senior Business Director, GroupM, expressed that brands now have a fair idea of the medium and are also not cutting down on expenses. Thus, investment in the medium will go up. Nonetheless, Phase III rollout would have meant additional revenue.

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