The past few months have seen most FM radio players increasing their ad rates. More are contemplating to hike ad rates in the coming weeks. Given the current economic scenario, when another financial crunch is looming large, the hike is likely to hit advertisers’ budgets. However, radio players insist that with their differentiated content and market positioning, it will still be a value for money proposition for advertisers.
Vineet Singh Hukmani, MD, Radio One informed, “Radio One has already achieved a 60 per cent plus average rate hike across seven cities in the last 100 days and it has been accepted by our client partners. The rate increase is because of the change to a higher quality international format in Delhi and Mumbai that allows better profiling and targeting of educated audiences.”
He further said that since value-wise radio was a small part of clients’ budgets, even an increase in rates would not impact client budgets at all, given that clients were pulling large spends out of TV and print as they preferred radio for better local city targeting and clearing local distribution inventory without large spends. He noted, “Two weeks of TV expenditure can fuel an eight-month campaign on radio and one full page insertion in a mainline English daily can fuel a whole year on radio. Radio offers much more value. Clients already realise this.”
”Our constant investment is in the product so that we can target listeners better, and that in turn, helps the advertiser. We will put the money back into making programming better,” Hukmani added.
Rabe T Iyer, Business Head, Big FM said that there is a lot for clients to maximise in terms of net reach and impact through Big FM’s 360 degree approach. “Hence, rate hike is only a correction, not a hike. The rate correction will go into increasing our width of customer engagement as well as getting new programming into radio. For instance, we have tied up with the BBC for the London Olympics, which will see very topical and engaging on-air content. This apart, there is the second season of ‘Yaadon Ka Idiot Box with Neelesh Misra’. We have launched the show ‘Once Upon a time in Bollywood’, and there are many more to come.”
He claimed that Big FM has witnessed a rise in its overall rankings while its retro music in Delhi has proved a strong differentiator even for the youth audience. “As Big FM continues to lead in the HSM market, it is aiming at 10-15 per cent hike in rates in sync with the radio industry trend,” Iyer added.
Radio Indigo is aiming close to 25-35 per cent increase in its ad inventory. High operational cost of business units has also triggered a rise in ad rates.
Like Big FM’s Iyer, Suresh Sanyasi, National Sales Head, Radio Indigo, too, preferred to see this as a rate correction rather than a price hike. “Our objective has always been quality programming and we will invest in providing just that. It will help us offer new and interesting concepts and content to our listener. We don’t see a major increase in the advertisers’ budget as we have been able to justify RoI for all our clients. Besides, the impact will not be felt as the advertising pie dedicated for radio is still lower than other mainstream media.”
At this stage, when the market is undecided on the direction and pace of growth, a rate hike is not the solution. However, clients are willing to pay premiums for better solutions with multimedia adaptation of ideas.
“Our approach is to clearly drive more value for the clients by offering them better creative solutions backed by multimedia extensions, extending to on-ground and digital in addition to radio. As far as the rate increase is concerned, we are working closely with our clients, and we will go for a rate increase at an appropriate time,” said Sameer Sainani, Chief Revenue Officer, ENIL, which operates Radio Mirchi.
Monica Nayyar Patnaik, Joint Managing Director of Eastern Media (Radio Choklate) shared, “We will be aiming for 25 per cent hike in ad rates. I don’t know about others, but we are giving value for money to advertisers as we are the No. 1 station in Orissa and we deserve to have a rate hike. We believe our advertisers will stick to us. The money from the ad rate hike will be invested in manpower and software programming.”
Radio Choklate is planning to expand to five cities – Berhampur, Sambalpur, Balasore, Baripada and Puri – in FM Phase III.
Radio City had increased its ad rates by 15-20 per cent few months ago.
Not much impact on clients’ budgets: Media planners
The starting point of the rate negotiations are not the existing rate cards but the existing rate benchmarks. The operating rates are fixed basis the existing benchmarks and extent of necessity on both sides. In the past three-four years, advertising volume on radio has grown by around 60 per cent in the metros and by almost 150 per cent in the smaller cities.
Janardhan Pandey, AVP, DDB MudraMax Media remarked, “I don’t see any real impact of increase in ad rates on advertisers’ budgets in the given market scenario. The ad rate hike is the outcome of the rise in various input costs that may be justified too and it’s up to the media vehicle owners to decide on how much to leverage the same. However, looking at the current scenario of our economy and ad spends, I personally feel that such move can either be futile or counter-productive if pursued vigorously.”
Agreeing with Pandey, Surbhi C Murthy, AVP, Allied Media felt that the ad rates would get normalised by way of negotiations.