“Within two years of sorting out of the licence fee imbroglio, the radio industry is most likely to pocket five per cent of the total ad-spent pie,” says Sumantro Dutta, COO, Radio City.
According to the Ernst and Young report on the entertainment industry for FICCI Frames 2004, the total adspend on radio in 2003 was approximately Rs 180 crore – two per cent of the total adspend of an estimated at Rs 9600 crore.
So why is Dutta so optimistic about the future of this industry, given the nominal growth it has garnered in the past two years of its inception?
Responds Dutta, “Listening to Radio is a habit and as with any habit it's got to be formed over a period of time. With leisure time getting compressed, there was a better time for a mobile medium like FM radio. The answer lies in understanding what listeners want from the Radio station and giving it to them. It is a question of positioning your brand to cater to this segment.”
He adds: “Introduction of private FM radio has just started in India. For a commercial medium that has flourished in the rest of the world for around 75 years, it's reasonable to expect that it will take a couple of years and not just months for radio to achieve its potential here. Radio is just getting started and it will rock.”
At Rs 9.75 crore for the first year, with a 15 per cent hike year on year, licence fees are the highest in Mumbai, with the industry watchers attributing it to the cut-throat competition. “101 bids were received, aggregating to a license fee of approximately Rs 425 crore. This was approximately five times the expected base price set by the government. The license fees for the first year, from the 10 players who finally set up stations, worked out to approximately Rs 162 crore, nearly 60% more than the annual revenues of the incumbent monopoly, All India Radio,” says the Ernst & Young report.
Accountability is another factor responsible for checking the progress of the industry. The absence of any formal research has made the advertisers and media planners sceptical of making investments in it.
Elucidates Dutta, “Going forward, Radio will be measured by independent research services to deliver audience estimates at least as reliable as the television figures that advertisers depend on. However, it may take a while before enough national advertisers are using radio to make such studies financially feasible, but the local advertisers who are always the major source of advertising support for FM radio stations will know without buying a rating report when their advertising is making their cash registers ring.”
In today’s fast-paced life, the emergence of an entertainment medium that moves with the listener makes it an unique offering and its future lies in the hands of the powers that be, in this case the I&B industry.