“Making FM Phase III launch profitable is challenging”

Ritesh Malik, MD, Creative Thinks Media says that while the radio ad business is pegged at about Rs 1,100 cr -1,200 cr, slowdown is impacting ad revenues

e4m by Shree Lahiri
Updated: Jun 25, 2012 8:55 PM
“Making FM Phase III launch profitable is challenging”

With the Government announcing the commencement of e-auctions from December 2012 as part of Phase III FM expansion, there is momentum again in the radio industry. Ritesh Malik, Managing Director, Creative Thinks Media, speaks with exchange4mediaon the importance of FM Phase III, emerging trends, creativity in radio advertising and more…

Giving an idea of the size of the radio advertising business in India, Malik pointed out that the major business is concentrated in Mumbai, Delhi, Chennai and Kolkata and is pegged at around Rs 1,100-1,200 crore.

Importance of Phase III
Malik noted that with Phase III, the Government and the listeners are all set to gain – the Government, in terms of revenue, while the listeners, in terms of choice of music. “The big question is how the broadcasters can gain out of this situation, which can only happen once the existing FM stations start showing signs of tremendous growth,” he said. The stations coming up in Phase III need to differentiate their content and must include a lot of local flavour, including dialect. This requires lot of trained manpower, which is key, and would demand investment from broadcasters too. Later, retention of good team members would also become a challenge. All in all, there’s a big challenge in front of broadcasters to make the Phase III launch a profitable one over a period of time.

One key trend emerging, he felt, is the unprofessional attitude of advertisers towards the broadcasters; “they run their campaigns and then don’t pay up”. The absence of any regulatory body like an INS for print is making broadcasters lose money. Another trend is the increase in retail revenue over corporate revenue.

Innovations
Malik further said that Creative Thinks Media is a pioneer in radio advertising. The company has many firsts to its credit – first agency to have its own production studio facility, the first to have music composers, voice-over artists and singers on the company rolls, giving an advantage to clients in terms of world-class audio production at a very low cost (compared to anyone across the industry), the first to give a payment guarantee for their clients’ activities that run on any radio channel in the industry. “We undertake responsibility for all outstandings of our clients in the absence of any controlling body, because we feel it is our moral duty,” he added.

Naming some prominent work done by Creative Thinks Media, he said that radio played an important role in the work done to create the brand Investors Clinic. “We used the audio with Yuvraaj Singh’s voice, who is their brand ambassador. This was the first example of a celebrity who came on to radio to endorse a product or service in the real estate segment,” he said.

Growth areas in radio advertising in India
The major advertisers, be it in retail or corporate, are located in all the big cities and metros, so, “the major revenue share in all the radio channels comes from metros; also big cities are trendsetters, hence all programming innovations are mostly undertaken by the channels first in the big cities and then taken further into the Tier II and III cities”, Malik pointed out.

The economic slowdown has definitely reduced the ad budgets of all clients, he revealed, adding that it is not confined to radio alone but has impacted other media vehicles as well. Retail advertisers, namely, real estate, education, retail and SME categories are the worst affected. “Many retail brands have seen closure of their businesses in the past few months too,” Malik observed.

Focus areas
Meanwhile, Creative Thinks Media has ventured into a new segment this year, where they foresee a lot of growth. This is the industrial category, including capital goods manufacturers, chemical products, industrial fasteners, clients from the power industry or manufacturing products related to power like heavy-duty transformers, power cables, etc.

“As an organisation, we have the experience of working for this segment and, that is our key advantage. Though getting them on radio will be a big challenge, but then, that is what Creative Thinks Media stands for,” Malik concluded.

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