Radio industry hopeful of a well-tuned Q4?
Top players share insights into why radio took a hit during the pandemic and how the upcoming quarter is shaping up for the medium
Like OOH and Experiential, Radio as a medium has undeniably had a tough time staying afloat during the COVID-19 pandemic. Although the airwaves witnessed a spike in listenership during the lockdown, advertising revenues took a hit, with most retail businesses incurring major losses too. The industry, however, is still banking on a better upcoming quarter.
The lockdown saw only essential services running, with advertisers having no means to drive walk-ins or demand. Q1 was already quite bad as the entire country was on a standstill. To make things worse, even the government-led ad spends reduced to almost nothing.
Talking about the impact caused to the sector in the initial stages of the lockdown, Abe Thomas, CEO, BIG FM said “The first two months of lockdown saw a steep decline with respect to the cut in ad spends by advertisers, including the government. These unprecedented times did put additional pressure on the sector which saw the revenues go down by 70% in the initial months.”
Adding to the reason behind the huge blow, even with everyone listening to the radio in large doses, Prashant Panday, MD & CEO, ENIL said, “The advertisers were absent because the markets were locked down. Since radio helps push retail sales and provides the last thrust towards generating footfalls, it suffered when shops shut down. Also, brand campaigns reduced on all media.”
Shedding light on the already fragile condition of the sector, Harshad Jain, CEO – Radio and Entertainment, HT Media Ltd and Next Mediaworks Ltd said, “Radio saw a year of softness, largely driven by economic slowdown resulting on account of macroeconomic uncertainties and liquidity crisis. Owing to this, radio revenues of private FM players saw a growth in the first half of CY 2019, but faced a decline in the second half.”
Even though the industry was initially down close to 85-90%, radio players are now looking at the light at the end of the tunnel. There’s no denying that radio has survived in spite of all pressures on the economy, thanks to its hyper-local cost-effective reach. Even the time spent listening to radio grew by approximately 30 minutes or 23% across segments.
Several studies have also highlighted that radio consumption went up and became the second-preferred medium of entertainment during the lockdown, following TV. “Its reach is at par with digital and TV and decision-makers realise the power and efficiency of this brand-building medium”, said Rahul Namjoshi, COO, MY FM.
According to the recent TAM Adex data, there has been a subsequent growth in advertising targeted towards each segment with various categories such as retail auto, cosmetics, financial services, restaurant, food products amongst many others leveraging the strength of radio to reach out to their target audience.
“We are slowly seeing an increase in spends by the advertisers as they get back to normalcy and resume their businesses,” said Jain of Fever FM and HT Mediaworks, adding that there has also been a growth in radio consumption by the youth across metros, which is a great opportunity for new age brands to leverage radio’s strength and further increase their advertising share.
Speaking on the categories that are actively using radio for their requirements in this time, Ashit Kukian, CEO, Radio City said, “We saw the automotive and FMCG industry actively indulging in radio advertisement, along with the health and pharmaceutical sector as of September, even while most corporates and the government are still being judicious about their advertising spends.”
Keeping in mind all the hurdles, the industry firmly believes that it will recover faster than other entertainment mediums. Substantiating this belief, the industry has indeed been coming back with the unlock process in place, especially in tier-1 and tier-2 cities, which saw 70-75% recovery, since the pandemic is not as widespread in these regions.
Even then, the industry is still far off from last year’s levels because pricing is down as everyone is offering bonus spots, even though volumes are returning fast, more advertisers are coming back and more categories are returning.
“The good news is that with every month, the gap with last year is reducing. If this continues, we should see a good Q3, and hopefully some growth in Q4,” said Panday of ENIL.
“Brands are going to be cautious and this will continue until the overall state of the economy improves and operations return to pre-COVID normalcy,” Kukian of Radio City added.
However, things are starting to look better for Radio, with the hope that the upcoming festive season will not only light up the streets but also the much-needed revenues. “We have started getting volume growth of 25%-30% market to market and by October, we are hopeful of reaching up to 60-65% of last year’s volume,” said Nisha Narayanan, Director & COO, RED FM and Magic FM who is hopeful that Q4 onwards, revenues will also go up by 75-80% of last year same months.
In fact, some radio networks already saw a recovery with festivals that have gone by. “We witnessed peaking inventories around festivals like Ganesh Chaturthi, Independence Day and Janmashtami. Our retail-business-volume is back at the pre-covid- level. We are seeing good traction in categories like Real Estate, FMCG, Auto, Education, BFI and they are growing constantly month on month,” Namjoshi of MY FM said, attributing the growth to constant demand from the retail sector.
BIG FM has seen a K shaped recovery, with certain categories booming and others failing.
Although growth will pick up in the coming quarters, Panday estimates that pure FCT will remain under pressure longer, but solutions will recover faster since that’s what advertisers are demanding now. “Earlier, our solutions had a big on-ground component built-in. Now because on-ground events are not happening, our solutions are having a lot more of our digital products built-in. This is working fantastically in the market,” he said.
The COVID-19 induced new normal is leading to analytics, which will play a huge role in helping bring various sectors back on track, as companies will have a chunk of data to refer to and create a full-proof future plan.
Radio City has already started focussing more on content, finding newer distribution channels and newer streams of revenue, whilst betting big on its digital offerings and launching a few engaging campaigns.
In the end, radio players are cautiously optimistic of what the next quarter holds. With a good festive season and advertising, Public Health messages, Auto, consumer durables, Industrial, FMCG opening up, the industry is looking at a better quarter. “Q2 will be much better than Q1, but it will still be just about half of last year. Q3 should see further improvement, but there will be a gap with last year. In Q4, there’s a chance that the industry will become equal to last year,” said Panday.
However, forecasting in this unprecedented situation is a difficult task as much damage has been done between Mar-July and it will take time to recover from it fully.
“Our focus is to move forward step by step on the road to recovery. I believe the situation is not going to be under control anytime soon and hence we must be prepared to face the worst,” said Kukian of Radio City.
The coming months usually bring in around 40% - 45% of annual business for Radio. Consumers are expected to indulge in pent up shopping and revenge buying due to deprivation since the onset of lockdown in March. Diwali, which is the biggest festival in India, will aid in shopping and bulk buying. “Categories such as BFSI, Automobile, FMCG, Consumer Non-Durables and E-commerce are expected to drive the bounce back. Add to that, we are looking forward to new launches and huge offers to capitalise on the consumer’s mood change,” Thomas of BIG FM said.
“The players in the industry are looking at alternate monetization avenues to augment Free Commercial Time (FCT) based revenue. The plethora or interesting content and properties being churned out by every radio station are sure to attract the advertisers.” Jain added.
Radio is, however, unobtrusive, allowing listeners access while working remotely. The places and devices where people listen have changed because of the COVID-19 pandemic and also technology.
Media agencies, on the other hand, are well aware of the difficulties that the medium has faced and will have to face for some time. However, they too, like most radio players, expect to see some respite with the festivities coming in.
Commenting on the same, Mohit Joshi, MD, India, Havas Media Group said, “Radio did see a dip in advertising during the lockdown, however, it’s coming back now. The festive period will have a lot of promotional communication and radio will surely be used. The extent of usage will clearly depend on the brand campaign objectives."
“Radio listenership has increased post-COVID, but the time of listening, place and devices are going through change, which means it redefines prime time and non-primetime. These are important trends to keep in mind while determining relevance and effectiveness of radio is in these times, said HimankaDas, Chief Executive Officer, Vizeum India
Speaking of the IPL that is to be hosted during the festive season, Das believes that the communication on the radio needs to be localized since tactical promotions work well during the festive time of the year. ”Marketers investments are extremely challenged due to COVID economic impact. Strategically, there will be a serious evaluation of trade-off to rationalize business objectiveness. While the relevance of radio is still there, it needs to be balanced by trade-off,” he adds.
Some brands, on the other hand, have invested heavily in radio and have full faith in the power of the medium to drive sales and create awareness. One of the brands that have been able to reach its target audience tactically, through the medium’s city-specific presence across states is Mother Dairy. “The medium has delivered effectively and has indeed become one of the preferred mediums for our campaigns, helping us converse with a larger set of audience. Going ahead, we will continue engaging our consumers through this medium. We also have new campaigns in the pipeline wherein radio will play a major role," a Mother Dairy Spokesperson said while commenting on its association with radio.
Radio players believe that a good monsoon will also drive consumption in emerging markets, where it scores high with its local reach. In the end, Radio has been standing tall to fight these daunting times with prudence and rigour.
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