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e-commerce drives radio ad revenues by 10-15% in Q2’15

09-November-2015
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e-commerce drives radio ad revenues by 10-15% in Q2’15

The private FM industry has been buoyed by increased ad spends for the festive season. Operators we spoke to said ad spends have accelerated for Q2 (July to September) and are expected to continue growing into the festive quarter.

For example, Vineet Singh Hukmani, MD of Radio One, said in the October-December quarter, the industry is likely to grow 20 per cent as compared to 7 per cent in Q2.

“Yes, ad growth has picked up this quarter (Q2) compared to the previous quarter. I think the sustained low commodity prices are driving auto/FMCG companies to spend more. The government has been on an overdrive in communicating its several public programs and policies, and e-commerce is a known story,” opined Prashant Panday, MD and CEO at ENIL. “We believe the radio industry has grown at between 11-13 per cent. There is one large player who has grown faster, thanks to a low-base of volumes last year, while all the others have grown in the 10-15 per cent range. Demand for radio has been high. In any sluggish economy, radio does better and that pattern has been seen for the last 2-3 years,” he further added.

A spokesperson for Radio City agreed that Q2 witnessed increase in ad spend for the entire industry. The growth, according to him, could be attributed to the festive period as well as large investments made by brands to drive visibility and optimize mileage on a national scale.

Harish Bhatia, CEO of MY FM, said that their ad revenues saw 11 per cent increase in Q2 over Q1. “Q2 was better than Q1 as the there was momentum from July itself. We have been seeing good demand month on month now and Q2 that was very busy and fruitful for us. The growth was in healthy double digits with improvement in both volume and yields,” informed Nisha Narayanan, COO at RED FM.

e-commerce driving growth

As has been the case for the past year, e-commerce continued to be one of the biggest spenders on radio. For example, Radio City’s growth in the quarter was driven in part by national campaigns done by the likes of OLX and TVS Scooty, said Radio City’s spokesperson.

“While dot com and e-commerce retail firms were amongst the biggest ad spenders Auto, FMCG, jewellery, etc. also spent better than Q1. With latest interest rate revision, one could see some momentum in real estate sentiments and most of the clients have come forward with their promotional offers,” said Narayanan. She further pointed out that start-ups, especially internet companies have been aggressive in their communication with a higher emphasis on tactical promotions and on customizing their offers for local and regional markets.

“Off late, e-commerce has emerged as a strong media spender and FM radio has been one of its favourite. Most of the high spending e-commerce brands i.e. Flipkart, Amazon, Olx, Quikr, Big Basket, Fashion & You, Make My Trip etc have chosen radio as their preferred choice for advertising. While this category was always active on radio, this year we could get reasonably good volumes and spends as they are multiplying their ad and marketing budget. There is also a higher emphasis on tactical promotions and on customizing their offers to suit powerful local and regional markets. Most important of all, the e-tailers want uniqueness and contextualization in communication and content differentiation to standout, which radio provides very effectively and efficiently,” she said.

However, it is not only about e-commerce. According to Panday, FMCG continues to grow and is still the biggest category but it’s the share down to just about 12 per cent, though he also agreed that e-commerce has taken over from traditional retail and dominates all media outlets at present.

When asked about which were the main sectors that have spent on radio, Bhatia opined that real estate, automobile, BFSI, lifestyle and education were the big spenders.

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