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Radio reaps the benefits of ad rate hikes in other mediums

06-August-2008
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Radio reaps the benefits of ad rate hikes in other mediums

The newsprint price hike has become a cause of worry for the print industry, leaving it no choice but to increase the ad rates. Other mediums, too, have increased their ad rates recently. One of the reasons for the increased ad rates is inflation, which has now reached the double digit mark. But one medium that is happy with this hike is radio.

Radio as a cost effective medium has been witnessing rapid growth. Radio, which currently contributes only 3 per cent of the advertising pie, is predicted to grow further in the years to come.

Expected shift of advertising to radio

Commenting on the issue, Harrish Bhatia, COO, My FM, said, “The expected shift to radio is quite obvious, as radio is already a competitive medium to put across ones’ brand message. Given its characteristics of an interactive medium, radio is able to bond well with its audience. This is surely a big plus for brands associated with radio.”

Anuj Singh, National Marketing Head and Station Head Mumbai, Red FM, was a bit more cautious. He said, “It is too early to gauge whether the increase in the number of advertisers is due to a shift from more expensive media options. There could be some merit for the assumption that advertisers would shift to radio to increase their radio spends. Now, with the impending rate increase, advertisers are forced to make a choice. If radio benefits from this, that’s good. I am sure radio broadcasters will go full steam to get advertisers and agencies to use the medium and recognise its strengths rather than use it as a stand-in for more expensive media.”

Ashit Kukian, Executive Vice-President and National Head – Sales, Radio City, said, “Over time, radio has created its own need by demonstrating its efficacy. Radio is not a substitute as a cheaper medium, but is clearly seen as a medium that delivers the advertiser’s objectives. Thus, I would not agree that advertisers would look at radio only in a scenario when other media may seem to be getting expensive.”

Praveen Malhotra, National Sales Head- Integrated Sales, Big FM, said, “Yes, radio will benefit a lot with the shift of advertising pattern. Radio being a cost effective medium and far more flexible than any other medium will see the advertisers focussing more towards radio with the latest trend in the market.”

According to Pallavi Burman, National Sales Head, Fever FM, “The increase in ad rates by other mediums is likely to benefit radio the most. Considering that the reach of radio and newsprint would be close, it is definitely more cost effective to advertise on radio as a medium. One would assume that during an economic slowdown, marketers would try to hold on to their existing bases as opposed to increasing awareness. In such a situation, radio would deliver the message more effectively since the medium ensures higher frequency for the message.”

So, is inflation a boon to radio?

Bhatia said, “The recent newsprint rate hike and an increasing inflation will definitely help this trend of media planners paying greater attention to the radio medium. In the age of escalating prices, the resources available for advertising are bound to deplete and here radio can put its best foot forward and offer more comprehensive and cost-effective advertising package. Radio, being cost effective, is the best available option to maintain brand recall in such times.”

Burman said, “I guess to tackle declining volumes, the other mediums would try and increase their yield and thus maintain their toplines. In the short term, the shift in marketing spends across mediums may be perceived as a gain for radio, but in the long term, a stagnant or declining marketing spend is not good for the media industry per se.”

Kukian explained, “Radio being as much a part of the media pie like print and television, is also likely to be impacted by anything that impacts all media vehicles in general. However, even in a scenario of a rate hike across media, given the reach, immediacy and sheer connect of radio, the efficacy of radio, particularly from a cost-benefit perspective would be further enhanced.”

Commenting on the whether inflation is a boon for radio, Anuj Singh said, “The inflationary trends and the economic and political uncertainty in July did appear to impact ad seconds on radio as well. Media choice is not always driven by costs and the advertiser and the agency fraternity know this well. It is not likely that advertisers will completely cut out the market leader in print. However, they may reduce spends in the leading publications and consider replacing second rung newspapers/magazines with cost effective media like radio.”

Meanwhile, following the market trend of increasing ad rates, My FM increased its ad rates by around 15 per cent in the last one month. Still, with the hike in newsprint price and a growing inflation, radio is one effective medium that the advertisers would not want to miss. The current market trends will in fact encourage advertisers to explore the radio industry even further.

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