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Radio players positive of AdEx growth in coming qu…

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The advertising volume on radio has grown 20% in 2023 compared to 2021, shows data from TAM AdEx radio advertising quarterly report for January-March 2023. Is this uptick momentary or here to stay?

As per Rahul Namjoshi, Chief Executive Officer, MY FM, said, “Yes, the radio AdEx is bound to increase in the coming quarters as the festive season is round the corner and many cricket series, including the World Cup, is lined up. Also, the recent quarter Q1 has shown a positive trend.” 

Nisha Narayanan, COO and Director, Red FM and Magic FM, is also looking at substantial growth in AdEx for the sector. “We expect AdEx to further grow in the coming months. Regional markets are driving AdEx volumes, and our inventories are fully utilized. It’s time for radio players to seek realignment of pricing and withdraw bonus offers to prioritize delivering the best entertainment to listeners and maximise earnings. We remain committed to providing maximum entertainment and listening joy to our audience for better advertiser mileage.”

Adding on, Abraham Thomas, Chief Executive Officer, Big FM, Reliance Broadcast Network Limited, said, “While we anticipate a marginal increase in ad volumes, the significant boost in AdEx is likely to come from radio companies exploring alternate revenue streams. We remain optimistic about the overall growth potential in the coming quarters as the industry continues to adapt and innovate.” 

Ashit Kukian, Chief Executive Officer, Radio City, said, “We are optimistic that the coming quarters will showcase positive growth owing to factors such as the onset of the festive season, upcoming elections, etc. India is among the fastest-growing countries and one of the top investment destinations in the world. With the growing advances in the SME as well as start-up sector alongside other industries, radio will continue to be an effective medium of advertising for brands in the ecosystem.” 

Back to pre-Covid ad rates?

When we deep dive into industry numbers, we found that the industry’s struggle to achieve pre Covid ad rates is in full swing. Mentioning ad rates, Kukian, said, “The radio industry is currently operating at 70-75% of the pre-Covid rates. As the market has already come to normalcy and the advertisers showing an increased inclination towards increasing their ad spends, we are expecting at least a 20-25% increase in our current operating rates.”

As for Namjoshi, “Not completely, we are making conscious efforts to get back to pre-Covid ad rates. However, all players in the category need to make a conscious effort if a few continue to extend discounts then rate recovery will become an uphill task.” 

Narayanan said, “Approximately 60-65% of cities, particularly medium and smaller ones, have made remarkable progress towards reaching pre-pandemic levels. Local brands have played a crucial role in this recovery by seizing the opportunity and capitalizing on uncluttered media exposure in the absence of national campaigns. 

By doing so, they have not only gained valuable visibility but also experienced significant brand growth. However, there is cause for concern as a few major metropolitan cities, such as Delhi, Mumbai, Bangalore, Kolkata, and some cities in the West, are still operating at 70-75% of pre-pandemic rates. It remains our strategic focus to restore these cities to their former levels as soon as possible.”

Adding on, Thomas, said, “At BIG FM, our focus lies on delivering greater value rather than solely on rates. We have witnessed a positive response from the market to our rate hikes, which has contributed to our ongoing recovery. In the last two years, we have been able to consistently increase our yields year on year based on delivering better solutions and better outcomes for our clients.”  

Leading brands and advertisers

The TAM report also says that the services sector retained its position as the top advertised sector in January-March 2023 with 32% of ad volume share followed by BFSI with a 13% share. 

Talking about the expected leading categories and brands in the upcoming quarters Narayanan said, “In this quarter of April-June, we have witnessed significant traction in the Education and service sectors, along with increased promotional activities by the Government in preparation for the upcoming elections. Real Estate, Auto, and Health/Pharma are prominent categories driving advertising expenditure. Additionally, with the commencement of colleges, Consumer Durables and IT sectors have become more active, focusing on gadgets, appliances, and related services.” 

Elaborating why the BFSI category is always leading in the categories, Namjoshi said, “The Jan-Mar ‘2023 quarter has always seen the BFSI category getting active primarily because the FY is coming to an end and a lot of people plan to save from tax point of view. So that’s the primary reason. Also, radio is the best medium to explain complicated things simply through explainer format content.” 

The report also says that 180 categories registered positive growth in 2023. Mentioning the factors responsible for the increase in overall advertising categories Thomas said, “The increase in advertising across more than 180 categories can be attributed to several factors. Advertisers across various sectors are seeking integrated solutions to effectively target their consumer base, and radio presents itself as a one-stop shop for targeted advertising. 

Additionally, the government’s “Vocal for Local” initiative has propelled regional advertising, tapping into the local pulse and offering regional advertisers a cost-effective and impactful value proposition. Moreover, the growth coming from Tier 2 and Tier 3 cities also gives us an advantage with advertisers recognizing the potential of these markets and seeking effective ways to reach the consumers in these regions.” 

Growing Markets

Emphasizing the leading market in radio advertising, Thomas further said, “According to the Aircheck data for FY 23, Gujarat has emerged as the leading state with a substantial 23% share of ad volumes on radio, closely followed by Rest of Maharashtra (ROM) at 17%. As we move into Q1 of FY 24, the trend continues, with Gujarat maintaining its position at the forefront with 19% of ad volumes, while ROM follows closely at 16%. 

Based on the past and current booking trends, it is highly likely that Gujarat will continue to lead in the running quarter as well.”

Narayanan said, “Gujarat and Maharashtra, being states with the highest number of stations in adex mapping, naturally contribute more volumes. However, we are currently facing inventory overflow in several cities beyond Maharashtra and Gujarat as well.” 

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