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Music to ears: Radio players hopeful of reaching pre-Covid revenue this festive season

After a two-year lull, the radio industry is finally hoping to witness a stronger festive period this season. While the business is yet to recover fully from Covid and reach the pre-pandemic levels of revenue, experts are optimistic that this year will be good for the industry as the sector is already exhibiting significant signs of strong recovery.

According to Rahul Namjoshi, CEO-Radio Division, MY FM, this year is far better than the earlier two years as almost all categories are registering growth. “Even the stock market is at an all-time high and we’re benchmarking this festive season to 2019 (pre-Covid times). I am very confident that we will be able to breach it,” he says

Talking with the same sentiment, Nisha Narayanan, Director & COO, RED FM and Magic FM, shares that overall volumes are seeing northward trends. “For Red FM, the season has started well and volumes are back in place. But due to global macro-economic factors, where inflation is also playing its role, certain categories are yet to recover,” she adds.

The radio industry has come a long way since the pandemic. The festive season of 2022, which started with Ganesh Chaturthi and will go on till Dussehra and Diwali, is expected to fuel this recovery.

Neeraj Saraswat, CRO, Fever FM, too asserts that they are optimistic about returning to pre-Covid levels this year. “With several innovative products being launched, the channel is looking at continuous engagement with its audiences,” he says.

According to Pitch Madison Advertising Report 2022, there was a 36% increase in spend on radio in 2021 (after a 44% de-growth in 2020), but radio AdEx has failed to recover fully. According to an estimate in the report, Rs 1,733 crore AdEx in 2021 takes radio back to the year 2016, when it had registered a spend of Rs.1,749 crore. In terms of share, radio AdEx, which stood at 4% in 2015, 2016, 2017, and 2018, now stands at only 2%, which is similar to what it achieved in 2020. 

Namjoshi shares that radio AdEx witnessed a major hit owing to Covid and special rates were offered during that period to brands as support. However, in the current financial year, they are witnessing almost normal business operations across categories.

Narayanan adds, “As a matter of fact, some of our markets will surpass 2019-2020 as well. However, there is scope for betterment in larger generation markets and categories, and we are hopeful that by the time we enter Q4, the gap will be minimal.”

According to Saraswat, after two years of pandemic-induced de-growths and slow recovery, there’s definitely more buoyancy in the market and radio business is no exception. He shares that August was the first month in the last two years when they had advertising inventories under pressure in Delhi-NCR. And from the start of Navratri, they believe, this trend will continue.

Talking about the rates, Namjoshi opines, “As an industry, all private FM channels should start demanding the right price. Being the leader in our markets, we have started the process of rate correction with our business partners and are moving in the right direction of rate recovery,” he notes. 

The FICCI EY 2022 report stated that the sector’s ad volumes recovered 29% over 2020 but are still 6% behind 2019 volumes. In fact, the ad rates fell 13% on an average during that period. 

According to media experts, some players in the sector have increased their pricing while others are still giving discounts on ad rates. 

“Yes, as volumes grow, all players tend to increase their pricing, we have also increased our festive pricing. This is a normal phenomenon every year followed across the industry,” says Preeti Nihalani, COO, ENIL, Mirchi.

Advertisers, meanwhile, are still being very cautious in their approach and are keeping their purse strings tight. “This is resulting in a price war of a situation among media players, which in turn is impacting the overall revenues and also the medium in general, says Narayanan. She however adds that advertisers are also blocking premium positions or properties by paying additional amounts. “I believe a good product is capable of getting its price in spite of competition and challenges.”

Talking about volumes, Saraswat shares, “From the ad-volume perspective, this festive season will be excellent for radio. From the pricing point of view though, we are still to reach pre-Covid levels. However, we expect that owing to much higher demand during this festive season, advertisers would be willing to pay us a premium for better services and for differentiated advertising environments. We are planning a 15-20% price increase during this festive period to cater to the spike in demand.”

As per the FICCI EY report, 71% of radio ad volumes in 2021 were delivered by the top five advertising sectors including services, banking/finance/ investment, food and beverages, auto and retail. In fact, these top five sectors remained the same as 2020.  

“We are also seeing certain categories spending more aggressively than others. Categories such as retail, food & beverages, automobiles, consumer durables, ecommerce, and new-age businesses like food delivery apps, aggregator platforms and payment apps will be some of the biggest beneficiaries of the spike in demand this festive season. The real estate sector has been growing in excess of 50% compared to last year. With the sector having overcome a lot of issues post the RERA implementation and slowly regaining the buyers’ trust, it will continue to invest aggressively to launch and market newer projects. Radio being one of the most favoured hyperlocal mediums for real estate, we are looking forward to a lucrative festive season,” added Saraswat. 

Narayanan shared that some of the key categories that have been very active on radio this year include dotcom, BFSI, govt, auto, industrial, FMCG, consumer durables, org. retail, real estate, shops, education and health services. “It’s truly heartening to see the revival of real estate, education & shops amongst top categories this year, confirming that radio is heading towards better revenues and growth.”

Talking about the factors that is driving growth this season, Namjoshi shared that the festive season adds up to 25-30% of revenue for all major categories. “People are at ease and looking forward to an exciting festive season after a hiatus of two years owing to Covid restrictions.”

Nihalani shared that the rise in consumer spending is one of the biggest factors driving growth during this festive season. Consumers are back in full swing after two years of subdued festivities, and hence, brands are actively deploying strategies to connect with and cater to them.

Since radio is hyperlocal, it will always be used to advertise for retail education, real estate FMCG and public services. We also see retail, lifestyle, events, real estate and education bouncing back from the pandemic as we witness the volume growing and revenue improving month on month. Also, during the festive period, all key advertisers and segments will utilise the medium’s ability as it helps in fraternising with all other mediums as a multiplier for reach and frequency.”

With the restrictions lifted, radio players have also started doing their on-ground events and the non-FCT revenues contributed an average of 15% of their total revenues, according to industry reports. FICCI EY report predicts that radio advertising will grow at a CAGR of around 8% over the next three years, while non-FCT revenues could grow at 17% or more. 

“Fever FM is also coming up with innovative on-ground IPs which aim to provide distinct and matchless consumer experiences through meticulous curation of entertainment content as well as handpicked F&B options. We have an exciting line-up of events starting November and going on all the way till February. These events and IPs will offer unique opportunities for brands to reach out to targeted audiences and create mass awareness about their brand or product, create experience zones to induce interest and finally generate lead for conversions,” said Neeraj Saraswat. 

Similarly, Nihalani shared that at Mirchi, nearly one-third of revenue comes from ‘solutions’ offerings by creating digital content (audio/video), impact property, and customized multimedia solutions for the clients. 

“Now that the fear of any curbs related to the pandemic is not a big concern, our ‘solutions’ business, especially where we were offering on-ground connect with audiences to brands, has also started scaling back to pre-pandemic levels. This year, after a gap of two years, we will be hosting various on-ground events, bringing back the physical format. One of our most popular dandiya events, Rock n Dhol, is coming back with full vigour,” he said.

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