Ad challenges for FM radio in Phase-III

MUMBAI: The new FM radio policy will speed up growth but the pie will not expand enough to make the sector profitable unless the bids are pursued within rational limits, experts said.

The private FM radio sector, sized at around Rs 10 billion, is expected to grow at 30-35 per cent due to Phase-III expansion as new towns surface and stations broadcast differentiated content in metros.

"The industry is currently growing at 20-22 per cent. After the new stations launch, the industry should see at least 30-35 per cent growth year-on-year," Entertainment Network India Ltd (ENIL) CEO and executive director Prashant Panday said.
FM radio stations will be able to tap local advertisers and widen their advertising base but the rates will be under pressure.

"The new frequencies will be in smaller towns and the rates will be much lower," Panday said.

Media agencies do not see a major boost in the sector‘s revenues as in the small towns ad rates could be even as low as Rs 75 per 10 seconds.

"The increase in revenue will come from local retailers and also at the cost of All India Radio. Also, a lot will depend on how the players manage to monetise on the differentiated content they create with their multiple frequencies in the metros," the chief executive of a media agency said.

Law & Kenneth India CEO and managing partner Anil Nair thinks the changes will be very gradual. "Radio is largely used as an announcement and remainder medium. Every marketer assigns certain objectives to various mediums. A case in point -- print is good to announce offers and promotions for local retail brands, while television is largely used to spread brand values and messages, because its an audio/video medium. Radio, on the other hand, is just an audio one. I doubt the overall equation will change," Nair said.

With more players coming in as the geography spreads, the radio ad pie will further get sliced.

"The competition will increase. Clients will now have more choices and so will the customers," averred Nair.

RK Swamy Media Group president Chintamani Rao is of the view that regional and local players will be at a great advantage. "The advent of a new medium is always great news," he asserted.

TBWAIndia MD Nirmalya Sen believes the radio medium, which has always been considered as passive and secondary, is now going to change with expanded reach.

"The medium can become more interactive and can be used best when communicating regionally. Traditionally the medium has been used by retail and real estate entities to reach out to the local audiences. But not we might see even big national brands getting aggressive on this front," Sen affirmed.

Radio always has been a highly cost-effective medium, helping brands to communicate with their target audiences at a very local level.

"The decision will benefit the outdoor media to a great extent as now there will be more players who would like to promote their brands through outdoor advertising. So I am really happy", asserted OAP India CEO Abhijit Sengupta.

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