FM radio ad rates to fall by 10-15%

To beat the slowdown blues, private FM radio operators are reducing advertisement rates by 10-15 per cent and offering value- added services.

Ad volumes for the FM radio industry had declined by over 14 per cent during the December 2008 quarter as compared to the corresponding quarter a year ago, according to Adex India, a division of TAM Media Research.

During the October-December 2008 period, some of the biggest advertisers on the private FM radio channels reduced their spends.

“While detergents and biscuits makers had stopped advertising on radio, real estate companies reduced their spends by 21 per cent, life insurers by 60 per cent, consumer durables firms 30 per cent and mobile phone services providers by 4 per cent,” Ravi Kiran, CEO-South East & South Asia, Starcom MediaVest Group, a leading media buying agency, told Business Standard.

With the markets contracting, “ad rates for the 10-second ad slot will drop by 10-15 per cent from its current Rs 1,500-Rs 2,500 across the industry. Also, radio operators will offer value-added services such as built-in content in programming to maximise the ad spends,” said an analyst.

“In 2008, new players were selling ad space at 50 per cent discounted rates of leading players who were holding onto their prices,” the analyst who follows the sector closely told Business Standard.

According to Adex India, the growth for the calendar year 2008 was marginal at 3 per cent compared to the last two years when the industry ad volumes grew at over 20 per cent per annum.

The radio industry, which consists of private FM channels and All India Radio (AIR), had recorded revenues of Rs 750 crore in the financial year 2007-08. “The industry was expected to cross revenues of Rs 950 crore this year, but with a bad December quarter, where most players had experienced a de-growth, and a gloomy forecast for the running quarter, the estimate is Rs 850 crore now,” says Prashant Pandey, chief executive officer, Radio Mirchi, the FM radio channel owned by the Entertainment Network group.

As part of its value-added services, Radio City has recently launched a 26-week campaign in association with Maruti Suzuki for the car maker’s ‘Maruti Alto weekend getaway’ programme.