FM players fret over shrinking ad pie

With just 3.2% share of the spoils and revenue growth not meeting forecasts, sustainability worries rise

MUMBAI: The sound of music is not translating into the sweet jingle of coins, at least not fast enough.
 
Advertising revenue, the primary bread earner for private FM stations, is not flowing thick and fast and station heads are now in a fix over sustaining their business in small towns in the long run. Since the business model is not subscription-based, radio advertising is the main source of revenue for radio stations.

Growth in ad revenues for radio has not met industry predictions. According to the Ficci-PwC report 2008, India’s radio industry grew by 37% in 2004-07. However, radio advertising in 2007 grew by 24% over the previous year, significantly lower than the forecasted growth of 30%.

This, at a time when private FM radio, all set for its third round of expansion into smaller towns is expected to give local and national advertisers greater reach and mileage. Analysts say that similar sounding stations have made advertisers hesitant to invest more in radio, even though they are “currently paying peanuts to them.”
 
“When all stations begin to sound alike, the music turns into white noise,” says a senior media analyst.

One could point out the same about general entertainment channels on television, but media buyers say that emotional connect still cannot be established by an advertiser on radio. “Firstly, purely music-centric content by all stations has made audiences look at radio as a music-only medium. Therefore, as soon as ad pops up, they switch stations,” says Sejal Shah, vice-president, India Media Exchange (IMX), which buys traditional media for Starcom Mediavest Group and Zenith Optimedia.

Measuring radio audience is yet another issue.

Radio Audience Measurement (RAM), an initiative from TAM Media Research last year, is still to take-off fully and only covers cities like Delhi, Mumbai, Bangalore and Kolkata so far. “Moreover, there’s still no third party to verify how many calls and SMSes each station is receiving from listeners,” says Shah.

Admen say FM stations are using the measurement statistics to their own advantage. “Every station claims that it is number one. How do we trust the medium?” asks Ramanuj Shastry, chief creative officer, Rediffusion DYR.

Anand Chakravarthy, vice-president -marketing, Big FM, admits that some FM stations have been using the measurement system to their own advantage. “It shouldn’t be happening and this is making advertisers undervalue the radio business,” he says.

Out of the total ad spend, investment on radio is low. In terms of share of the ad pie, radio industry has been able to increase it to a mere 3.2% in 2007, from 3.1% in 2006. The quality of radio advertising hence, has taken a hit, say ad men.

Abhijit Awasthi, executive creative director - South Asia, Ogilvy & Mather, who was in the Radio and Radio Craft jury at the Goafest, says he “almost lost one ear listening to the 380-odd entries.”

“The quality of work has gone down. Primarily, compared to TV or print, radio advertising is not considered glamourous. Ad men think it’s not sexy enough.”
Most radio creatives, therefore, resort to short-cuts. “A Sholay spoof is the most popular cliche on radio. In fact, had there not been Sholay, there would have been no radio advertising today,” says Awasthi.

FM station owners, however, pass the buck to advertisers claiming that the radio, a medium that has been in India since more than 60 years, has not been understood yet by them and their ad agencies.

“It’s not about the money. It’s about the value they place on the medium,” says Anil Srivatsa, chief operating officer, Radio Today, which runs Meow FM, targeted at women listeners.

“Marketers need to get more involved in the medium rather than leaving it to the media agencies. The latter will obviously try to save most amount of money for their clients, rather than helping them find audiences. At the end of the day, an advertiser wants audiences,” he says.

Ashit Kukian, EVP and national sales head, Radio City says, “Educating advertisers is going to be a key focus area now. Involvement and stickiness with radio is much higher compared to other mediums.”

Some breakthrough has been achieved though. While, currently brand-related activities include contest-based tie-ups, promotions and ground events. Off-late simulcasting content in partnership with television channels is also gaining momentum.

c_arcopol@dnaindia.net