Three major players in the frequency modulation (FM) radio space — Radio Mirchi, Red FM, Radio City — have hiked advertising rates by 15-20% in select markets to boost revenues.
MUMBAI: Three major players in the frequency modulation (FM) radio space — Radio Mirchi, Red FM, Radio City (in that order) — have hiked advertising rates by 15-20% in select markets to boost revenues.
The hike, which will be largely confined to radio stations in the metros, comes on the back of TAM Media Research providing Radio Audience Measurement data. FM players claim the data have helped them in having a better understanding of listenership in the markets they are present in and also give them a greater negotiating power with media buyers.
For Radio Mirchi, it will be the first hike in its ad rates in two years.
Meanwhile, Red FM said the “rationalisation of rates” reflects the changing dynamics of the market.
B Surendar, national sales head, Red FM, said, “A lot has changed in the markets over the past one year. The erstwhile perception-based market leaders have been toppled over and there is a greater accountability with the entry of RAM.”
Radio City is targeting 40-50% revenue growth on the back of hike in ad rates.
Apurva Purohit, chief executive officer, Radio City, said the fact that radio delivers, has been amply demonstrated by RAM. “Be it having the lowest cost per thousand, or having a high multiplier effect of 15% when a campaign is used in conjunction with television, or being 3/5th as effective as TV in raising awareness at 1/7th of the cost, radio’s power is truly one to reckon with.”
Radio Audience Measurement data is currently available for four cities — Mumbai, Delhi, Bangalore and Kolkata. It is believed that saturation in advertising on airwaves was also a key reason for the FM players announcing the ad rate hike.
Interestingly, the move comes at a time when advertisers in certain categories have decided to allot conservative budgets for advertising, which means dependency on retail advertisers will only increase.
Pradeep Hejmadi, senior VP, TAM Media Research, said the cost-effectiveness of radio advertising could help FM players get a wider reach. “It’s a fairly good move to hike rates now and I’m glad that the RAM data is being used,” he said.
Hejmadi, however, added that the effective rate hike would depend on the integrated packages offered by FM stations to advertisers. “It’s not about ad spots alone, radio stations also offer other advertising and brand integration opportunities such as RJ mentions (where radio jockeys talk about a particular product) and brand activations.”
FM radio stations have long maintained that their ad rates are underrated and deserve to be increased. Currently, radio commands about 3-4% of total advertising spend.
However, small budgets by advertisers and lack of credible data to back their listenership have, so far, discouraged them from increasing ad rates.
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