New Delhi: Owing to growing ad fatigue among listeners, private radio stations across the country are revisiting their advertising volume and ad rates to expand listenership and increase revenue.
Some of the leading FM radio players have cut down on their commercial time from 15-18 minutes (on an average) per hour to approximately 10 minutes an hour to counter ad fatigue.
FM brand Radio Mirchi, owned by Entertainment Network India Ltd (ENIL) has capped commercial time on its stations at 10 minutes per hour, simultaneously increasing its ad rates by 5% in the markets where it has been present for long. In new markets such as Bengaluru, Kochi, Guwahati that it has entered recently, the company has attached a premium to the ad rates as compared to competition. Additionally, Radio Mirchi is also looking to bring down its peak season (festive season) advertising from 22 minutes per hour to 18 minutes this year.
“One constant complaint we got from listeners was that radio stations play too many ads. In order to stem this problem, we decided to cut the inventory down. I expect our average (peak season) to eventually come down to 10 minutes per hour," said Prashant Panday, chief executive at ENIL, the radio broadcasting unit of Bennett Coleman & Co. Ltd.
DB Corp Ltd-owned radio brand 94.3 My FM has announced a hike of 25% in its ad rates effective 1 April 2017 and is looking to cut down advertising time to 10 minutes per hour from the current 15. “Customer experience cannot be compromised which is why it is not possible to increase the inventory beyond a point. We need to ensure that listeners keep coming to radio. We have to reduce the inventory and raise the rates to strike a balance," said Harrish M. Bhatia, chief executive officer at My FM.
Currently, FM radio companies charge anywhere between Rs300 and Rs4,000 per 10 seconds in cities like Delhi and Mumbai (depending on the time and programme), while the ad rates in remote areas go as low as Rs25 per 10 seconds.
Taking a cue from Radio Mirchi and My FM, Sun group-owned 93.5 Red FM is also looking to hike ad rates on its network and go easy on ad volume during festive season. “We also have plans to increase our rate. We will be announcing it soon. That’s the only way forward for radio," said Nisha Narayanan, chief operating officer at Red FM, adding that advertising during festive season goes as high as 24 minutes per hour.
Media experts say that radio companies can afford to do so because of the increase in number of FM stations. “Radio companies were limited in terms of frequencies and that led to shortage of inventory. With phase 3 licensing, that pressure is somewhat reduced and now radio companies can spread inventory minutes across more channels," explained Ashish Pherwani, media and entertainment advisory leader at EY India.
Additionally, fewer commercials will lead to increased listenership, giving advertisers value for their money. “As a result of short ad breaks, listenership will actually increase. It’s a win-win for all—advertisers because the ad works more powerfully, listeners because they have a far better experience and us because our listenership will grow," said Panday of ENIL.
However, not everyone is sold on the idea of cutting back on commercial time. Reliance Broadcast Network Ltd-owned 92.7 Big FM and HT Media Ltd-owned FM brands Fever and Nasha have refrained from making changes.
“We have been very disciplined about our advertising time. For many years, we have maintained 20 minutes threshold on prime time. Everything else (non-prime time ad time) is even lower. We are not changing anything as of now but it’s good that the industry is looking at the cut for better customer experience," said Tarun Katial, chief executive of Reliance Broadcast Network Ltd (RBNL).
Harshad Jain, chief executive, radio and entertainment, HT Media, agreed: “We run extremely strict inventory norms on both stations. For us, there is hardly scope for change. However, tighter inventory check and control is an ongoing endeavour for both stations. For instance on Radio Nasha we have only 3 premium ad breaks in an hour, 2 ad breaks in the afternoon slot and we play maximum songs per hour. This has propelled Radio Nasha to become the destination station for listeners and ensured that when a listener tunes in to Radio Nasha, he doesn’t tune out," he said.
In November, RBNL sold a 49% stake in its radio business to Zee Media Corp. Ltd. The deal is subject to regulatory approvals. HT Media, the publisher of Mint, competes with other radio firms in several markets.
The radio industry is expected to record a compound annual growth rate of 16.1% between 2016 and 2021 and is projected to touch Rs4,780 crore by 2021, according to a report titled Media for the masses: The promise unfolds by consulting firm KPMG and lobby group Federation of Indian Chambers of Commerce and Industry. Currently, the industry is valued at Rs2,270 crore.