2012 has really been a mixed bag for the radio industry. While we wait for the regulatory policy to come which indeed has been a disappointment, that has got delayed yet again, the industry is doing best it can in trying to increase its margins, look at top line growths in various different aspects. Some of the things that Radio City has done and the industry is doing is set up alternate businesses, for. eg. the activations business which is slowly and surely growing for all of us where are able to Radio in conjunction with on-ground to increase revenues for us and provide solutions to our clients.
We are also looking at growth in digital and on internet radio where because of regulatory constraints we are not able to offer multiple genres on terrestrial radio. So, we are trying to shift that focus onto internet and Radio City for e.g has set up niche streams on internet radio on planetradiocity.com. For eg. devotional band or a independent artist band and that is one way in which we are looking at growing listenership and revenue for ourselves.
The other challenge for the industry really has been that given the subdued economic environment, we have not been able to increase our ER’s dramatically. This year was a year of consolidation where all of us were looking at growing ER’s specifically in the markets where inventory has been going full for the last two years. For eg. markets like Mumbai, Delhi, Bangalore, Lucknow, Ahmedabad, Pune etc. So while we have been able to increase ER’s, there have been fairly marginal in that sense. So, growth of ER has been to the extent of 8-10 %. On the back of favorable economic circumstances, we expect that ER growth to go up but till that happens again for a lot of us our top line growth is really coming from the inventory fill in the smaller markets where clearly we are looking at national advertisers to increase the amount of utilization onto the second tier markets like Surat, Baroda, Ahmednagar, Coimbatore etc.
So, specifically for Radio City, our growth really has come from clients who have increased their spend in radio by taking more markets. So, if they were spending their advertising rupee on 4-5 metros, today are using 7-10 markets. Indeed that is one silver lining for the industry and for Radio City specifically that the advertisers who believe in radio are increasing the spends. So the advertisers, within the category who spends more on radio are spending close to 8% of their advertising dollar on radio by using more and more markets, by using innovative solutions, by using activations, plus radio, plus digital in combination. So that clearly is silver lining!
I think the fact that radio is remaining a 4% share of the advertising pie is not really a reflection how the media planner or the advertisers thinking about radio today. There is clearly heightened interest in the medium and they do want to spend more. They are however restricted by not the lack of their interest but the fact that the medium itself has not been able to show growth because of regulatory environment. It is still stuck in a position where we are available as an industry only in 81 markets. The moment that expands, the policy opens out and expands from 80 markets to 300 markets.
Certainly over the next two three years, I see the medium expand to go from 4% to 8% but however for that the larger regulatory environment has to change.
