According to the Telecom Regulatory Authority of India, the advertising revenue of 388 private radio channels in the country decreased to Rs 428.45 crore in Q1FY25 (April-June) as compared to Rs 491.98 crore in the previous quarter (Q4FY24).
This was when the Ministry of Information and Broadcasting (MIB) updated rates for advertising on private FM radio stations by 43% in the base rate- from Rs 52 to Rs 74 per ten seconds.
Experts tell Storyboard18 that with the rapid growth of digital and OTT platforms along with cheap data packs, the radio sector is being impacted like any other medium– or even more since it is free-to-air and heavily dependent on advertising revenues.
Q1 has always been a bit slow for the radio sector, but this year, according to Nisha Narayanan, COO & Director, Red FM and Magic FM, it felt even more prominent, especially with the general elections during this period.
“The impact on the radio industry on the revenue front has been noticeable due to the macroeconomic factors influencing us. What makes it challenging is that many in the industry are dropping rates and offering rebates just to stay competitive. In addition, to the fragmentation of ad budgets and the rising costs that affect both our operations and expansion plans,” she shares.
According to PWC estimates, radio advertising revenues will grow by a compound growth rate of a mere 2.1% between 2023-2028.
It is to be noted that while advertising volumes increased by 19% in 2023 (as compared to 2022), the ad rates remained below the 2019 levels.
Since the past two years, the current ad rates on radio have remained constant, and unfortunately, they are historically low, shares Narayanan.
Stations in some cities are even airing up to 40 minutes of ads per hour just to meet revenue targets.
According to Sunil Kumaran, Chief Operating Officer, BIG FM, overall radio has shown a modest growth in the first half of the year for most of the larger players.
In the second quarter, the growth was subdued due to a reduction in government spending post-election.
Although he is hopeful that radio remains a highly relevant local medium for most advertisers.
“As the retail sector continues to grow, the allied categories have also shown a strong performance, benefiting the industry. Additionally, many players are shifting their focus towards on-ground activations and digital revenues,” he adds.
As advertisers are moving towards greater accountability for their media investments, radio’s unique strength in activating local markets has consistently delivered impactful business outcomes.
BIG FM’s current ad rates have remained stable, enabling it to secure the right value for the inventory. Its ad volumes are now more than 40% higher than pre-COVID levels.
Subdued Festive Push
Even during Diwali, a time typically known for high demand and increased ad spending, most radio players are focusing on increasing ad inventory instead of pushing for a rate hike, remarks Narayanan.
This is primarily driven by a fear of losing business to competitors. What started last year as a short-term solution has now become a forced strategy, where the pressure to retain advertisers has led to an excess of ad inventory.
“This compromise comes at a cost, as it affects the listener experience. While this might secure short-term revenue, it raises concerns about the long-term sustainability of the medium. It’s a difficult balance between business survival and preserving what makes radio special for listeners,” she explains.
This year, the growth in radio’s adex doesn’t look very promising, according to her.
Elections haven’t delivered as expected, real estate has been quiet in the first half, and the education sector has remained mostly flat. Even the government’s advertising picked up late in the second quarter. With all these factors, the outlook for significant growth seems limited.
However, she still holds on to some hope.
“If we can manage to reach 8-10% growth this year, it would be a positive outcome. The festive season and the second half of the year are where we are placing our hopes, but it’s clear that this year has been tough for the industry overall.”
Kumaran expects the radio adex to grow by around 10- 12% compared to last year. For the festive season, in particular, the growth is projected to be between 12-15%, driven by the increased demand for high-impact campaigns during this period.
The company, for accelerated growth, is embracing new-age technologies like AI-driven content recommendations, advanced data analytics and social media amplification to boost engagement.
It is also focusing on digital transformation by extending its content across platforms, ensuring that it is not just a radio network but a comprehensive content and community engagement platform.