Despite securing over 75% of market share in listenership in the FM radio segment according to the government?s own listenership survey conducted in the metros, the commercial ad revenues of All India Radio (AIR) fell for the second consecutive year during 2008-09. The advertisement revenues of AIR, which currently runs a total of 232 (with 171 FM stations) stations in the country stand at Rs 208 crore for the year 2008-2009, down by 10% since the previous year (Rs 233 crore for 2007-08). This doesn?t compare favourably with the estimated Rs 632 crore-ad revenue earned by the 248 private FM radio stations in the year 2008, which grew around 24% since the year before and has grown about 73% since 2006. This is also striking as it runs contrary to the overall radio industry trend, which has registered a CAGR of around 19.7% in terms of ad-revenue in the period 2006-08 and has shown a year-on-year growth of around 13.5% to touch Rs 840 crore in the year 2008. The revenue share of AIR in the total radio ad pie has fallen to approximately 24% last year from the estimated 31% the year before and 39% in 2006.
Media experts feel that if AIR FM radio could go aggressive on marketing their brands, segment their customer base on the basis of demographic profile, it could monetise its potential better in terms of high ad revenue. Despite the fact that many of the AIR stations are located in economically unviable markets, both the AIR brands-Rainbow and Gold have garnered healthy listenership figures for the metros, which are considered relatively lucrative markets.
?In a way, it is unfair to compare the revenues of the public and the private radio broadcasters as the manner in which they charge for ad space is fundamentally different. While AIR charges ad rates according to fixed rate charts, the private broadcasters resort to flexible pricing through dynamic marketing strategies. However, considering that AIR FM stations are hugely popular even in metro cities, their leadership positions don?t reflect in their ad revenues, mainly because the public broadcasters don?t market themselves well, even in metro markets where they have a much higher earning potential,? said Sunil Kumar, managing director, Big River Radio, a radio consultancy service. He added that the public broadcaster anyway doesn?t operate with profit motive and operates in many uneconomic locations where private operators are reluctant to venture.
Rajesh Jain, head of information, communication and entertainment at KPMG, India also felt that once the public broadcaster spruces up its marketing strategies and works on factors like customer segmentation on the basis of demographic details, it has the potential to improve earnings. The size of the radio advertisement share in the total advertisement pie in India is still quite low at about 4% as against a global average of about 8%.
On the whole, the radio industry is expected to grow at a CAGR of 14.2 % over 2009-13 (compared to 19.7% over 2006-08) and reach a size of Rs 1,630 crore by 2013, projects KPMG.