A substantial chunk of ad revenues that accrue to FM radio comes from non-ad spots. The unconventional forms of advertising, which includes product mention in the show, content integration, show sponsorship, on-ground interactive sessions with target group, accounts for 20-35% of total ad revenues in various radio stations.
According to most FM radio players, this segment of advertising is growing at a much faster rate than the growth rate of conventional ad revenues. Media planners also think that FM radio is gradually emerging as much more flexible and innovative in advertising than its counterpart television. ?While planning ad space for brands and products in FM radio, we explore around 40% of placement in innovative non-ad spot category,? said Nandini Diaz, COO, Lodestar Universal.
In Radio City, the share of unconventional ad revenue is around 20% currently. According to Pallavi Burman, national sales head, Fever 104 FM, ?Radio as a medium is more interactive and flexible vis-?-vis other mediums. In Fever 104 we have experimented with concepts like full-day roadblock, wherein only a particular advertiser is given exclusive ad space to deliver the brand message in the interactive game shows. Currently, the conventional space selling continues to dominate the revenue pie. But the unconventional revenue pie is growing by the day. Last year alone, 20% of our revenues came through innovative customised propositions?.
The Indian radio advertising industry is projected to grow by 24% over the next five years, touching Rs 1,800 crore in 2012 from Rs 620 crore in 2007. However, in terms of share in the total media ad pie, radio advertising will only increase its share from 3.2% in 2007 to 4.0% in the next five years. That is partially because of dismally low ad rates in tier II cities, where a 10 seconds spot could cost as low as Rs 400, almost half the cost in metros. The General Entertainment Channels, a comparable platform on TV, charge in the range of Rs 2,500 to 5 lakh/10 seconds. However, according to Apoorva Purohit, radio ad revenue which has doubled in last three years from Rs 320 crore in 2005 to around Rs 620 crore at present, will grow faster with radio increasing its geographical footprint and innovating ways to monetise. Purohit added that if the multiple networking becomes a reality, ad revenues in radio could go up remarkably. Business head of MY FM, Harish Bhatia also felt that with increasing number of stations, penetration into multiple target groups across geographies, the role of radio ads will be better recognised and will impart higher bargaining power to the FM radio players.