FM radio operators need to bring down advertising inventory to at least 10-12 minutes for more listener-ship and premium, say industry players.
"The increasing ad inventory has only had an adverse impact. The biggest harm that we have done to the medium is ads. We will look to trim it as it could drive more listener-ship and premium," said Entertainment Network India (ENIL) Managing Director and Chief Executive Officer Prashant Panday at the FICCI Frames here today.
ENIL, the radio arm of Bennett, Coleman & Co which operates Radio Mirchi, is estimated to account for 35 percent of the overall radio advertising spend in the country and is looking at cutting its ad inventory.
"In all of the new stations that we have launched, whether it is the second frequency in Bengaluru, Hyderabad, or new markets in Chandigarh, Kochi or Guwahati, we have a 10 minute cap. We had an advertising cap of 22 minutes fifteen days to Diwali. We have decided to reduce it back to 18 this year," he said.
Noting that such a move could impact its revenues, he said, "We will lose revenue, but we have other ways to report growth. We will cut it down to 18 this year, 15 next year and 12 the year after that. I am sure all of us would be happy to pull it back."
Every hour of programme has some advertising inventory that needs to be sold in order to earn revenue and in case of certain stations it is estimated to be nearly 30 minutes.
"Earlier 3 lakh seconds a month was the number (ad inventory), now it has gone to 10 lakh seconds a month in some cities and some stations, which is equivalent to 35-40 minutes of prime time advertising," Panday said.
Reliance Broadcast Network CEO Tarun Katial said people don't tune into a radio station to listen to ads, so it is necessary to control advertising inventory.
"We don't go beyond 20 minutes. Radio in metros is still
very under-leveraged for the kind of reach it delivers on a weekly basis. That kind of reach you cannot get at that price in any medium. That is why the volumes on radio is so high and there is serious headroom to grow," he said.
Music Broadcast CEO Abraham Thomas said, "The best way to increase pricing is restrict supply. It is not about restricting just in the newer stations, it is about restricting supply across. In the new stations it can be 8-10 minutes."
According to the Pitch Madison Advertising report, Radio is expected to grow at 15 per cent this year to take the overall ad spends to over Rs 2,000 crore.
On the threat from emerging medium like digital, Gautam Radia, founder and CEO of Millennium Broadcast which operates Hit FM, said, "The industry has grown 10 times in last 10-11 years. Radio has its tangible advantages and I don't think digital can take away all those advantages.
