NEW DELHI: The number of advertisers on FM radio has grown from 1,715 in 2005 to 5,581 in the period January to October 2012, while the number of brands has grown from 1,295 to 8,133 during the same period.

Furthermore, the number of categories has risen from 285 in 2005 to 379 in January-October 2012 and the volume of hours has grown from 5,273 to 41,202 in the same period.

According to the Ernst and Young Report ?Poised for Growth: FM radio in India? prepared for the Confederation of Indian Industry, the industry?s revenues have been estimated at Rs 14.2 billion for 2012-13 and have been growing at a CAGR of 14 per cent over the last three years.

However, the rate of growth is slowing down due to limited expansion opportunities and the overall economic slowdown affecting all segments of media.

Retail Advertising on FM radio

Advertiser revenues comprise more than 85 to 90 per cent of the total revenue generated by FM Radio companies. Unlike in international radio markets, in which local retail advertisers contribute as much as 75 per cent of a station?s ad revenues, retail advertisers account for only 40 per cent of the total ad revenues of Indian radio companies. Regional radio networks generate the higher proportion of their revenues (averaging between 60 to 80 per cent of their total ad revenues) from retail advertisers.

In the past three years, retail advertising on FM radio has grown twice as fast as national advertising. Overall, there is a 10 to 20 per cent growth in the number of ad campaigns using radio, which is now an integral part of around 50 per cent of all ad campaigns ? rising to as much as 70 per cent of ad campaigns during festive seasons.

Revenue growth in FM radio is driven by launch of new stations in the A+ and A category towns, allowing for more programming variety to emerge and for new listeners to be acquired. At present there are only 4 to 9 stations available in these towns. In contrast there are many more TV channels, newspapers, magazines, outdoor sites and websites available.

Ad rev expansion

Launch of stations across more tier II and tier III cities, which enables radio companies to provide advertisers with a bouquet of channels that can support brand launches across states or regions as a substitute for print or regional TV, retention of key sales talent and client relationships, extensive focus on events and activations to give more practical solutions to advertisers and enable them to experience the effectiveness of radio, and implementation of an accurate nationwide measurement mechanism that will evaluate returns across FM stations can also help revenue growth.

The largest categories on radio include retail, real estate, auto, FMCG, education, and so forth. Of the total media spends on radio, real estate alone contributes 10 to 15 per cent. Telecom, TV channels, Retail, and handsets contribute 6 to 10 per cent while auto, FMCG, durables, and financial services contribute less than 5 per cent.

Radio companies are witnessing increasing inventory utilization ratios, despite a subdued advertising environment, on the back of sustained, albeit falling, GDP growth and reduced effective rates. Utilization of inventory in the radio industry grew by 10 per cent in 2012 over 2011 accounting for the bulk of the industry?s revenue growth. Average utilization of ad inventory across radio players ranged between 65 to 75 per cent. The 10 largest Indian cities recorded high inventory utilization at around 85 per cent in FY12. These calculations assume a 13-minutes-per-hour, 17-hour day from 7 a.m to midnight.

Ad rates

Ad rates have been growing, but are still nearly 25 per cent below their pre-slowdown peak levels of 2008. Currently, the ad rates for a ten second slot vary from Rs 100 to a few thousand rupees, depending on the radio station, city and time-band. Ad rates are the highest in Delhi, Mumbai and Bengaluru, where city-specific advertising can go up to Rs 2000 for a ten-second slot. Rates for pan India advertising can vary from Rs 4000 to Rs 10000 for a ten-second slot, and there is still significant room for them to grow.

The average ad rates of a large radio network were Rs 9,800 in FY 12 ? substantially lower than the peak average rates of Rs 13,000 to Rs 14,000 witnessed in 2008. The dip is also the result of changes in the ad inventory mix, with higher utilization in non-metro stations where ad rates are lower than in the metros.

Innovating on campaigns

Radio companies have been experimenting with the medium and innovating over the years, trying to incorporate interactive elements that engage their audiences better and increase advertisers? ROI (generally referred to as non-FCT sales). Furthermore, innovative campaigns command a premium over plain vanilla ad-spot rates. Non-FCT sales can contribute up to 20 per cent of a radio company?s total revenue today.

Live and telecasted events, primarily centered round music awards, sports events, youth events, and so forth provide alternate sources of revenues, as do activations to help advertisers connect directly with their target audiences to demonstrate products, generate leads, create awareness, induce product trials, and so forth. Customer promotions through internet or mobile phone-based contests, ticketing agents for concerts and plays, mobile radio, which enables listeners to access niche content on their mobile phones, Internet radio, and international revenues also provide alternate sources of revenue.

Activations

Activations are a growing source of revenue for radio companies. Entertainment Networks (India) Ltd reports that activation revenues currently contribute around 17 per cent of its overall revenues, and that it seeks to grow this segment in coming years.

Activations have become an integral part of the revenue mix of radio stations, and account for five to ten per cent of the revenues of large companies. Moreover, since radio is a local medium and activation teams have a good understanding of the dynamics of a town, activations generally create a greater buzz (with on-air promotions) than other media.

FM radio stations have introduced internet radio services, which help them to reach a targeted audience with a taste for niche genres. Radio Mirchi and Radio City operate four and three online radio stations respectively that cater to diverse tastes, including modern Bollywood and retro Bollywood songs as well as club mix and international music in their offerings.

FM radio stations are also looking to generate revenues by selling programming software of certain popular programs to international radio players. Moreover, Radio Mirchi runs radio stations outside India as well. ENIL assists international radio companies to create programmes and stationality for stations targeted at non-resident Indians.

MUMBAI: Production company Participant Media revealed its plans to start its own cable channel by combining the assets of two channels, The Documentary Channel and Halogen TV.

Participant Media is a production house that has churned out films like ?An Inconvenient Truth,? ?Food, Inc.? and ?Waiting for ?Superman?.

The company said it was aiming to start the yet-to-be-named channel in the summer of 2013. The channel reins will be handled by Evan Shapiro who was earlier president at IFC and the Sundance Channel. He joined Participant Media last spring.

On launching, the new channel will reach 40 million homes owing to its recent channel acquisitions. The company said on Monday that it had completed a deal to acquire The Documentary Channel, which is available in about 25 million homes, and was working on a deal to take over Halogen TV?s channel position in about 15 million homes.

Participant Media founder Jeff Skoll was quoted in the New York Times, ?The goal of Participant is to tell stories that serve as catalysts for social change. With our television channel, we can bring those stories into the homes of our viewers every day.?

The content of the channel could include documentary films made by Participant Media and other producers. The company also revealed that the channel will have original programming.

Shapiro informed that the channel will target viewers under the age of 35 that cable and satellite distributors are ?most at risk of losing.? Participant Media might try to get the channel picked up by pitching it as a way for distributors to retain young subscribers.

NEW DELHI: In a move that is bound to raise hackles of the television and ad fraternity, the government Thursday decided to broaden the scope of Indecent Representation of Women (Prohibition) Act, 1986 to cover satellite broadcasters and internet medium.

The amendment approved by the government seeks to ensure that more effective protection is provided against indecent representation of women by covering newer forms of communication including internet, multimedia messaging beyond the print and audio-visual media.

This, the government feels, will aid in addressing the problem of increased objectification of women, thereby ensuring dignity of women.

"The existing Act covers print media in its present form however over the year‘s technological revolution has resulted in the development of newer forms of mediums such as internet and satellite based communication, multi-media messaging, and cable television among others," the government said.

"It has, therefore, become imperative to widen the scope of the law so as to cover such forms of media, on one hand, and to strengthen the existing safeguards to prevent indecent representation of women through any such form," it added.

According to the amended act, penalties are to be enhanced to a maximum of three years of imprisonment and fine of between Rs 50,000 to Rs 100,000 for first conviction, and imprisonment of not less than two years, but which may extend to seven years, and a fine between Rs 100,000 to Rs 500,000 for second conviction.

Police officers of the rank of inspectors will be authorized to carry out search and seizure, in addition to state and central government officers authorized by the respective government.

The IRWA Act focuses on indecent representation of women and brings under its ambit references that are derogatory to the dignity of women. The IRWA 1986 was enacted with the specific objective of prohibiting the indecent representation of women through advertisement, publication, writing, and painting or in any other manner.