The gross base rate for relaying ads of state-run-agencies on privately-owned radio stations were increased to 43 per cent — Rs. 74 per 10 seconds during 2023 Diwali. The government intends to adjust city-wise rates for advertisements. The increase did help to some extent radio advertising. However, radio is facing severe competition from audio OTT channels or streaming services. E-commerce sites or telecom operators are offering discounted music streaming services. The data packages are very economical. There are apps such as Jio Saavan, Spotify, Hungama Music, Gaana and Amazon Prime Music.

As a result of this, there is plateauing of listenership in metros. The share of radio advertising (4 per cent in 2019) has fallen. Ad volumes have increased by 19 per cent in 2023 (over 2022). The ad rates have remained below the 2019 levels.

To meet revenue targets, some stations air up to 40 minutes of ads per hour.

Radio companies have started diversifying into digital platforms. They are also collaborating with streaming platforms to enhance reach.

Prior to digital onslaught, radio companies had shelled out heavy license fees in late twenties. There was high upfront cost for the air waves (frequency). In addition, there is annual fee. It was the higher of 4 per cent gross revenue or 2.5 per cent of the non-refundable one-time entry fee (NOTEF). This affected broadcasters bottom lines.

Cost recovery is problematic for the broadcasters. It has abated the enthusiasm of the operators for the next round of auctions for 234 cities. Broadcasters want the base price to be scrapped. It is too high for some of the smaller markets.

All smart phones must be FM-enabled to have wider distribution.

All expenditure and little revenue from ads have left the broadcasters with little cash to invest in content. Much of the content is made of music only. There are some talk shows. Music owners and operators negotiate a revenue share agreement. There is not enough left for original content programming.

Broadcasters should look at events, brand activities, international music streaming, influencer marketing contests, and brand placements.

There should be a healthy ratio of revenue between non-FCT and FCT (free commercial time). Today FCT percentage is much higher. It could be brought down to 65 per cent.

There should be robust guidelines for this sector. The measurement techniques must improve.

It is estimated that radio advertising could reach Rs.2000 crore growing at a CAGR of 2.1 per cent by 2026.