MUMBAI: A couple of weeks ago, Red FM and Suryan FM increased their ad rates by 35 per cent. Keeping that in mind, Red FM national marketing head, Rajat Uppal, said that the price hike would be beneficial not only to the station, but also for the industry as a whole.

Defending the price hike which followed soon after the Phase III auction, Uppal said, "We are not looking at this as benefit only for us, but are also asking for a due share for FM radio – it has to go beyond 4-5 per cent. Even if all the players decide to increase the rates, the change will be very small in comparison to the year-on-year changes for other media."

He pointed at television, social media and other fast growing mediums that have witnessed unprecedented increase in prices.

With a successful auction, many radio players are looking at growth that will bring radio into a new light. To that Uppal asserted that the "radio industry will grow as there will be aggression to reach out to new advertisers, new players will make the advertiser also spend more on radio and most importantly the share of voice within media will be increasing."

Uppal simplified the complexity of radio business by saying if the rate correction does not take place now it would mean that players would once again be sitting around boards to plan expansions and would seek more funds for expansion. He explained that today, radio as a medium is “growing at a Compounded Annual Growth Rate (CAGR) of 12-14 per cent and attracts a large number of advertisers as consumption of radio is on an overall high. The demand and supply scenario has a huge imbalance with demand way beyond the inventory we can play on Red FM."

Suryan FM has been a dominant player in its region, and has been garnering over 40-60 per cent volumes in most of the cities, claimed Uppal. "All Tamil Nadu and Pondicherry stations of Suryan along with key markets of South like Bangalore, Hyderabad, Trivandrum, Cochin, Mysore, Vizag etc are already over booked. Hence, there is a revised rate structure for the entire network," he added.

Uppal highlighted that inventories across major metros and big cities have been seeing the festive season-kind of demand this year from May-June onwards, which is what brought about the revision. He added, "Rates for smaller cities have been stagnant for almost two- three years, and with the changing time, penetration of radio in these small markets and development of local retail markets have pushed us in a corner where the rate hike was the only way out. We all know that it is a commodity with limited inventory, and to achieve our business goals, as well as rationalise client requirements, we are taking this step. Now that the economy is also looking at growth northwards, we feel that this rate correction will be absorbed well."

With respect to the Phase III auction, he said that bidding prices have gone over the roof in cities like Delhi, Bangalore, Mumbai, Jaipur, Ahmedabad, Pune, Varanasi, Guwahati and Bhubaneswar, among others. "Looks like the scarcity allowed the Government to earn in some of these cities more than bigger cities like Hyderabad, Kanpur, Lucknow, Chandigarh etc," Uppal added.