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Radio One hikes ad rates on the back of differentiation

MUMBAI: Commanding premium value due to its differentiated formats across cities, Radio One will hike its advertising rates by 20 per cent with effect from 1 February.

A joint venture between Next Radio Ltd and BBC Worldwide, the network’s hike comes due to higher investments in programming and digital engagement which, according to the player, have resulted in an exponential increase in audience engagement across markets.

Vineet Singh HukmaniRadio One MD and CEO Vineet Singh Hukmani said, “In the last two years, our ‘product first’ approach has ensured unparalled engagement of our listeners and therefore huge value to our advertisers. It is imperative to continue on this path of product upgradation.”

Pricing strategies on radio are mainly based on the market positioning, and with Radio One positioned differently across its seven markets, its strategy is to command a premium rate. This is due to an increase in cost where the network has to build on-air content complementing simulcast digital conversations with its audience.

“Advertisers gain most as a result of this continuous upgradation as they can get access to supremely engaged audiences,” Hukmani added.

PM BalakrishnanPresenting his viewpoint, Allied Media COO PM Balakrishnan stated, “English does claim a premium in terms of rates, so Radio One’s English stations can command a premium price. It will now be seen if they can extend a premium value through relevant brands and campaigns.”

Radio One relies very strongly on spoken content, where music comprised around 60 per cent of its content which is packaged differently based on the needs of the audience. This content also ensures a returning audience which works in its favour, claims Balakrishnan.

“They feel they can create a value perception, and since there is a returning audience since English music playing stations are less, brands are also willing to pay more,” he added.

Hukmani highlighted that while most large networks have started to create only ‘commodity pricing’ based on ‘empty’ reach and package many stations free, their prices and profits and, therefore, impact are being driven downwards. This happens in the absence of proper targeting and product upgradation is absent.

“Our strategy has always been different. 30 per cent of our advertisers do not advertise on any other radio station. More than 25 per cent of our revenue comes from highly targeted ‘high engagement’ on air and digital conversation properties. We have stopped doing on-ground activations as our prowess and competitive edge is in the on-air product,” Hukmani mentioned.

Although the network is showing confidence to demand a premium value from its advertisers, such strategies do not always work stated Balakrishnan. Pricing will become the base for discussion, but if brands are willing to pay the price or no will be the network’s challenge.

Radio One has been undertaking several initiatives to increase engagement which included an online rebroadcast of its international stations in Delhi and Mumbai.

The network runs international stations in Delhi and Mumbai, Bollywood stations in Bangalore and Pune, Hindi retro stations in Ahmedabad and Kolkata and a complete request station in Chennai.

Hukmani said, “In the last one year we have begun to offer noticeable engagement in the online streaming audience and continuous upgradation of this service is the need of the hour and we are willing to make this investment for our advertisers.”

For the first half of this fiscal, Radio One has reported a revenue of Rs 28.07 crore ( Rs 280.7 million), up 19 per cent over the year-ago period. The company’s operating profit stood at Rs 1.85 crore ( Rs 18.5 million) as against operating loss of Rs 1.23 ( Rs 12.3 million) in the same period last year.

2014 for the radio industry has commenced with an ad hike by one player and the segment is expected to grow by 5-7 per cent with most stations holding their topline well with new advertisers coming in, predicts Balakrishnan.