Radio players upbeat about AAAI & AROI pact; see fine-tuning of credit terms
The Advertising Agencies Association of India (AAAI) and Association of Radio Operators for India (AROI) recently signed a Memorandum of Understanding (MoU) to jointly promote advertising business on radio.
The MoU was signed in Mumbai on March 16, 2018, by the Presidents of the respective associations – Nakul Chopra for AAAI and Anurradha Prasad Shukla for AROI.
The aim is to set up a close working relationship between the Radio and Advertising Agencies Associations through joint committees and standard procedures, as well as to develop and implement a credit control and collection mechanism to ensure best credit terms and timely collections.
AAAI and IBF already have a joint credit control mechanism for television. With the signing of the MoU, a similar mechanism for radio advertising is being developed and the necessary groundwork for setting up joint committee, developing SOPs, etc., is already under process.
Radio players have hailed the move and see it as giving a greater growth impetus to radio advertising in the country. According to Anurradha Prasad Shukla, Chairperson & MD, B.A.G. Network and President, AROI, “AAAI members will get the best terms from radio, while AROI members will get timely payments.” She further added, “It is important and prudent to set up credit terms and even more important to ensure that terms are followed and payments are on time. A joint mechanism is the best way to ensure this.”
Calling it a great development for the radio industry, Abraham Thomas, CEO, Radio City, remarked, “Other mediums have better understanding with advertisings and media. Thus, AAAI and AROI have been working on it for quite some and have mutual understanding to improve the radio platform in terms of selection by advertisers. TV and print have something similar in place and this latest development shows that radio is at par with the other platforms.”
Echoing similar views, Rahul Namjoshi, Business Head, My FM, said that such a move was very much required. He further noted, “Joint collection mechanism between AAAI and broadcaster will definitely help in improving the relationship between broadcaster and agencies. Establishing credit control, including defined credit terms, billing process, and collection process, will bring more transparency and smooth functioning. All these collectively will help in better credit control and more ad spends.”
Prashant Panday, MD & CEO, Radio Mirchi, too, said that this positive development would protect the financial interests of radio broadcasters against erring clients. “Print and TV companies already have their arrangement in place; it’s good that radio also has it in place now,” he added.
He further remarked, “It will make the financial health of broadcasters stronger; to that extent they will be able to invest in better programming, better client solutions, etc. There is bound to be an indirect benefit on radio growth.”
“This MoU will help the industry in organising the business better to understand the pain points in collection and payment. AAAI and AROI have streamlined and created profit by which the entire system’s regulations will get better. So, in that sense it is more organised, business friendly and far more viable,” pointed out Thomas.
Adding further, he said, “I think the next step is a detailed SOP (Standard Operating Procedure) that is being worked on by the two bodies, which will set the guidelines for how to actually implement it.”
As far as the guidelines are concerned, the radio players are still going through the fine print. My FM’s Namjoshi informed, “We as broadcasters (radio) were part of the Credit Control Committee and gave our contributions wherever required.”
Thomas, too, stressed that there is need to go through the guidelines very carefully as they would help in managing the business better, thus helping all the parties, including advertisers, advertising agency, radio and broadcasters. “From an advertising point of view, there is optimal involvement required from all the parties,” he maintained.
Meanwhile, giving an ad agency’s perspective, Naresh Gupta, Managing Partner, Bang in the Middle, remarked, “This looks like an interesting experiment. There are many colleges across the country that sell advertising and communication courses and there are many students who seek those courses. This will help in students looking at advertising as an option for career, especially in cities beyond the metros.”
At the same time, Gupta added, “I am not sure if this will change how brands use radio to connect with consumers. Radio offers many advantages in localisation, targeting, language idioms and they will continue to work with how radio works.”
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