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PMMAO 2010 Review: Radio – Skipping a beat

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The radio medium did not play a happy song in 2009. Pegged to be a lukewarm year for the audio medium, the year turned out to be much quieter than expected. The medium earned a total advertising revenue of Rs 681 crore in 2009, up from Rs 662 crore in 2008.

Of the total ad pie Rs 18,670 for 2009, radio managed to hold on to its ground in terms of its share. Staying at number four on the list of players commanding the advertising revenue, radio pocketed 3.6 per cent of the total ad revenue.

However, the diminished growth rate that the medium registered, displayed that radio even while being a measurable medium to a certain extent wasn’t unaffected by the weak economic sentiments. The medium, which was expected to grow at eight per cent in 2009, was able to achieve only a three per cent annual growth. That is a poor performance, considering that in 2008, the medium clocked a 38 per cent growth.

One big reason that saved the day for radio, players feel, is that the medium proved to be a good choice for marketers looking for a better return on marketing investment as it offered a far better reach because of its localised programming and reach.

The fact that radio allows for far better reach and localisation helped it maintain the growth rate though at a miniscule level. Tarun Katial, CEO, Big FM says, “The year can be marked for its constant innovation and consolidation.  Though in 2009, the economic slowdown de-accelerated the growth of the entire media industry, radio emerged to be the least affected by this slowdown, making it a key medium for the advertising fraternity.”

Another reason that experts feel worked well in favour of the medium, is that radio moved on from being a vanilla medium selling ad spots to a medium providing media solutions to clients through tailor-made advertising and branding solutions.
The fledgling radio industry in India is on the verge of yet another surge of expansion, thanks to the third round of licensing on the anvil. It will be adding 700 frequencies across 237 cities, to the existing over 250 stations across 90 cities.

A glance at how the industry fared in 2009 shows that the radio industry lacked any major developments in the past year, with the only exceptions being Red FM and Big FM. Red widened its network through consolidation with as many as 50 stations under its belt. Big too expanded its network through agreements with Radio Dhamaal and Rangila FM; and an exclusive content tie-up with BBC Worldwide.

While significant issues like opening up of more content options on the radio and allowing content other than music to be aired on radio still remained unresolved; music royalty was another major issue that hogged the limelight.
Engagement with audiences was also one of the themes that brightened the year for    the medium. From fan clubs on the internet and cities to ‘Facebook on radio’ to outdoor meets to social causes, radio stations have gone out of their way to interact and engage their audiences. Social media or social networking sites too were seen experimenting with ways to engage with the radio audiences. This all will see real growth and traction, once, online streaming of stations is allowed.

Democratisation

The fact that 2009 was an election year proved to be a blessing for the medium is a unanimous statement from all the players. Apart, the medium proved itself to be a cost effective and versatile medium with new sponsorship models, better integrations, better reach and brand loyalty. The year 2009, witnessed newer categories of advertisers experimenting with the medium for the first time.

S Keerthivasan, Business Head, Fever FM, says, “General elections boosted the ad spends on radio, wherein, radio played a key part in the campaigns of political parties. Some players from new categories like airlines also spent a great deal in the last fiscal.”

Education, FMCG, television, automobiles, agriculture, real estate, consumer durables, retail and government sectors were some other categories that favoured the medium.

Localisation saves the day

Marketers analysed the ROI and high reach of radio when their budgets were curtailed, resulting in a number of first time advertisers coming in, not just from the metros, but also from the tier II and III cities.

Prashant Panday, CEO, Radio Mirchi, feels that while it is true that 2009 did not spell a great relief for radio in terms of hardcore numbers, but the fact that marketers – because of forced ROI pressures – tried the medium and got the bang for the buck is a positive sign to be taken from the year. Highlighting the fact that listernership showed positive signs, Panday says, “In spite of all its troubles, the radio industry has retained its grip on huge audiences. This helps media planners and advertisers – who want to be sure of where their money is going. It also indicates a maturing radio industry in India.”

Anuj Singh, Head – Marketing, Red FM touches upon radio’s USP in these tough times, “Radio is one of the few mass media, which appeals to direct marketers. Since radio is all about a personal connect with local appeal, advertisers have been able to use this medium to add the missing X factor in their campaigns, i.e. a believable and real consumer connect.”

Apart from this, expansion of different radio brands in Tier-II cities and towns also helped the medium gain some pace. Panday explains, “It’s a fact that a lot of India’s economic growth is now happening in the smaller towns – and going forward, this will be the key theme of radio in the smaller markets. Further, in most small markets, radio is relatively new – hence, the growth rates have been higher as it’s still in its early cycle of growth.”

Big FM’s Katial shares Panday’s sentiments. “Recession and economic meltdown opened the Pandora’s box for spenders, wherein, radio emerged as the best solution provider, with excellent ROI and mass reach.  This led to many Tier-II and Tier-III cities and advertisers opening up to radio as an advertising medium,” he says.

Heavy discounting

Heavy discounting being the flavour of the year, radio too couldn’t save itself from the discount onslaught and saw market leaders offering airtime at throwaway prices. According to Vineet Singh Hukmani, CEO, Radio One, what hurt the industry most was the fact that at the beginning of the year, market leaders went for huge discounts leaving no other options for the smaller players but to follow suit. “The spots were offered for extremely low prices, which is now resulting in lower advertising
revenues despite the fact that ad volume showed a healthy growth.” says Hukmani.

Anuj Singh, Head – Marketing, Red FM agrees that discounts did a lot of damage. “The highlight last year was that growth in advertising volumes was not matched by growth in
revenues because of rampant discounting.” However, Singh maintains that the hit to the radio industry was possibly lesser than other mediums. Mirchi’s Panday too agrees on this. “There’s been an erosion of pricing by 20-22 per cent for Mirchi. I think it’s been steeper for most other players,” Panday says.

Keerthivasan of Fever FM feels that the radio as a medium did do well but as the entire industry was in a discounting mood, efficient pricing was the key competitive edge that radio had to leverage while converting new advertisers. “The trend during the recession period was that the radio industry helped the advertisers by reducing ad pricing and offering more value additions,” he says.

Staying afloat

But the players are taking a heart out of the fact that radio managed to stay afloat in terms of holding onto its audiences and also by getting more advertisers on board. Harrish M Bhatia, COO, My FM, shares, “Radio witnessed a healthy growth rate in terms of numbers as well as taste of listeners. We managed to avoid the negative impact of slowdown by focusing our energies into marketing the benefits of radio as a flexible and cost-effective medium for the advertisers.”

Panday also feels that the sheer fact that radio held onto listernership has been one of the key takeaways for the radio medium in 2009. “Good news is that volumes have surged. Why would volumes surge if advertisers did not get results from radio? So that’s really good. Going forward, these high volumes of 2009 will stay and pricing will improve, improving the revenues of radio again.” Panday opines.

As radio enters a crucial phase in 2010, with the industry trying to resurrect and expand on the one hand, and grappling with functional issues on another, it would be interesting to see how content differentiation and increased competition
facilitates growth of the medium in coming times.

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Neeta Nair

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