The high point of 2011 for the radio industry was the announcement by the government of the Phase III policy. While, this will determine the future of radio to a great extent, the year 2011 wasn’t a year of any great shakeups. Against our prediction of a growth of 15 per cent to clock a revenue of Rs 1,018 crore, the medium could grow only by two per cent to get a revenue of Rs 903 crore only.
Radio players associate the bleak growth to lack of innovation and understanding of the medium.
Ashit Kukian, President and COO, Radio City, says, “The challenge is, that most of the agencies, be it creative or media buying agencies, haven’t really invested enough mindshare to innovatively use the medium. The medium is commoditised and this is hampering the growth.”
Meanwhile, owing to the growth of digital, radio lost its share in the entire media pie from 3.7 per cent in 2010 to 3.5 per cent. Considering that the base is low, even a 0.2 per cent loss is huge.
According to Apurva Purohit, CEO, Radio City, the ‘growth’ phenomenon, in the last few years, “has become increasingly contextual and complicated.” “Single digit growth is great, but if you grow in double digits, you are an exception and do not define what is happening to the rest of the industry,” she says.
Do we understand radio?
While, the functional benefit of the medium reaching the masses remains the core, the lack of proper implementation of ideas seems to be hindering the growth of the medium. Advertisers need to take the medium more seriously and explore its true potential to build their brands. Vineet Singh Hukmani, MD, Radio One says, “Two things marketers complain about are: one, all radio stations sound the same; and two, all of them are catering to lower SECs and therefore sound dumb to an educated audience.”
Programming content and innovative promotion concepts must seamlessly integrate the advertiser’s brand without compromising on the entertainment quotient. The communication must remain relevant and engaging. Experts feel that somewhere, this understanding is lacking amongst marketers and as well as radio operators. They feel that marketers should insist on innovations and till everyone understands clearly how to use radio effectively, the role of evangelising the medium will remain with the radio operators. Monica Patnaik, Joint Managing Director, Eastern Media Ltd (Radio Choklate) says, “Lack of knowledge of a studio set-up, addressing transmission problems, etc are key challenges for the regional players.”
Both experts that marketers realise that using radio for just ‘carpet bombing reach’ across SECs is not resulting in proper ROI, as one cannot really ‘engage a particular TG’ . Hukmani feels that ‘print, TV and internet are able to engage a profiled audience by using English print, TV etc’. He adds, “Media agencies too tend to be helpless and offer simplistic reach solutions with radio and you can’t blame them as radio is not offering any differentiation currently.”
How innovative can you get?
While radio operators agree that there is much more scope for ideation, they also feel that the industry is experimenting and innovating with the medium, and it is slowly but surely, detaching itself from the ‘dhaniya’ image of being an add on to the media mix. Hukmani says, “Innovation contributes to over 35 per cent of our revenues. Every campaign we have done has an innovation element that engages audiences better. Some of them being for Visa, Tata Nano, HDFC and the like.”
Meanwhile, as according to Prashant Panday, CEO Radio Mirchi, innovations bring premiums and contribute about 20 per cent to the company’s revenue. “The premiums vary from 10-30 per cent over normal FCT rates – but it depends very much on the specific creative developed,” he adds.
Players like Radio Mirchi and Radio City have in-house creative services teams that provide innovative solutions to clients.
Media as a saviour?
FMCG and media are the two major brand categories that advertise on radio. Apart from these, services is a growing industry that advertises on radio. At the local level, it’s the retail sector that advertises on radio in a big way. Radio uses the human voice in real time providing active sampling opportunities closer to the time of actual purchase for faster conversions, hence delivering results for these categories. However, the real estate sector, which has been witnessing a negative trend, has not picked up well on radio. According to Purohit of Radio City, “The number of advertisers on the medium increased from approximately 9,000 to around 12,000. Nearly 3,000 new advertisers tried the medium in this year.”
Meanwhile, Harrish M Bhatia, CEO, My FM, feels that slowdown has not affected the advertising spends on radio in Tier-II & III cities. “My FM, on account of its strong retail focus and retail advertising market share, grew at a healthy rate of 22 per cent in Q3,” he says.
Until last year the graph of radio for financial product advertising was getting bigger and better. Financial brands that are sticking to radio, are mostly using it for tactical reasons. Shefali Chhachhi, Director Marketing, Max Bupa says, “Radio is a very flexible medium which is very effective for direct and tactical messaging. It is a cost efficient medium for advertising in smaller towns. At Max Bupa, we follow an integrated marketing approach.” One reason for financial services using this medium is that it reaches out to the service class, the salaried people, and basically to people who would look forward to buying financial products.
Telecom is another category that managed to maintain its share in the radio advertising pie. However, this year it has been observed that local advertisers are the ones that have relied on the medium in a big way. There is a decline in the national advertiser categories, which have been the traditional spenders on radio. A reason that is being attributed is the advent of newer and exciting opportunities like the internet.
Bhatia from My FM, however, begs to differ about the negative impact of internet on radio. “Internet penetration in India is still quite low. Moreover, power shortage and bandwidth are still big hindrances in smaller markets leading to lower usage of internet medium. On the other hand, with an increased FM consumption on mobile handsets, the reach of radio has increased further.”
Local vs national
However he agrees that while global showdown may have impacted the spends of national players on radio, retail marketers still are looking at radio as a viable option.
On the other hand, Radio Mirchi has a different tale to tell. For Mirchi, which commands a 35 per cent share in the private FM business, the percentage of local players is 45 per cent and that of national players is 55 per cent.
Stations with large networks and a strong presence in metros and big towns state that national advertisers have a larger share in their revenue pie. This difference in the ratio may be because of the fact that local or retail advertisers buy ad spots on stations in a particular geographical area, hence, a local station of that area may appeal more to them. In comparison, national advertisers largely buy on the basis of the network of the radio broadcaster. Hence, stations spread across the country are able to lure more national advertisers.
Using radio as a medium for advertising is not just limited to on-air announcements and RJ mentions. It stretches beyond just that and enters the domain of activations as well. Panday from Mirchi says, “Activations are different from radio advertising, but have become an integral part of a radio station’s revenue mix. For Mirchi, as much as 12-15 per cent of our revenues come from activations.”
Kukian further gives insight into why activations are effective. “Radio is the one medium that is local. It has teams that understand the dynamics of the town, and the activations teams of a radio station therefore are far more knowledgeable and capable of pulling off on-ground activations. When this activation is amplified adequately on-air, they create a huge buzz,” he says. As more advertisers look for an integrated offering for all their communications, activations will only play a larger role in getting those advertisers on radio and recognising the true potential of the medium.
For My FM, activation accounts for around 7-10 per cent of its revenues. Bhatia says, “Activations become an integral part of clients’ campaigns as they offer listeners a touch and feel experience in real time along with radio.”
Phase III promise!
Will radio be able to hold its current advertisers or will they move away to digital? Or will the Phase III of FM radio breathe in a new life to the medium. Flip over to know more and our projections for 2012.