Case Study
Riding A Wave

Dated: January 28, 2015

Behind the revival of radio in India stands a determined private industry. In 2000, the year the government opened the airwaves for private stations, radio was a public service. Listenership was low. It wasn’t considered a viable advertising medium. In fourteen years private stations have created a large enough listener base and an instant choice of entertainment attracting 4 percent of the total ad-spend. The industry awaits yet another expansion, the third phase—taking radio to 160 such cities where even All India Radio (AIR) doesn’t reach. How is radio placed as a cultural and commercial medium? CREATIVE BRANDS learns from the industry insiders as they retrace the shape industry took.

Roughly, a 60 min clock of a radio show looks like this: Jock-Talk (4 min.), (socially relevant) promotions (4 min.), Ads (12 min.), and Music (40 min.); Siddharth Mishra, Breakfast Show Host, Mumbai, 92.7 Big FM. The schedule is split into “drive time,” the rush hours in the morning and evening—also attracting highest number of advertisers, and “non-drive time,” from 11 am to 5 pm. “Housewives” and “students” make for more than half of the listenership.Most of us “listen to radio on our mobile phones.” Mishra maps the outline of radio today.

Siddharth MishraAt present, FM radio reaches 158 million listeners. The services are provided by AIR and private radio stations. While AIR still covers a larger geography and 42 percent of the population, private FM is a phenomenon in cities, with a population greater than 3 lakhs, across India. Radio, considered a telecom service, is regulated by Telecom Regulations Authority of India (TRAI) and the Ministry of Information & Broadcasting (MIB) provides the licenses. Since privatisation in 2000, the government has issued out licenses in two phases, and now is set to introduce the phase-III of radio licensing. MIB has proposed to distribute 839 new frequencies covering 294 cities. For the first time towns with a population of above one lakh would be expecting to hear some music!

Currently in Phase-II, the private radio industry amounts to 242 stations run by 40 broadcasting companies across 86 cities. National networks, such as Sun Group (93.5 Red FM), Reliance (92.7 Big FM), Entertainment Networks India Limited (Radio Mirchi 98.3 FM), and Music Broadcast Private Limited (Radio City 91.1 FM), together, operate 144 stations, with each network owning a station in more than twenty cities.

Following is the industry landscape:

(Source: Poised For Growth: FM Radio in India, Ernst & Young, CII, 2013)


INDUSTRY’S SLOW START, ENTRY OF LARGE MEDIA HOUSES, BOLLYWOOD MUSIC AS THE BACKBONE

Nisha NarayananThe start was shaken by irony! The “power” of radio is that itis a “local medium,” says Nisha Narayanan, COO, 93.5Red FM.The station is among the firsts —along with Radio City 91.1 FM and Radio Mirchi 98.3 FM — that introduced private FM. Operationally, however, Red FM “is a mass channel,” Narayanan says. A forged identity,mass channels are a result of “huge license fees” imposed by the government, Narayanan says, that compelled “the stations to move into a Target Group which is more accepted [by the advertisers]; and [to turn] into a mass product.”The expensive licenses meant a mere 21 stations in 12 cities would become operational, that is, only 20 percent of the desired 108 frequencies across 40 cities brought out by the government. The government’s idea of “treating licensing as a revenue generating steam was unproductive.,” and many stations were forced to forefeet their frequencies due to “commercial unavailability” of the project, reviewed TRAI before the launch of phase-II.

The national networks were the only players able to sustain the stiff situation.They aimed an audience encompassing “SEC A, B and C” says Narayanan.This wide band of listeners only Metros could provide, where the very first stations began. The music had to be Bollywood “that a paan wala to a Palio owner listen,” which became the medium’s backbone and the “only way to recover” the huge costs, she explains.

In 2005 MIB brought out 245 frequencies across 87 cities, including the ones that were offered in Phase-I.Under Phase-II, 221 became functional.

Vineet hutmaniOne such station that was born in Phase-II is Radio One 94.3 —ametro-based network across seven cities. Vineet Hukmani, Managing Director, Radio One 94.3, says, “Bollywood” was the only opportunityat that time. “Every radio station was in a way a GEC (General Entertainment Channel). For generic radio stations at that time, the growth rate was so high that people took to all— whether it was Radio Mirchi, us, or Radio City — like fish to water.”With most stationsstringingfromthe same resource,for two years the radio grew by “30-40 percent.”


LISTENERS GROW TIRED, STATIONS FOCUS ON LOCALISATION

However, in 2009 recession shook everyone. The period was an“eye-opener”, Hukmani says. Bollywood had saturated. He says, “Everybody sounds dumb and everybody sounds the same,” responded the listeners. “The time took us to the basics: radio is a local medium and not national. Having a general proposition is not enough.”

Differentiation, realised many, was the need of the hour. “We said, ‘can we create differentiated radio stations in every market, locally, which have three core values: intelligence, involvement, and international quality?” It resulted in the networktaking a city-specific approach. The stations in Delhi and Mumbai turned English, in Ahmedabad and Pune: “premium heritage channel”, Hindi in Bangalore, and a 100 percent request station in Chennai.These moves were based on local insights: for example, says Hukmani, that in Chennai “you have to be larger than life or make the other person feel such — there is no middle way—and we play what the listener wants”.

In Bangalore, Hindi worked because a large Hindi-speaking diaspora lives in the city. In effect budgets were redistributed locally from being managed centrally. “So, when decisions are being taken locally, then regional mediums such as radio, outdoor, and other local, regional newspapers, etc., grow.”

On the other hand, Red FM that continuesto be a mass channel localised its programming to a great extent. On radio “the higher the frequency, more the impact,” says Narayanan. She explains: a national network such as Red FM, covering 47 cities, providesa better demographic reach.The advantage is if you have ten stations across 10 cities it becomes possible for a brand to customise each radio ad according to the dialect and issues of the city or district. This “allows us to deliver the promised high frequency.”

The wide presence allowed the station to equally focus on retail business, which caters to local audiences, along with corporate business.Profitability from Retail suggests the high potential of radio locally, she says.

The diversification of content allowed wider range of local advertisers — doctors, pharmaceuticals, car showrooms, and the likes — to tune in, as they saw their audiences listening radio.To this, the real estate boom thrived on a medium like radio. In three years, “most radio stations raised their advertising rates by 20 percent.” Survival is not an issue: “the advertisers support radio to that extent, but, the issue is education on radio as an effective medium of communication, to say, what else we can do on radio.”


CAMPAIGNS BECOME PROPERTIES;MEDIUMS CONVERGE

Today advertisers are looking for innovation.The innovation has come in the form of “special campaigns or ‘properties’,” according to both, Hukmani and Narayanan.

Red FM, the brand, has created four properties integrating on-ground and digital into its media:Red Liveis an on-ground property. “We’ve done a lot of concerts across cities — Sugandha Mishra in Delhi, Zubin Garg in Guwahati...” Second,Red Activis the brand-activation wing that creates integrated media campaigns.Red Mobileis a mobile platform in partnership with Hungama, where you can dial a numerical code and you can listen to any of the 50 channels of RedFM, at a fee... “So, sitting in Delhi, as a South Indian I can tune into the channel in Trivandrum and listen to Malayalee songs.” Red Digital, which, including Social media, is a gamut of digital applications, mobile apps, softwares, and tools.

Apart from ad-spots, the stations are designing shows that an advertiser community can sponsor. For Real Estate industry a show like ‘Home Sweet Home’—a show on Radio One—works, Hukmani explains, which is a talk show between two celebrities talking about the problems and parameters involved in searching a flat. Such showscreate “conversations around the advertisers/brands,” Hukmani concludes.

Digital has been a natural ally in furthering radio’s reach. “Our TG, especially in smaller markets, consumes digital a lot. A youngster from a smaller town today aspires to know what is happening in a Delhi or a Mumbai.”

Mobile has already connected the rural areas with the wireless world, the phase-III holds interesting possibilities for all — the medium, the audience, and the advertisers. Hukmani expects the ad-spend on radio to double, from 4 to 8 percent, after phase-III, because “for the first time, will be more than Print.”


ELUSIVE PHASE-III AND THE TALENT CRUNCH

Radio is a “non-intrusive medium”: In a world mediated by screens the radio offers relief. Hukmani recites, ‘the only medium that you can have sex to is radio’, said Richard Branson once”. Second; it’s live: “If it is raining for you it is raining for the radio jockey also, and you are talking about the same things.” These abilities would keep radio alive and internet will strengthen the medium.

However clarity still evades radio. Narayanan points out: “If the agenda of the government is that the radio should cover 60 to 70 percent of the population as an empowering, andan entertaining medium then the current policy is highly regressive. I keep repeating that radio is still governed by the Indian Telegraph Act of 1885 when Marconi (Guglielmo Marconi, the inventor of radio,he pioneered long-distance wireless communication) was 9 years old.”

Practicability and practicality too seem opposite shores in relation to other media. Internet is far less regulated than radio, Narayanan asserts. The crux is “to what degree radio should be regulated”. “Self-regulation” needs greater emphasis and stations need to inculcate the philosophy, as “radio has the power to stimulate, and requires control”.

According to Hukmani, “the government is not able to distinguish between telecom and radio, as both are spectrum licenses. In telecom the consumer is paying for the product: your calls, SMS, data; whereas radio is free. The advertiser funds us and not the listener. It has taken a while for the government to understand that you cannot make licensing so expensive.”

Narayanan stirs the issue: “If we talk about the bidding process:the bid price of a C town, say Saharanpur, where radio hasn’t entered, is equal to the nearest C town around it in that region where private radio stations are operating, which in this case is Chandigarh where minimum bid is 16 crore. In what world do you think Saharanpur can generate that kind of money? The question is how you survive.” The classification, of cities as A, B, C, and D is largely guided by population ignoring other influential factors such as,who are your potential listeners? What they want to listen to? How large is the advertiser base? That determines the feasibility of operations.

Another key to survival is talent. “Where do we get them from?” asks Narayanan. As of now “we take people in from various industries — from aeronautical engineers to counter-boys of Barista — and train them.” Radio jockeys, to a large extent, are the face of the brand, “the differentiating factor between stations: it’s more about the way the presenter behaves and handles programming than about sound quality,” Hukmani says. “They are the ones that make radio what it is: a two-way conversational medium.”According to Narayanan,“smaller towns reside greater talent,” but, finding them out is tough. Management of knowledge and talentis a key growth driver, which the industry needs to address.

As some issues revolve around private radio,what the resolution the policy-makers and private players would reach, remains to be seen. So far,‘License fees’ seems to be the biggest worry. The policy is largely an economic one, and the auctioning has somewhere given radio an IPL-like aura.The medium’s much lauded credibility and ability as a human resource — in terms of employment, knowledge, and cultural exchange — can diminish further. The policy sparsely recognises the special case of Jammu & Kashmir and the North-East, but only in terms of reducing the fee. As a meagre financial security, it however doesn’t ensure that stations would actually start in citiesradio aims to enter for the first time, as it happened in the past. Narayanan recalls,“In a market like Aizwal [where] there aren’t too many options of entertainment,” a Phase-II city, Red FM is the only channel. The concerns of many Aizwal-like cities“where there is no TV, nor a Cinema hall” need to understood, before advertising becomes sustainable in brand-poor areas. “In Andaman, where 4 frequencies were up for sale in Phase-II, nobody bid. The ones who did surrendered soon due to high bidding price and the 15 percent cap. Today you don’t have a commercial channel in Andaman.”

CB

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