MxMIndia

Tag: Phase III

  • Kicking off a series with players who did well in the media last year, we have a quick chat with Tarun Katial, CEO of RBNL. on how Big FM's switch to retro in some stations worked for him

    First Leader,First Mover Advantage with Retro

    Quick Takes with 2014 Stars

     

    Beginning a four-or-more-part series of interviews with A quick Q&A with Tarun Katial, CEO of Reliance Broadcast Network Ltd whose 45-station 92.7 Big FM climbed the ratings roster after it switched to a retro music format in some of its key markets.

     

    Do talk us through the Big switch to retro

    We were in the business of radio for about four to five years before we took the plunge. We realised that just being one of the pack doesn’t work. Some of our competitors were in the market for 10-odd years. While the station did really well initially, the growth had plateaued. Being in radio, we’re also in the business of consumer insights. We realised there was a clear gap in the market and a market in the gap. Our research told us that a large number of 25-plus discerning, paying consumers  were now present on radio in large volumes. A combination of putting the consumer at the centre and understanding what the competition would and wouldn’t do and what were the possible unique gaps in the market made us decide to go retro.

     

    Did the dispute with T-Series have a role to play in the switch?

    No, it was largely driven by consumer insights and a deep-ended research conducted by a couple of agencies. I won’t link it to T-Series but what we also saw was there was a high amount of fatigue and low amount of involvement with interest in new music. Music was burning out quicker and was not engaging listeners as much. The number of music hits is reducing year-on-year. Even the biggest movies don’t have some very big music song hits anymore. The shelf-life of that music is reducing from six months to just four to five weeks.

     

    Wasn’t there a worry that you would alienate young listeners?

    When we did our research with both young and old listeners, we realised that everlasting or all-time favourite hits were popular across age groups.

     

    And what about teenyboppers?

    There were 50 to 60% of them who voted for the retro positioning. Also, we believe that the discerning and paying audience was largely in the 25-plus age bracket. Most advertising categories focused there.

     

    But as you go along, you’ll need to incorporate newer music

    Most radio stations in our position worldwide add another five years in their music library every two or three years.

     

    Has the issue with T-Series been resolved?

    We don’t really need them so where’s the issue?

     

    But five years from now, you’ll need them.

    Then we’ll take them because we’ll do what is right for the consumer. Needless to say, there have been fairly big competitors in that space. Zee, for instance, has done very well with music and we’re working with them in several of our geographies where we don’t do Retro. They’ve released large volume of new music which has done really well and we do play it.

     

    How has the retro switch worked for your revenues?

    Exponentially and I think both our volumes have increased significantly. We’ve seen at least over 25% year-on-year growth on both topline and bottomline.

     

    What next on the current offering?

    The effort to innovate within the format is going to be continuous. We’ve launched Anup Jalota in our morning band which is a first on radio. That kind of talent is rarely seen on Indian media, let alone, radio. So, a combination of Neelesh Mishra, Annu Kapoor and Anup Jalota is quite powerful. We’ve also launched Richa Anirudh, the famous TV journalist who did Zindagi Live on our daily station as our morning show host. We’ve got veteran journalist Bhawana Somaaya, full-time as our entertainment editor and all of these are enriching the content and making it well poised and well positioned.

     

    Phase 3 has taken a long time. Are your plans for it still on?

    With Phase 3, radio will be one of the segments that will probably grow the most in 2015 among the various media categories. The hope is not only will the base of radio advertisers and the inventory will grow, but also radio will appeal more demographically and geographically in this country.

     

    Once Phase 3 is in, you could also have competition in the radio space.

    May be we will, may be we won’t, depends on what whose plan and strategy is.

     

    Independent news continues to be a no-no on private FM?

    We’re hoping that there will be final news guidelines very soon and that they will be more liberal than what we’ve heard.

     

    Now that others have seen your success, the same thing that happened in the hit music space may happen with retro…

    We have the first leader, first mover advantage here that we didn’t have there.

     

    A shorter version of this interview appeared in ‘dna of brands’ on January 5, 2015

     

     

     

  • Asheesh Chatterjee, CFO, 92.7 Big FM is positive about Phase III of FM radio licensing and the new spectrum being freed

    Jaldi 5 with Asheesh Chatterjee: FM will grow five times

    Asheesh Chatterjee, CFO, 92.7 Big FM is positive about Phase III of FM radio licensing and the new spectrum being freed. MxM India caught up with him recently to talk about the FM industry, pre- and post-Phase III.

     

    01. With Phase III coming into play, do you think that the issues such as royalty, taxes etc that the FM industry has been struggling with, will be sorted?

    I am very optimistic. If you look at the efforts the government has taken towards digitization, the intent is to have a consensus and resolve the issues and make the industry grow. Most of these issues have been identified, and yes, there will be solutions. The phase III guideline itself solves many issues. We tend to look at the glass as half-empty, why not look at it as half-full? There were many things which have been addressed, and some which need to be addressed which I am confident will happen soon.

     

    02. Does the current RAM measure the listenership of FM radio appropriately?

    Ratings and measurement requires investment. So once you have strong players with a pan-India footprint, they will have the necessary revenues for the investments to make these measurements appropriate.

     

    Yes, today the measurement is restricted to the top markets, and this is set to expand. You do not need daily or weekly measurement to tell you that radio reaches where literacy has not reached yet or where, because of electricity problems, TV does not work. It is enjoyed as a passive medium, even while you are working. Radio does not really have a prime-time at all. So research will capture all this and much more. I am sure with phase III, and stronger players, there will be sweeps that will be done to bring out the statistics.

     

    03. Prashant Panday of Radio Mirchi recently said that FM radio will have strong competition from internet radio. Do you agree?

    Digital is one of the areas, which by no means implies that FM radio has little future. FM radio is itself going to grow five times from its current numbers. There is immense future in FM radio. And also, yes, digital radio with its uniqueness to be able to search, social networking, and customize, will offer another product. FM players who have the understanding of the audience, as well as content, will be able to monetize internet radio better than anybody else. However, if you are going to make it a paid service, there are not going to be many takers for it.

     

    04. Phase III: Challenge or opportunity for FM radio industry?

    I see only opportunity: to make good use of the spectrum that will be freed after the Phase III auction happens, and to execute on product innovation and product differentiation to make a profitable business model for all stakeholders, whether it is the advertisers who will look at this medium for its cost-effectiveness or listeners who will look at it as a passive medium for enrichment and entertainment, and us as radio operators who like to reward both investors and employees. It is going to be a work-work solution for everybody. The opportunity is right there at the section point and we need to execute it to the plan.

     

    05. Are advertisers taking this medium more seriously in their traditional media mix?

    Advertisers have always taken this medium seriously. Nobody buys you cheap, you sell cheap. The fractured spectrum that some us have had, because we are there in two towns in Gujarat, does not mean that no advertiser can do a Gujarat-plan with you. So those are the problems that will go away, and you will have the spectrum to reach the targeted region or TG. I think once that gets corrected, advertisers will start using FM as the primary medium.

     

    As told to Ananya Saha

     

  • Even as advertisers are yet to take this medium seriously, the industry players are waiting for Phase III with anticipation. MxMIndia finds out what their expectations are

    MxM Monday: Expectations from Phase III FM radio licensing

     

    By Ananya Saha

     

    FM Radio is set for exponential growth. Even as advertisers are yet to take this medium seriously, the industry players are waiting for Phase III with anticipation. The industry is positive that the third phase would result not only in differentiated content but will also interest the advertiser and listener alike.

     

    We speak to private FM players for their expectations from Phase III of licensing.

     

    By Ananya Saha

     

    Harrish M Bhatia, CEO, DB Corp Ltd - Radio Business (94.3 My FM)

    We all want Phase III to happen. It is an industry’s requirement to grow. But it is important for the government to remove hurdles like the issue that happenedinChandigarhor not allowing us to carry news. What is the objective of taking AIR news? If it the issue of keeping tab or administering the news we carry, they can ask us to keep our news recordings for 30 days and they can review it. How does the government control cable telecast? Why cannot they trust us?

     

    From the advertisers’ front, I am sure that the advertising in the medium’ will continue to grow. What is required is proper decisions by the government to ensure that the private FM players also gain.

     

    Asheesh Chatterjee, CFO, Reliance Broadcast Network Ltd (92.7 Big FM)

    The more number of Spectrum licenses in Top A, B cities will only benefit the industry. It will add to content loyalty. Phase III licensing will result in closure of music royalty issues when the tariff rates will resolve the ambiguity issues that exist at the moment. And yes, the FM players will be investing in Category C and D towns. Kozhikode, Chandigarh and the South will make the things uncomparable. Those areas need a bit of correction.

     

    These three are broadly the issues, apart from smaller issues such as news. Even while protecting the identity of your brand, we will be able to cover news in the same manner or better manner. Otherwise you are too restricted in communicating it in the same manner.

     

    Harshad Jain, Business Head, HT Media (Fever FM)

    The highest bidding of Phase II will becomes the lowest bidding price in Phase III and that is a cause of concern. I hope the government understands the fact that the cost of doing business is high. And I hope they do pay attention to this fact apart from solving the issues such as transmitter and infrastructure.

     

    It is no doubt that the Phase III is going to do better to the industry, but the back-end processes will have to be taken care of and sorted.

     

    Anurradha Prasad

    Anurradha Prasad, President, AROI and CMD, BAG Networks

    We want the processes of Phase III radio licensing to begin as soon as possible. We, as an industry, do not want something that becomes unviable. Hence, we are awaiting the process to begin soon so that industry gains. You cannot compare telecom and radio spectrum together. The consumer does not pay for radio. The medium requirements are different.

     

    It looks like the issue of music royalty will get sorted as Phase III licensing comes into play. However, I am concerned that in Phase III, the bidding prices might go haywire and people will not be able to pay, nor would they be able to make it profitable.

     

     

    Prashant Panday, CEO, Radio Mirchi

    The objective of any policy should be to ensure growth of the sector. In the case of FM radio, Phase-3 policy should attempt to expand FM in a big way.

     

    The Phase-3 policy as it stands today only partially addresses the objective. It does seek to expand geographically into some 250 new towns. However the auction methodology (electronic ascending auctions) and high reserve fees (highest bid received in Phase-2 in a similar category town in the same region) will frustrate this goal. The radio industry believes that FM auctions will be a flop with most new cities not being taken up. The industry prefers electronic tendering, just like done successfully in Phase-2. This would also take care of the problem of reserve fees, since they are set post-auctions (25% of the highest bid).

     

    The policy allows for networking across the network, which should help cut operating costs in small towns. It also allows broadcasters to operate more than one channel in the bigger cities, which should help in consolidation. The policy also allows news broadcast, but limits the content to AIR feeds. This is blatantly unfair, since news without restrictions is allowed to all other media.

     

    However, the biggest problem is conducting auctions under scarcity conditions. There is only 1 channel in Delhi, Bangalore, Chennai, Ahmedabad and Pune and 2 in Mumbai. This will lead to exorbitant “desperate” bidding. Further, this high bidding will become the base for the next round of auctions, which will put the radio industry into a cost spiral. Instead, the government should accept TRAI’s recommendation of halving “channel separation” to 400 KHz and doubling the number of channels. This way, the government will get more overall license fees, the public more programming variety and the broadcasters reasonable license fees.

     

    Suresh Sanyasi, National Sales Director, Radio Indigo

    Our expectation from Indigo are fairly simple: we are looking at larger market space in terms of international quality music available pan India. We current fall into very niche A+ segmentation. We are looking at Mumbai,Delhi as a market and may be a couples of Town A and B where we see potential like the way we got Goa where we can harness our brand and give listeners good music. Invariably connecting them with good brands and advertisers and giving them pan-India reach. Currently, if any advertiser wishes to advertise with us, they have to locally listen to our station in Mumbai and Goa. Once, we get license, the advertisers will be able to connect with our brand pan India. We already have offices in Delhi and Mumbai and once we get license, we will start expanding horizontally. We have, maybe about 20%, of business coming out of Mumbai and Delhi irrespective of the fact that they do not have touch-and-feel of Radio Indigo and they have only heard about our brand.

     

    Once Phase III begins, the market will grow. More radio stations coming in, licensing will become larger, the government is definitely going to get lot of revenues and a lot of employment will be created. There is huge amount of growth that we are looking at.

     

    However, radio in India has not reached maturity yet. By maturity, I imply, consumption of radio is not a very-well accepted norm right now. I say it comparing it to more mature medium like a television. People buy in terms of brand and advertising people do not know how to use radio. Radio is a very tactical medium. Advertisers do not understand the medium since it is not a visual medium, even as it remains the most cost-effective medium to advertise and there is a definite return that comes through. With larger number of stations coming in, people would like to try out and understand the value of radio in itself.

     

    We are looking at Phase III with much positivity and optimism.

     

  • The e-auction for Phase III is expected to begin in January 2013 and may take another two or three years until the entire FM Phase III expansion is completed

    FM Phase III: Pre-qualification bid for e-auctions starts Sept

    By Robin Thomas

     

    The FM radio industry has moved one step closer to the Phase III expansion as the Ministry of Information and Broadcasting (MIB) has called for tenders starting September 2012. The pre-qualification for the bidders is expected to be complete in another two months, following which the qualified companies will be allowed to participate in the e-auction for FM Phase III. The e-auction for Phase III is expected to begin in January 2013 and may take another two or three years until the entire FM Phase III expansion is completed.

     

    CS Kaushik, Deputy Secretary (FM), MIB (Ministry of Information and Broadcasting) and Uday Chawla, Secretary General, Association of Radio Operators for India (AROI) have confirmed the development to MxMIndia.

     

    It may be recalled that the Union Cabinet had given its nod to the e-auction for FM Phase III. In November 2011, an Inter-Ministerial Committee (IMC) was constituted in the MIB with an aim to guide and supervise the process of e-auction and to award the license of FM radio stations to private agencies under the FM radio Phase III expansions.

     

    FM Phase III policy seeks to extend FM radio services to about 227 new cities. Phase III will cover all cities with a population of one lakh and above, simultaneously, there will be a total of 839 new FM radio channels in 294 cities. In addition, FM radio stations will also be allowed to air news, but sourced from AIR (All India Radio) only.

     

     

  • Mr Goyal speaks about the challenges facing the station in achieving break even, the issues that need to be resolved before the phase III rollout, on their plans to revamp their official website

    Govt policies anti-small radio stations: Goyal

    Tarun Goyal is the Founder, Director of Radio Chaska, a radio station which was founded in 2006 by the Goyal family. In conversation with MxMIndia’s Robin Thomas, Mr Goyal speaks about the challenges facing the station in achieving break even, the issues that need to be resolved before the phase III rollout, on their plans to revamp their official website and whether the radio industry has been hit by slowdown?

     

    Founded in 2006, when you look back, how would you say the journey has been for Radio Chaska?

    The journey since 2006 has been a different one. We started a radio station in Gwalior, thinking that FM radio will catch the fancies of the people, and it did. Over the years there has also been a shift in the advertiser perspective about the medium. However it is the support from the government that we are lacking today, they are spending very less on radio. On a positive note, despite odd challenges, radio has managed to grow tremendously over the last many years, and has also contributed to the development of the city as well.

     

    What is the Gwalior market like for radio?

    Well, it certainly is very different from the metros. People invGwaliorvhave an altogether different taste for radio itself.  The advertising category on radio is mostly retail. We mainly play music all the time – mostly latest Hindi or Bollywood hits.

     

    Apart from advertising, what are the other sources of revenue generation for Radio Chaska?

    We do generate some revenues from activations, a good pie of our revenues also come from Radio Mirchi (ENIL), with whom we are instant partners for sales and then we rely on our local revenues. Although activations help increase our revenues, the profits generated are low, mainly because of the high costs in activation. Thereby, we primarily have to concentrate more on advertisements because that’s where a good portion of our revenues comes from. Nonetheless, more number of activation definitely helps us increase our brand value in the city, which in turn, helps us get more local advertisers.

     

    So, has the strategic sales alliance model worked? How does it benefit both Radio Chaska and Radio Mirchi?

    Since we are a single station owner in Gwalior, this partnership has been a strategic move for both Radio Chaska and Radio Mirchi. Since Radio Mirchi is present across Chhattisgarh and Madhya Pradesh except inGwaliorand Radio Chaska is present in Gwalior, therefore Radio Mirchi (ENIL), in strategic sales alliance with Radio Chaska, has created a space for itself in Gwalior as well. It is quite hard to sell a single station and keep track of various campaigns coming from different parts of the country. This strategic alliance with ENIL gives Radio Chaska an edge in reaching out to other parts of the country and the state. Thus we have had an extremely good partnership with ENIL ever since the inception of Radio Chaska.

     

    What are your break-even plans? When do you see Radio Chaska achieve break-even?

    I don’t know when we would be achieving break-even as the costs are escalating and hence we are unable to increase the revenues as anticipated. Unless we have some good policies from the government, small stations will never achieve break-even. Government policies, I believe have gone against the small radio broadcasters and, besides, there are other small issues which if resolved would help small stations achieve break-even.

     

    Music royalty is one of the issues that are yet to be resolved. The escalating fuel cost is another worry because it is adversely affecting the industry. A company’s five to seven per cent cost is always burnt in fuel because the government is unable to provide electricity. These may be small issues but nevertheless they are vital in helping the business sustain in the market.

     

    The MIB (Ministry of Information and Broadcasting) has already given its nod to news on private radio stations, multiple licenses are allowed, FDI limit has been marginally increased. How does Radio Chaska view these developments? Will these benefit smaller stations?

    We welcome this move, but issues like music royalty need to be sorted out first and only then I believe FM radio stations can probably flourish in the long run. Right now challenges for smaller stations, in particular, are many and only time will tell how FM phase III will benefit the industry. Nonetheless we welcome the policy and we too would try and be part of the phase III policy.

     

    So, will you approach phase III more cautiously? Will you expand to other markets? What are your phase III plans?

    We are eyeing for expansion in parts of Madhya Pradesh as well as in other markets, but yes, our approach will be a little cautious. We will not hype up the prices and bid unnecessarily. If we find the scenario viable only then we will bid, otherwise we will stay away.

     

    How significant a role does the website play for a radio station? Do you plan to add new features or redesign your website someday?

    Yes, we will be upgrading our website very soon, probably in next two months. Official websites have also become a medium for radio stations to interact with their listeners. Our RJs regularly interact with listeners on social networking sites and today official websites have also become an integral part of a radio station.

     

    It is said that the radio industry being hit by the economic slowdown. Do you agree?

    Yes, I do agree that the radio industry too has been hit by the economic slowdown. The telecom industry, for instance, was one of the highest spenders on radio and in the last three or four months we have not received any business from the telecom sector. So, yes there is a slowdown and radio has been affected by it, but nevertheless radio is surviving the slowdown.

     

  • Monica Nayyar Patnaik, Joint Managing Director at Eastern Media Ltd. in conversation with MxMIndia about trends in the radio industry, Radio Choklate, post break-even, phase III plans and much more.

    Tier 2 & 3 crucial for radio: Monica Nayyar Patnaik

    By Robin Thomas

     

    She is the founder member of Radio Choklate, the radio arm of Eastern Media Ltd. Monica Nayyar Patnaik is the Joint Managing Director at Eastern Media Ltd., In conversation with MxMIndia, Ms Patnaik spoke at length about the trends in the radio industry, the challenges, on Radio Choklate post break-even, the phase III plans and much more.

     

    Q: How would you rate the year 2011 for Radio Choklate and the radio industry?

    The radio industry is still awaiting phase III announcements, and there are hopes in these announcements. Secondly, the increase in FDI has brought some cheer for all of us. As far as the copyright issue is concerned, the talks are still on, though I believe that we have gone ahead and may soon reach a breakthrough point.

     

    For the past three years Radio Choklate has been able to further consolidated its position and achieve break-even. The year 2011 has seen our listenership in Bhubaneswar, Cuttack and other nearby areas further increased, the reason being the change in programmes. We have been constantly changing our programmes, placed them in the right time slot and it worked well. In addition to these, our on ground activations also gave further momentum to our listenership.

     

    Q: Radio Choklate achieved break-even couple of years ago… what has changed for the station since then, ie in terms of infrastructure, talent, etc?

    The break-even achieved was purely advertising led, our expenditures has however gone up. One of the significant contributors was the Telecom sector. They had advertised considerably which gave us a huge boost in our advertising revenues. Besides we also deliver a lot of value additions to our clients. Going forward, it is not so easy. It is difficult in getting the right talent, and a lot of money is invested in recruiting good talent. Hence both in terms of talent pool and infrastructure it requires a lot of money and besides the copyright issue is yet to be fully resolved. In fact this year has not been so good for the industry in terms of advertising revenues which has slightly declined.

     

    Q: According to IRS, radio consumption has seen a decline. Do you agree? Some say that the decline is because of a delayed phase III and content restrictions…

    I have a different view on the listenership because we have been number one in our listenership since a long time and we are still number one radio station. However we have not witnessed any decline in our listenership. There are still many small town areas that need to be covered under the IRS bandwidth, many of which significantly contribute to the listenership share. Hence IRS must bring those uncovered or under covered areas under the IRS bandwidth to bring up the overall listenership.

     

    Q: Has radio listenership reached a saturation point in the metros and the next phase of growth for radio will come from tier 2 and 3 cities?

    I do agree that the next growth of FM listenership in India will come from the tier 2 and 3 cities as there are lot more cities and towns that need to be covered. With phase III rollout FM radio will be spreading its wings in 227 new cities. I believe it is now time that those cities which have reached saturation point must bring differentiation in terms of delivery, packaging and programming. However these developments can only take place once multiple licenses are allowed and I am sure it will help especially in cities where listeners need variety of music or programming.

     

    Q: Do you think the industry is confusing innovation with differentiation? As you just said, there is lack of differentiation… but, isn’t there too much innovation happening in radio today?

    It could be true however I am aiming to give listeners a different experience by getting into the niche areas i.e. by providing them a differentiated programme. So, if the listeners in my State want us to get into different areas of programming we would deliver to them what they want. So, if the listeners want a talk show they will be given, and that’s why we are so keen on multiple licenses, which is the key to differentiation.

     

    Q: You once said, come FM Phase III, you would want Radio Choklate to further expand in Orissa… Do your plans still remain the same?

    Absolutely, our plan still remains the same. We are looking forward to phase III, and our plans to further consolidate in Orissa. Music is just one part of radio, and for the medium to grow robust it needs other elements of contents as well, whether its sports commentaries or news and current affairs. Hence I feel there shouldn’t be any more delay in Phase III, the sooner it is rolled out the better for the industry.

     

    Q: Will multiple frequencies bring additional listeners and advertisers to radio or will it further fragment the listenership in the already fragmented medium?

    I don’t think so. How many multiple frequencies can one have in the same city? Multiple frequencies will give listeners more choice, and yes it will bring new listeners to radio, perhaps even those that have never listened to radio.

     

    Q: How has 2012 welcomed Radio Choklate? Any specific industry trends we should watch out for in the coming years?

    In 2012, Radio Choklate will look forward to FM Phase III rollout, we should be able to give different variety to the listeners and we will continue to concentrate more on local music.

     

  • Most big advertisers are shifting their focus beyond metros, particularly towards the rural markets, where radio is seen as delivering better ROIs.

    FM players expect boom in small-town India

     

    By Robin Thomas

     

    Radio has come a long way since the transistor era. Today, listeners have multiple access to FM radio through mobile phones, in-car listenership, particularly during drive time, restaurants, coffee shops and public transport to name a few, an FM radio phenomenon that’s peculiar to urban India.

     

    In addition to this, FM stations are said to earn huge chunk of their advertising revenues from the metros. But all this could change with the soon-to-be-launched Phase 3 that will witness the addition of 839 FM stations in nearly 300 new cities having a population of one lakh and above. This is expected to further increase the reach of private FM stations across the country, which, in turn, will lead to a spike in the advertising share of the medium.

     

    While the metros are saturated with radio players and with advertisers looking for options to widen their nets, industry observers are of the view that the next phase of growth in FM radio will come from the tier 2 and tier 3 cities. This phenomenon, they say, will explode in a big way once Phase 3 becomes a reality.

     

    But before one proceeds to identify how lucrative these markets could turn out to be, it would be ideal to verify the effectiveness that radio stations at these small cities and towns display and whether they carry a certain edge over the other sought-after mediums, television and print, in these markets?

     

    MxMIndia spoke to various industry players, including media agencies, to find out their views on the effectiveness of FM radio in Tier 2 and Tier 3 cities.

     

    Most industry players are of the view that time spent on radio in small towns and cities is much more than in metros like Mumbai and Delhi. Besides, most of the non-metros are said to face a lot of power cuts, hence more time is spent on listening to radio, which becomes an alternative source of entertainment and information.

     

    “Radio is extremely effective in Tier 2 and 3 cities. In the smaller towns, the share of radio is higher than what it is in the bigger towns. In some markets, the share of radio is as high as 20 per cent of the print market. This is a reflection of the effectiveness of radio” said Prashant Panday, CEO, Radio Mirchi.

     

    With such effectiveness in the smaller towns and cities, most big advertisers these days are shifting their focus beyond metros, particularly towards the rural markets. Radio is believed to play an effective and constructive role in delivering better ROIs (Return on Investment) for brands in these markets, particularly as other mediums are either too expensive or do not provide good reach.

     

    “Since the level of activity in these markets is lower than in metros, people have more time to spend with themselves. This is where radio fills the gap. An increase in number of FM-enabled handsets has further increased the consumption of radio,” pointed out Harrish M Bhatia, CEO, MY FM.

     

    “Radio measurement surveys conducted by RAM have proved that the average time spent listening to radio per day is 244 minutes in Nagpur and 206 minutes in Jaipur as compared to 127 minutes in Mumbai and 124 minutes in Delhi (Source: RAM Sweeps 1.0),” he added.

     

    According to Narendra Kumar Alambara, Vice President, Starcom Mediavest Group, Chennai, both retail and national brands will gain by using radio in the smaller markets. While retail will be able to gauge the efficacy of the medium in the market, national brands will be able to tap into these markets with more focus. “Radio is as good as any medium in smaller towns. Given the smaller geographies and the relative newness of FM in these markets, it has that edge, but ultimately the medium has to transcend from being just an entertainment/information media into being a medium that can deliver results for the brand.”

     

    While national advertisers are increasingly flocking to the tier 2 and tier 3 markets, local advertisers such as retail outlets, education institutes, real estate, auto outlets and others are also said to be increasingly advertising on radio. While metros may bring a significant chunk of revenues for larger FM stations, it is learnt that the advertising revenues from tier 2 and tier 3 markets are growing significantly year on year.

     

    The challenges, too, are many for FM radio in these growth markets. The challenges relate to filling up the entire available inventory. Local businesses are not strong enough to fill it up. So radio stations have to rely heavily on business from national clients. Apart from this, for some stations there is the constant battle to keep profitability intact.

     

    R Venkata Subramanian, Senior Director-Investments, MPG India noted: “The is no strong local media in many of these tier 2 and 3 cities, and this is where radio has the potential to be a highly effective and reach building medium. The challenges, however, include the emotional connect with the RJs and how effective the FM station actually is. There is a need for better radio commercials. One other challenge for the radio industry in these markets is the lack of a good credible measurement system, which will measure the effectiveness of radio commercials and listenership.”

     

    But a Big FM spokesperson countered: “The radio, as a medium, enjoys much higher visibility and it is the only medium that people can relate to as it is customized to those markets and hence it will have a much better appeal.”

     

    Nowadays, a lot of advertisers use television and print as a lead reach medium whereas radio is used as an amplifying medium. Industry observers are of the view that after Phase III expansion, radio is likely to be seen by advertisers and marketers as a reach medium, especially for the national advertisers. As a result more advertisers are likely to use radio-led advertisements instead of using it just a complementary advertisement medium.

     

    But Mr Alambara is of the opinion that most FM station in the markets have not been able to create and sustain a distinct local identity while maintaining their overall brand persona. “Media brands work best when they can relate to, and bond with, the local populace seamlessly,” he said.

     

    But the real magic of FM radio, its reach, effectiveness in metros, mini metros and rural markets is likely to be seen only after the launch of FM Phase III. As of now, the cities which do not have private FM radio are eagerly waiting to experience the medium.

     

    Big story image from Clipart, Microsoft Word

     

  • Phase III will open up a lot of job opportunities. Multiple licensing, news and networking will open up jobs, feels Rana Barua

    5 reasons why Phase III is vital for FM radio growth

    By Rana Barua

     

    1. More reach:

    The reach of radio will further increase with an additional 839 new FM stations in more than 200 new cities. Thus the medium will become even more effective and the opportunity will also be huge for the advertisers, especially because of radio’s reach in even the tier 2 and 3 cities.

     

    2. News in FM radio as a revenue stream:

    News on FM radio, in whatever form, will open up newer revenue streams if packaged well. The industry, for long, has been waiting for news to be allowed on radio. It will therefore be interesting, especially from the listeners as well as the advertisers’ point of view.

     

    3. Multiple Frequencies to create new genres:

    Multiple licensing, especially in larger cities, will bring new genres to radio. Larger stations, for instance, may want to create another genre of station, perhaps in a different language or a completely different programming category altogether. This will be another interesting facet for the advertisers and listeners.

     

    4. Networking will be allowed:

    Networking will bring down cost and thus play a critical role in radio’s growth. It will streamline a lot of cost of being in radio. Allowing networking means one will be allowed to run the FM station sitting out of a main hub; as a result the cost may come down.

     

    5. Create job opportunities:

    Phase III will open up a lot of job opportunities. Multiple licensing, news and networking will open up jobs. Therefore FM phase III will bring a lot more excitement as well as opportunities, thereby bringing in more talents, and genres.

     

    Rana Barua is veteran media professional, a former COO, Red FM and an advocate of radio

  • FM radio stations are one of the most popular entertainment mediums, offering millions of Indians a great mix of shows

    Why FM is more than just a recall medium: Rabe Iyer

    By Rabe T. Iyer

     

    Old media don’t die! They just bounce back in new avatars. Not so long ago, radio had been written off as dreary, downmarket and not so cool. Television and, later, “new media” were touted as being media of the future. Thanks to advancements in technology and a change in lifestyle, radio has made an incredible comeback.

     

    FM radio stations are one of the most popular entertainment mediums, offering millions of Indians a great mix of shows covering music, contests, discussions, humour and gossip, delivered in local flavour by popular young radio jockeys.

     

    Radio is a medium of the senses, bringing the listener’s imagination to life and taking him into an exciting new world of his own. Thanks to local FM stations, marketers have been able to connect with their target group, especially the youth, like never before.

     

    According to industry experts and analysts, there are 250-300 million radio users today. This penetration is surprisingly more than that of newspapers, known to be the oldest among present day media. In addition, at 145-150 minutes per day, the consumption time of radio is more than that of television, which stands at 140.  Today, 80-90 per cent of mobile users access the radio on their phones.  The fact that the medium is mobile has clearly helped to increase its usage and popularity.

     

    With the rollout of Phase III licensing, the Indian radio industry is optimistic of huge growth. The industry, which currently brings in around Rs1,100 crore revenue, will see 800 new radio stations across 300 towns coming up.

     

    Here, radio-based advertising can be used effectively for communication and positioning. It is to be used well since it can target a large audience because of its immense reach. It is useful in increasing awareness about a brand or business and helps in enhancing the brand image. The past couple of years have witnessed a flurry of activity in the FM sector. Not surprisingly, the radio industry of today can be compared to television in the early and mid-nineties, and one that is all set to boom further.

     

    With carefully worded scripts, brilliantly created situations, and tailor-made strategies, radio advertising is getting more innovative and effective day by day. It is perhaps one of the simplest yet most cost-effective and powerful means of communication in today’s world.

     

    Studies indicate that instead of two back-to-back commercials on television, one commercial on television and another one on radio give about a 20 per cent higher brand recall. Also, a television commercial, if aired on radio, works very well as the listener can then visualize the entire advertisement. Hardly surprising that over the years, print based publications and television channels have been using radio as a support medium, as a reminder medium, and as a mean to building up frequency.

     

    As mentioned earlier, another interesting facet of the Indian radio story is the mobile phone explosion and its convergence with FM. This has exponentially increased the width and depth of the market.

     

    Radio offers tremendous opportunities for advertisers and media planners who need to explore various options, following which they can effectively use the medium in their media mix. Conversely, broadcasters need to develop the market by being more responsive to an advertiser’s needs. This will provide an opportunity for the market to arrive at the final verdict on the effectiveness of the medium inIndia.

     

    Rabe T. Iyer is Business Head, 92.7 BIG FM

     

  • Radio is free, easy to access, and reaches everyone, everywhere. Yet why is the eye favoured over the ear?

    FM radio: Waiting in the wings for how long?

     

     

    By Ritu Midha

     

    Television and print continue to be the mainstay of any media plan. The buzz around launch of new channels and publications (largely newspapers) is difficult to ignore. Digital media, too, has become a medium of ‘now’. Meanwhile, radio continues to struggle, with cost to operate being quite high while profitability is still an issue. Is it time, then, to ring the alarm bells? Is radio getting lost even before it has acquired a national footprint?

     

    Prashant Panday

    Radio: Today

    Prashant Panday, CEO, ENIL, emphasises: “There is no evidence of that yet, though if Phase III expansion gets delayed, this is bound to happen. The Indian media scenario has new brand launches happening all the time. Newspaper reports say that since August this year, the Ministry of I&B has given permission for 745 new TV channels – about half of which are news channels. Likewise, if you look at newspapers, there are editions opening across the country almost every month. It’s the same with outdoor sites and internet portals. In a scenario like this, if there is no addition in the number of radio channels, then the sector will get affected. That is one reason we are waiting for the 800 odd new radio licenses to be issued under Phase III. At present though, radio continues to grow, and its share continues to be just under 5 percent of total advertising spends.”

     

    Media planning and buying fraternity, in turn believes that radio as a medium is gaining popularity, and that is largely because of its content which touches a cord with the local consumers. Mohit Joshi, Managing Partner, MPG India, explains, “While there is not as much buzz about radio, I don’t think it is losing out. It has developed a unique role in the communication mix, which straddles ATL and BTL. Advertising support on the medium has been growing at 11 percent over the years.”

     

    Ashit Kukian

    Increase in FDI Limits: Low impact

    Media owners are of the view that increase in FDI in radio would not really impact the sector, unlike retail where the proposal for FDI in multi-brand retail has raised a storm. The common belief is that not many foreign players would be interested in the medium because of low profitability.

     

    Mr Panday says, “Remember, FDI only enters sectors where there is profitability and where the regulatory regime is favourable and stable. Today, most radio broadcasters are barely hitting EBITDA break-evens. This, after half the license period of ten years, is already over. I personally feel that the higher FDI/FII limit will help increase trading in listed radio stocks like ENIL and RBN, but apart from that, the impact might not be that high.

     

    Ashit Kukian, COO and President, Radio City, agrees, “The increase in FDI in radio sector from 20 to 26 percent is not really going to make any dramatic impact on the industry.”

     

    Vinish Joshi

    Slowdown: Whither goes Radio?

    While FM in India continues to struggle, impact of the slowdown, interestingly, on radio, as per the expert opinions might be the least, courtesy its local content. As per Mr Panday, with a slowdown in ad spends, the overall ad industry is unlikely to grow at more than 5-8 percent. His belief is that radio may grow slightly higher at 10-12 percent. “Almost all sectors are seeing a slowdown. We attributed the slowdown in the 1st quarter to the higher spends in the preceding 4th quarter on account of the cricket. However, the 2nd quarter also has been weak,” he says.

     

    Vinish Joshi, GM, Mediacom, too believes that radio might see a higher percentage growth than other media – largely due to its reach and content. He says, “Increasingly FM-enabled mobile phones are driving radio growth in India and phase III is expected to extend radio’s reach to 294 towns and 839 stations. If any medium stands to gain from this slowdown, it is radio, as during the periods of slowdown, marketing activities get more focused. The concern remains on accountability, as marketing will also be more accountable during this period and comprehensive measurement tool for Radio industry will be critical.”

     

     Mohit Joshi

    Measurement currency: A catch-22

    Indeed, the tighter times lead to a lot more stress on RoI, and measurement currency becomes very important. The radio players feel that there is need for a more robust radio measurement system. Mr Panday says: “The present system is a diary system which has many flaws. What we need is an electronic measurement system which accurately captures listenership. We also need more sample sizes to better capture the heterogeneous habits of our cities.”

     

    This sentiment of the media players is shared by media planning and buying fraternity. While, they agree that attempts being made to capture a larger listener base are commendable, they believe that it needs to broaden further.

     

    Mohit Joshi says, “Effort is already on for increasing the coverage of the network of the current Radio Measurement systems. Today, when we have radio stations across most of the key cities, the coverage also needs to mirror that growth. The better the data, the easier it would be to establish the role of Radio.”

     

    It would be interesting to find out how much is the fraternity ready to invest in improving the measurement system and currency. It is a known fact that research and measurement is cost-intensive. With RoI being an issue, most of them might find it difficult to make a major investment in anything.

     

    FM stations: Same, same – no different

    Radio, at the moment is suffering from me-too syndrome – which to a large extent can be attributed to investment constraints. There is definitely a need for differentiation – enter localised communication.

     

    Mr Kukian says, “Radio as a medium has the ability to create customized communication for pocketed audiences and impact millions of Indians due to its wide coverage and personal connect. This coupled with the medium’s innovation quotient gives it one up over other media in terms of fulfilling advertisers’ requirements.”

     

    Vinish Joshi shares a similar opinion, but he qualifies, “Inserting rapid-fire weather forecasts and traffic reports is just providing minimum local content. Local radio, by my definition, is the real interaction of radio personalities, announcers, the people on the air, with listeners both on and off the air. As long as radio maintains its local presence, something that other syndicated forms cannot provide, there will always be a need for its services.”

     

    Unfortunately local content on radio, largely restricted to traffic reports and contests, seems to be similar on all the stations. The reason for this, yet again, is operating costs and limited number of stations. The game might change once there are more radio stations post Phase III.

     

    Mr Panday states, “Very little content differentiation will happen unless more frequencies are released. Let’s take an example. Suppose only 10 TV channels were allowed by law. Which channels would exist then? My guess is that the 4-5 GECs would still exist, there would be 1-2 news channels and 2-3 other channels. The reason for so much content differentiation in TV is that there are so many channels. The second reason is that broadcasters are allowed to own and broadcast several channels, so that the cost of operating smaller format channels is reduced.”

     

    He continues, “In radio however, we suffer from restrictions on both the above mentioned requirements. There are only 7-8 channels in the major markets and broadcasters are allowed to operate only one channel per market. The Phase-III regulations are going to relax the second condition, but till the number of channels increases significantly, we cannot expect much content differentiation. And if the auctions happen the way they are planned – e-auctions for one frequency in Delhi and two in Mumbai – then the license fees will shoot up and niche formats will become unviable. The government needs to release more spectrum BEFORE auctions are conducted. We have even given them a formula to do this – just reduce the “separation” between two adjoining radio channels from the 800 kHz at present to 400 kHz.”

     

    If the separation between two adjoining channels is helved, the number of channels would double – broadcasters will be able to compete better with TV and print, the government will get more license fees through auctions. And it just might help in increasing FDI investments in the sector by raising the bar and the competition.

     

  • Licenses, bidding, alliances… the world of radio is complex – and remember, there is going to be a phase 4 one day. E&Y Associate Director Ashish Pherwani on Phase III must-dos

    The Anchor: 8 key aspects of Phase III that radio companies need to address

    By Ashish Pherwani

     

    #1 Which licenses to bid for:

    The answer is quite complex, as it needs to consider the ability to sell the new stations both singly and as a bouquet, how well the new stations complement the existing bouquet of stations in terms of tactical sales, the future revenue potential from these stations both from the point of view of generating local revenues and adding on to the revenue generating ability of other stations, etc.

     

    #2 Bid values: 

    The bid value should logically be based on the revenue generating ability of the station over its license period, and expected costs.  But when you factor in that the revenue generating ability depends on the listenership position the station achieves, the rest of radio company’s station network, the efficiency of the sales team, expected competition in the market, etc, and the cost depends on variables like the license period (10 or 15 years), the rate of music royalties, the ability to share infrastructure and content, etc, it’s a complex decision to make!

     

    #3 Alliances:

    Some radio companies need to consider which stations to bid for on the assumption that they will form alliances with other networks that together will provide advertisers with national, regional or state-wide reach.  In addition, radio companies with existing ad sales alliances may need to reconsider these in the light of the licenses they propose to bid for.

     

    #4 Trade licenses that add value to other networks:  

    Radio networks are entering the phase where they will be able to begin trading their licenses.  Some radio companies may want to exit, and valuations aside, may find buyers in those wishing to enter the segment, as well as those which need to increase their presence through a more assured mechanism.  Particularly if multiple frequencies are permitted.

     

    #5 Using FDI effectively:

    Given the increase in foreign investment that is expected to be permitted, radio companies are already looking to identify partners / investors.  The long term strategic fit and the degree of control that is required to be diluted are key areas that need to be considered.  Particularly since there will also be a Phase 4 one day.

     

    #6 Go for multiple frequencies:

    If they do come into being, the key questions will pertain to the programming mix – what genre should the new station be? – and ad sales – how not to discount the existing station’s rates when selling space to advertisers.

     

    #7 Build better MIS and control mechanisms to prevent operational chaos:

    Given the growth in the number of stations, the need to refine processes, automate, and ensure an adequate level of controls in the new, and existing, stations, will be key.  As the span of controls increases, controls always get less effective.  Processes which were performed manually across 20 or 30 stations won’t continue to operate across a 100 stations.  Key persons from existing stations will be used across new station launches, and that could cause the controls environment in existing stations to get lax.  Integrating station infrastructure and content, centralising capex and support function, implementing standard operating procedures and accounting checklists could benefit radio companies.

     

    #8 Focus on people:

    When 300 stations become 900, the number of people is expected to grow by 175 percent as well.  Recruitment, training, and then monitoring the new set of radio operations will be a challenge by itself.  Not to mention managing the inevitable poaching!

     

    Ashish Pherwani is Associate Director, Advisory Services, Ernst & Young Private Limited.

  • While the FM phase II may have been well received by the industry, all FM stations have reported break-even. Smaller FM stations are more likely to face huge challenges ahead.

    The lesson so far for FM players

    By Robin Thomas

     

    FM Phase-I Policy was approved by the Government in July, 1999. Under Phase I policy, a total number of 21 FM radio channels are operational in 12 cities. FM Phase II on the other hand has a total of 336 channels in 90 cities across the Country whereas the much awaited FM Phase-III policy seeks to extend FM radio services to about 227 new cities. Phase-III will cover all cities with a population of one lakh and above, simultaneously, there will be a total of 839 new FM radio channels in 294 cities. In addition to this Foreign Direct Investment (FDI) in radio has been raised from 20 per cent to 26 per cent, if allowed, multiple frequencies will bring new genres in radio leading to content innovations, and the overall advertising pie is also expected to rise from the estimated 5 per cent.

     

    While the FM phase II may have been well received by the industry, all FM stations have reported break-even. Smaller FM stations are more likely to face huge challenges ahead especially since the music royalty issue is yet to be resolved. Overbidding in phase I and II could be just one of the issues, MxMIndia asks some of the industry players what lessons the FM radio industry can learn in Phase III from the earlier Phase I and II.

     

    Mr Prashant Panday
    Mr Rana Barua
    Mr Harrish M. Bhatia
    Mr. Harshad Jain
    Mr. Ashish Pherwani

    Mr Prashant Panday, CEO, Radio Mirchi observed, “One main lesson from Phase I and II – Do not bid so aggressively that you can never recover your investments. Those who bid sensibly in Phase-II (very few) are making PAT profits this year. Those who did not are at best making EBITDA break-even. Some are still making EBITDA losses. These people sometimes feel overjoyed that they have turned EBITDA positive; but fail to realise that the returns on investments only start after you turn PAT positive. There are barely 4-5 years left for the licenses to get over. If a company is not PAT positive yet, it has no hopes of generating any decent ROI. This is the main learning from the first two phases.”

     

    “The 2nd learning is about being able to bring brands. But to build brands, companies need profits. So again, if you have bid wrongly, you don’t have enough resources to build brands. That’s what our research shows every quarter. That except for Mirchi and maybe one-two other brands in some specific cities, no other radio station has been able to build a brand. They may have listenership, but they still don’t have a brand. There are no attributes that people assign to these brands. No values that the brands stand for. Without a solid brand, listenership suffers. Pricing suffers. And long term profitability suffers” he added.

     

    In an earlier interaction with MxMIndia, Mr Rana Barua, COO Red FM said, “One of the critical learning that a lot of us had in phase I and II is not to overestimate the potential of the market. The biggest challenge that lies for all of us is knowing that uncertainty has become such a huge thing today, therefore I think a cautious approach is going to be extremely critical.”

     

    According to Mr Harrish M. Bhatia, CEO, MY FM, “What was witnessed in Phase 1 and Phase 2 is totally different than Phase III. The Phase-3 rollout will increase radio penetration, making it a pan-India medium, reaching tier II & III towns. The most important thing that the radio players need to keep in mind is to bid realistically.”

     

    Mr. Harshad Jain, Business Head, Fever FM had a different viewpoint, he said, “The regulatory amendments in phase III are ultimately expected to facilitate industry growth.  FDI has been increased and might drive some additional investment in the industry. I do believe that FDI should have been raised further to actually fuel growth and overall industry development. Another key change is to allow multiple frequencies in the same city but we will have to wait and watch how this rolls out in practice. Another key shift in policy is the e-auctioning route as this will take the license fee to new highs, especially for frequencies in metros like Delhi and Mumbai.”

     

    Mr. Ashish Pherwani, Associate Director, Advisory Services, Ernst & Young, has seven point suggestions to the FM players, some of them are  the key aspects that all radio companies need to address vis a vis phase III are: –

     

    1. “Which licenses to bid for-  How well the new stations complement the existing bouquet of stations in terms of tactical sales, the future revenue potential from these stations both from the point of view of generating local revenues and adding on to the revenue generating ability of other stations, etc.”

    2. “Bid values- The bid value should logically be based on the revenue generating ability of the station over its license period, and expected costs.

    3. “Alliances.  Some radio companies need to consider which stations to bid for on the assumption that they will form alliances with other networks that together will provide advertisers with national, regional or state-wide reach.  In addition, radio companies with existing ad sales.” In addition to these, “Trade licenses that add value to other networks, Using FDI effectively, Build better MIS and control mechanisms to prevent operational chaos and Focus on People” are some of his suggestions to the FM players.

     

    As one of the industry player said FM Phase-III is not the same as Phase I and II, true, but it is bound to have challenges of its own perhaps even more bigger and tougher. MxMIndia will focus next on the challenges for FM radio in Phase-III.