Ads surf radio waves

Oct 16, 2011, 11:41 IST | Yoshita Sengupta

With over 300 radio frequencies up for auction next year, mofussil India is being lured by radio channels like never before. Not only are stations revamping their music lists, they are also asking their jockeys to make advertisements for the local mechanic and tile maker

This is a story best told in numbers. Radio advertisement registered a growth of 20 per cent in 2010, second only to the Internet, that marked a 28 per cent hike. Radio's share in the Indian advertising pie increased from 3.1 per cent in 2006 to 4.4 per cent in 2010, says the PricewaterhouseCoopers' India Entertainment and Media Outlook 2011 study. According to their estimates, the share is likely to go up to over 6.3 per cent in the next four years.

Industry experts say radio advertising has catapulted to its current position in the last three years, at a time when overall advertising expenditure hasn't been striking. "Radio has been growing faster than the other segments. In the fiscal year of 2011, radio grew by 20 to 25 per cent, while the advertising industry was growing at a far slower rate. As a result, the share occupied by radio ads has climbed to about 5 per cent of total ad spends," says Prashant Panday, CEO of Radio Mirchi. 

(Left to right) Radio One's creative team: Evening host MJ Prachi,
Music Manager Manish Tiwari, Afternoon Host MJ Gya, Station Head Kiran
Dcruz, Programming Head Anita Naidu Pawaskar, Breakfast Producer
Jayraman Mohan, Manager Client Solutions Aanchal Aggarwal, Breakfast
Host MJ Shruthi and Promo Producer Kirti Shetty. Pic/ Datta Kumbhar

Interestingly, it's the growth in the Indian automobile sector, and the increase in the sale of FM-enabled mobile phones that's contributing to radio's success.  Radio penetration has increased from 59 per cent in 2007 to 77 per cent in 2011 across Mumbai, Delhi, Bengaluru and Kolkata (where Radio Audience Monitoring --RAM -- is available).

"Radio is a dynamic localised medium that clients have now begun to exploit to customise their communication to fit specific geographical, marketing and competitive needs. Besides, the growth in FM penetration across all RAM markets along with the launch of new stations covering a wider geographical area, has resulted in increased radio consumption," says Kiran Dcruz, Mumbai Station Director of Radio One. 

Creative Director of Origin Beanstalk Creative Consultants, a Mumbai-based ad agency, Sunil Gangras, says advertisers are finally waking up to the fact that it's important to connect with people who are constantly on the move, especially India's young; an important target audience for most brands. Gangras says he ends up writing close to 70 radio ads each month.

The continuing economic slowdown has in fact, proved to be a disguised blessing for radio in India. It's turned into a more attractive advertising platform since the expenditure on radio (in absolute terms) is far smaller than that on print or television. "Radio is way cheaper, and a lot more new players have stepped into the business.

The competition has brought down production costs. A quality radio ad can be produced for as little as Rs 12,000. Compare that with the budget for a television ad that can run close to over Rs 20 lakh," says Gangras. While the print ads tariff hasn't been affected, radio channels are competing fiercely, and offering deals like never before.

Creative Director at McCann Erickson, OR Radhakrishnan, who has taken home several awards for radio ads (including the most prestigious Cannes Lions International Festival), says it's still a task to convince clients to consider radio. "Clients on a budget should opt for radio but some of them are willing to cut down on peripheral advertising costs to accommodate cheaper television commercials. Radio is still not the primary medium for advertising."

What's evidently a trend though, is that radio is being used more effectively as a tactical communication tool to support television and print commercials. For Gangras, radio ads are always on the plan when his firm designs campaigns for clients. "For short or budget campaigns, it's okay to exclude television ads, but radio ads are an absolute requirement," he says. Pandey refers to this as "the beauty of the medium". No matter which medium it ties up with, radio works well to make the overall publicity effective, he says.

Strategy that worked last year
Last year's growth in radio ads was on account of higher ad sales volumes instead of an increase in ad rates. According to the PWC report, several broadcasters, particularly in the larger cities, managed to increase advertising revenue by cutting down on music and talk time. This resulted in a substantial revenue increase without a significant increase in advertising rates.

The interesting development, say insiders, is the willingness to advertise with radio in Tier 2 and 3 towns across India. According to Dcruz, smaller towns that opened up to radio a couple of years ago are fuelling the growth of radio advertising. "Given the rising purchasing power of non-metro markets, advertisers have begun focusing ad spends there. Besides regional print ads, they now have another localised medium to fall back on," he shares. In a market like Raipur in Chhattisgarh, Pandey says, retail advertisers have begun to use radio to advertise their products in addition to considering print. "In fact, for the first time they have an alternative to print," he says.

And radio stations are targeting these advertisers with a novel strategy -- one that makes them a one-stop shop for publicity. Broadcasters now end up taking care of every client need, right from brand positioning to conceiving the creative idea, and handling production. "These clients are tapped through print and outdoor ads, and word of mouth. Besides, cold calls are integral to the business. We understand the brand, its positioning and the challenges it faces. That's when we make a proactive pitch to the client. The challenge is to first sell the medium by demonstrating its effectiveness and efficiency, followed by the creative idea," says Dcruz.

"Local small and medium enterprises like iron rod makers or tiles manufacturers are advertising on radio. We meet the advertiser, convince him about the effectiveness of radio over print, and that's when our programming team comes into to conceive the idea, write the copy, get the voiceover, produce the spot and add the zing. We do it all," says Panday.

Profits ahead
The growing interest of small town advertisers in radio is likely to increase after the government auctions more frequencies in FM Phase III. The Union Cabinet on July 7, approved the Information and Broadcasting Ministry's proposal for the expansion of FM radio broadcasting services in the country. According to the proposal, in the next expansion phase (Phase-III policy), FM services will extend to about 227 new cities (in addition to the existing 86). This means, 839 private FM radio channels will cover 294 cities.

"The Phase III stations will go operational by April 2013. So, the impact of Phase III stations will be realised only in fiscal year of 2014. Till then, the radio business, I believe, is likely to continue growing faster than other media," says Panday. Dcruz estimates that the FM radio sector, currently sized at around Rs 10 billion, will grow by 30 per cent to 35 per cent when Phase III kicks in.

The icing however, is likely to be a series of regulatory changes that have been accepted by the government. One includes allowing private operators to own more than one channel in a city (not more than 40 per cent of the total channels in a city). In such a case, operators will see economies of scale playing out in their favour, enabling them to use the same studio for various kinds of programming, and different stations, upping their advertising revenue.

"Phase III is going to change the fortune of India's FM radio industry. It will be able to compete with regional print publications that have expanded aggressively in small towns over the last few years. Differentiated content, multiple frequencies along with news and current affairs, is definitely going to enable radio to become a mainstream medium," Dcruz believes.

We understand the brand, its positioning and the challenges it faces. That's when we make a proactive pitch to the client. The challenge is to first sell the medium by demonstrating its effectiveness and efficiency, followed by the creative idea. Radio One Station Head Kiran D'Cruz on stations becoming a one-stop shop for publicity campaigns in small towns

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