Radio should look for local advertisers

The discussion focussed on the need for audience segmentation for various FM channels present in the country, so that present and potential advertisers can justify ad spend.

The Association of Radio Operators of India (AROI) organised the second edition of the Radio Congress 2011 at Kingdom of Dreams, Gurgaon. The day-long event for the radio industry included panel discussions with various industry experts on key issues such as policy, regularisation and advertising on radio.

One of the panel discussions of the session focussed solely on advertising on radio. The discussion focussed on the need for audience segmentation for various FM channels present in the country, so that present and potential advertisers can justify ad spends.

The panellists of the discussion comprised Apurva Purohit, chief executive officer, Radio City and ex-president, AROI, Harrish M Bhatia, chief executive officer, MY FM, and Sam Balsara, chairperson and managing director, Madison Communications. Raj Nayak, founder and managing director, Aidem Ventures, moderated the session.

During the discussion, Balsara said, "In India, 60-70 per cent of the revenue is being generated from metro cities such as Mumbai, Delhi, Bengaluru, Kolkata and Chennai."

Nayak echoed the same thought and added, "Hence, the moment you have more channels, there will be fragmentation of both listenership and advertisers. Thus, the increase of private radio stations will lead to stiffer competition, which will result in low yield."

Balsara asked Purohit how one could profit merely by creating more new radio channels as this will lead to fragmentation of advertisers and ultimately, fragmentation of revenue. One should rather aim at localised advertising, too, to change the current scenario of four metros earning 50 per cent of the total revenue.

The discussion also stressed on the need for greater creativity in radio advertisements, which could help the radio stations to earn more revenue. Purohit said, "The fundamental growth driver for the radio industry that can be looked at during Phase 3 will mainly be evangelising radio, both as a media and a multimedia. There should be the right kind of packaging to sell radio as an industry. Nobody has really come forward to evangelise radio, which could have been done before."

Talking about the problems faced by the channels, she mentioned, "The channels need to get advertisers. Even the marketers are not bothered - they will buy anything in which they see value."

Pointing at another problem, she urged people to look beyond the three 'Big Daddies' of the industry - Radio Mirchi, Big FM and Radio City.

Nayak added, "When a smaller player goes to an advertising agency or a client, the reality is that the client has no time for it. If one is ready to shell out Rs 5 crore, it is a different scenario. However, if one does not want to spend more than Rs 5-6 lakh, then they are not given so much importance."

Nayak then threw the ball in Balsara's court, asking him how a media planning agency could help radio to evangelise as a medium.

Balsara answered, "You are thoroughly mistaken if you expect me to evangelise this medium. One needs to put himself in the shoes of the advertisers. The idea is to showcase the potential of radio advertisements. One needs to go to the advertisers with case studies to show how the station has grown as a brand. The need of the hour is to make radio act like a multimedia platform."

Nayak agreed, saying that marketers buy anything in which they see value, and advertisers look for the right opportunity.

Purohit urged the government to treat radio at par with other media. "Sometimes, I feel radio has been devalued more by its owners than by the advertisers. We are also fighting with the advertisers. The Times of India never carries a Page 1 advertisement for radio."

She added, "We do not need to stress more on the seriousness of the issue. We are fighting both with the government and with the advertisers. We have come a long way - from a five-player, to a 40-player industry in Phase 2. The only thing we want right now is parity."

Bhatia said, "Radio revolves around music -- so a very limited amount of differentiation can be expected in various programmes. We need to create a creative client. The need of the hour is deregulation. There are just too many regulations for us."

Purohit then said that the radio stations need the media buying agencies to design the right kind of media mix for the industry. Opposing vehemently, Balsara added, "I think we are doing a fantastic job, adding value to our clients. We are both a part of the same side of the coin."

Agreeing with Balsara, Bhatia added, "If we want to evangelise the medium, we will have to do it ourselves by not getting dependent on any client or agency."

The panel came to the conclusion that the industry suffers from an ad revenue disparity, wherein a few centres are more viable than others in terms of ad revenue. During the arrival of Phase 3, the concern is whether the increasing number of FM channels leads to more fragmentation of ad revenue. However, it also concluded on the positive note that if the penetration increases further, more advertisers will come in.