The
Madison India Radio Research reveals that
consolidation and specialization are two
distinct trends in the evolution of the
radio business. Their in-depth survey
focuses on International trends in the
radio business, radio measurement and
the best practices that have evolved in
using the medium.
Opening
of the Floodgates
It
is ironical that while India has the second
highest penetration of C&S homes in
the world, radio has suffered from shunted
growth. This can be attributed to misdirected
policies by government, which did not
give enough prominence to radio as a rich
medium for entertainment and also for
community development. Recently though,
government has liberalized radio broadcast
and this has resulted in most media houses
diversifying to offer radio services.
In
Mumbai, for instance, five private FM
radio stations have been launched. Mumbai
listeners can tune in to any of the seven
FM stations (five from private broadcasters
and two from AIR). Government has indicated
that its long-term plan is to have 150
FM stations across 40 cities. Is this
a case of one too many? Can Indian market
sustain so many radio stations? Going
by the International benchmark, even 150
stations across India is a sustainable
proposition. There are more than 6000
radio stations in US and even a developing
country like Nigeria has 18 FM stations.
In most markets, radio manages to garner
around 4-5% of the mass media spend. In
some countries like Sri Lanka, radio accounts
for 20% of ad spend. It is estimated that
in 2001, American radio commanded US$3.2
Billion out of US$60 Billion spent on
mass media. In India, currently radio
is able to garner less than 1% of the
total ad pie of Rs.8, 600 crore. Madison
media estimates that by 2004, advertisers
will spend around Rs. 500 crore on radio.
This will constitute around 4 % of the
enlarged ad pie.
While
growth of the radio broadcast industry
looks exciting, there are numerous issues
facing the radio broadcasters. Chief of
them being the license costs and licensing
policy. After bidding aggressively, many
players have realized that high license
cost is making the business unviable.
As per reports, bidders license for 37
stations. This translates to around Rs.4.2
crores as license fee per station. The
broadcasters now want the government to
scrap fixed license fee and move to a
revenue sharing regime. However, the industry
feels that these are mere start-up issues;
radio should feature in the media planner's
radar as a serious medium.
Today,
media planners are quite at loss as there
is inadequate information on this medium.
This study attempts to provide better
insight by exploring other markets where
radio is a more established medium and
then extrapolate the same to Indian markets.
We will examine three aspects relevant
to media planners:
1)
International trends in Radio Business
2) Radio Measurement
3) Best practices that
have evolved in using the medium
International
trends
International
experiences show two distinct trends in
evolution of radio business
Consolidation
- Typically, there is a surge of activity
when the media is liberalized but over
a horizon of five to six years, consolidation
is inevitable and stations groups are
formed that controls most of the revenues.
For instance, in UK four media groups
control nearly 60% of ad revenue. We expect
similar consolidation exercise in India.
Radio stations that are part of established
media houses would do well. Publications
having strong city edition will do have
an advantage as they already have infrastructure
to marshal local advertisers and also
keep a tab on the pulse of the city citizens.
Specialization
- Internationally, radio stations have
grown by attracting niche audiences (like
a Hispanic channel in US or a Malayalam
channel in gulf) and local advertisers.
As of today, if one goes by Mumbai experience,
the concept of niche programming has not
yet caught the imagination of the broadcaster
and audiences find it almost impossible
to distinguish one from another. Madison
Media expects that the evolutionary pressures
will prevail in India and radio stations
will increasingly find their own niche.
For instance, we expect that by year 2004,
emergence of stations that address only
specialist audience groups - like a special
radio station dedicated to south Indians
residing in Mumbai or a station that caters
exclusively to college going population.
Such specialist channels will be ideal
medium for advertisers, as they will have
access to well defined captive audience.
Radio
Audience Measurement
The
question haunting most advertisers and
media planners is regarding the audience
measurement that will be adopted for Radio.
As it is early days in India, station
owners and advertising agencies on ad
hoc basis are conducting research. We
expect the trend to continue for some
more time till significant advertising
monies are committed on radio.
Even
Internationally, radio audience research
has not matured to the extent of television
audience measurement. The popular rating
system for radio that is used in US is
the Arbitron's RADAR (Radio's All Dimension
Audience Research) audience report. It
measures National radio audiences and
the audience size of radio commercials
aired on 31 radio networks operated by
large radio networks. Till recently, RADAR
report was based on a 12,000-person telephone
survey. However, the next round of RADAR
plans to shift reliance from telephone
survey to diary-based panel for data collection.
There has been some academic discussion
on use of "meters" in radio
sets to determine listnership. However,
these are many years away from being put
to commercial use. The prime reason for
inadequate advancement in radio audience
measurement technique has been the small
share of ad pie that radio commands and
also the vast geographic spread.
We
expect that over a period of time, audience
measurement technique for radio will improve
and a currency will be established for
buying commercial time and selection of
alternatives. In the mean time, we suggest
that advertisers should not ignore the
media owing to non-availability of any
established audience measurement data.
Indicative surveys are being conducted
and published periodically by research
agencies. Advertising agencies also conduct
periodic dipstick surveys. Madison Media
routinely undertakes studies on radio
usage.
Key
Findings from Madison Media Research -
- Radio
has a reach of 56% and there is a distinct
skew towards males.
- Radio
Mirchi is the most popular station and
is tuned by people in SEC A and B.
· People listen to FM at home
(70%), while driving (32%), at public
places (9%) and at the office (7%).
- Almost
51% of the people listen to FM for an
average time of one hour and another
39% listen to FM for a longer period
of 1-3 hours.
- Sunday
listenership is dramatically low with
only 10% of the people tuning in to
FM vs. weekdays where the number of
tune-ins is as high as 94%.
- Majority
of the people listen to Hindi film songs
(63%), followed by Hindi pop (40%),
remixes (37%) and English pop (33%).
Best
Practices that have evolved in using
the medium
While the audience
measurement is still in infancy, users
of radio as an advertising medium
can benefit from extensive work carried
out in area of media effectiveness.
Most of these studies have been conducted
in developed markets like UK and USA.
The most impressive in this genre
of research has been the Radio Recall
Research (RRR), which tested 1200
commercials with 200 respondents per
commercial.
This exhaustive study
was conducted in early 1980s and subsequent
research added to the body of available
knowledge. It will be incorrect to
directly transplant those learning's
in Indian context. However, they are
invaluable in providing directions
and we at Madison Media have distilled
these findings, adapted to Indian
context and arrived at set of best
practices for radio advertising.
Create Unique Properties
- studies clearly demonstrate that
properties created on radio are cost
effective and have advantage of high
recall. International experience suggests
that music oriented properties targeted
at youth last long and provide immense
benefit to advertisers. Closer home,
"Binaca Geet Mala" on radio
was as one of the best media properties.
To create such high decibel properties,
advertisers should be willing to enter
early and commit long term investment.
It might take some time before the
properties start to reward the advertisers
and advertisers should be willing
to fork out the extra premium now
before the medium gets established.
Exploit Drive Time
Audiences - the traditional bastion
of radio has been the "In car"
listening. However, given the low
penetration of ownership of personal
cars in India, we do not expect car
owners to be the largest audience
for radio. It is not important whether
in-car listeners will form the bulk
of listnership base. It is more important
to understand that radio will be the
best medium to target upwardly mobile
high spending executives and businessmen.
Studies have demonstrated that in-car
listeners are light consumers of other
media like television, making radio
a very effective medium. A study by
Voice of British Advertisers shows
that radio is the most effective medium
to target businessmen. There are mixed
reports with regard to station switching
behavior among in car listeners. A
research by Radio Advertising Bureau
(RAB), UK indicates, contrary to popular
myth, that nearly 85% of in-car audience
do not shift stations frequently.
However, other studies indicate there
is extremely low loyalty among in
car listeners. In any case, it is
undeniable that for brands that target
at affluent section of the society
need to be actively associated with
radio. In other markets, many successful
service brands especially those in
office supplies and financial services
have benefited tremendously by judicious
use of radio.
Exploit Imagery
Transfer - a study by Statistical
research Inc. shows that three out
of four consumers who watch a television
spot will "replay" the visual
image mentally when they hear a radio
commercial for the same brand. This
is called Imagery Transfer. Another
series of studies called "distraction
study" tried to simulate the
fact that radio listening is always
secondary activity. These tests also
indicated that listeners were able
to create and keep images fresh and
top-of-mind even when engaged in other
task. It is through imagery transfer
that radio creates a synergy with
television. Recent studies shown that
Sonic branding, where aural brand
elements are used is very effective
in sustaining brand's recall (tring
tring of Britannia). Creation of sonic
branding reduces long term cost of
advertising, as one need not air the
complete commercial to register recall.
As can be fathomed, radio can be advantageously
used in creating sonic elements of
a brand.
Effective Radio
Copy Management - studies have
clearly established that length of
the commercial had a positive impact
on the ad. In general, spots of 45
seconds or more were effective. RRR
studies also indicate that more brand
mentions in the commercial were good
for ad recall and was more effective
when the brand was mentioned early
in the ad. Moreover, fatigue factor
is high with radio commercials. The
ads that were repeated too often were
disliked. Copy variation can offset
this fatigue and it is suggested to
have three variants of the same theme.
Though airing multiple variants is
recommended, there is evidence, which
state that simultaneous airing of
more than 5 executions leads to decay
in effectiveness. As in any other
media, ads that were liked had higher
impact.
Radio Multiplier
Effect - apart from RRR, another
monumental study is the Millward Brown
study on radio multiplier effect.
Millward Brown conducted the study
across October 1999 to April to find
out how effective radio advertising
can be relative to television. This
study involved nearly 5500 interviews
in continuous research to track awareness
and attitudes to 17 brands. The media
tested were Commercial Radio and television
in the Central Region of UK. The broad
findings of the study proved that
radio was, on an average, three-fifths
as efficient as television at driving
advertising awareness amongst radio
listeners; used in conjunction with
a television campaign, it proved to
be an effective medium; and in general,
if 10% of a given television budget
is re-deployed onto radio, the efficiency
of the campaign in building awareness
increases on average by 15% as shown
in table below:
(Source: rab.co.uk)
The study highlighted
that radio effectiveness result was
achieved at one-seventh of the cost.
Of course, this cannot be taken as
a thumb rule as there will be wide
variance between rates in U.K and
other markets. However, the study
makes a strong case for advertisers
to divert a small portion of their
TV budget to radio.
Conclusion
Radio offers tremendous
opportunities for advertisers and
media planners need to explore various
options by which they can effectively
use radio in their media mix. Conversely,
broadcasters need to develop the market
by being more responsive to the advertiser's
needs. This will provide an opportunity
for the market to arrive at the final
verdict on the effectiveness of the
medium.
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