RADIO TRENDS IN INDIA & ABROAD: A MADISON INDIA STUDY

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.