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IndustrySpeak: Regional markets, the next growth areas for FM radio – Part I

IndustrySpeak: Regional markets, the next growth areas for FM radio – Part I

Author | Robin Thomas | Friday, Jul 11,2008 8:48 AM

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IndustrySpeak: Regional markets, the next growth areas for FM radio – Part I

Going regional has become the growth mantra for FM radio players in the country. After forays by national players like Radio Mirchi and Big FM, regional / local players like Tomato FM, Radio Choklate, and Radio Mango are further expanding the market. exchange4media spoke to FM players and media planners to get an industry perspective on the growth and challenges faced by regional FM stations.

On Being a Regional Player:

Listing the challenges faced by regional channels, Monica Nayyar Patnaik, Director Eastern Media Ltd, said, “The major challenge we face being a regional FM station is regarding music rights. The cost is enormous for us to bear. Also, not getting included into a national advertisement campaign would be our second challenge.”

“It is estimated that of the total ad spend in India on various mediums, FM radio accounts for only 5 per cent as per Lintas Media Guide 2006-07. Because of this, while planning a campaign for radio the inclination is towards including network players than regional stations, even though the regional station has the merit to get included into the campaign. The last, and not the least, challenge is that we here do not have any surveys,” she added.

Speaking on the pros and cons of being a regional FM station, Naval Toshniwal, CEO, Tomato FM, said, “A regional player can do more justice to the local dialect and tastes of the local population, which enables it to produce content that is liked by the listeners, setting it ahead of the competition.”

On the challenges faced by regional players, Toshniwal said, “On the sales front, national players can afford to pass on lower rates thanks to the lower operating costs enjoyed by them. It is not economically feasible for the regional players to match the rates offered by the bigger players. Therefore, we feel the real challenge faced by the regional players is only on the corporate ad revenue front.”

For Ravi Nair, Programming Director, Radio Mango, the pros of being a regional station were better understanding of the region and the audience.

Nair further said, “Some of the challenges that regional players face are lower economies of scale in operations, lesser bargaining power with music companies for getting better license rates and getting shares of advertising pies from national advertisers. The key factor for growth in the current scenario would be more rational music royalties.”

What do national players and media planners have to say?

Vineet Singh, CEO, Radio One, said, “Metro players need the regional players to increase their reach, and the regional players need the metro players to increase their revenue growth. The challenge for regional players is to increase their revenue growth, which as of now is slow.”

According to Arjun Singgh Baran, Station Director Mumbai, Big FM, “Radio has the power of reaching out to the masses and at a very cost effective rate. Since the market is growing exponentially, there is enough business for all the players in radio. National players have the advantage of a pan-India presence and are thus, better equipped to serve the advertiser. The regional players don’t have this advantage.”

He further said, “There are some regional players who are discounting heavily, which is not a very long term strategy, and we are sure that they, too, shall start concentrating on helping their clients build brands and help them sell their products.”

Pointing out the pros and cons of national players, Nisha Narayanan, Project Head, SFM, said, “Smaller and local players have a higher network among local authorities and better ways to solve roadblocks during set up and operations. A highly revenue generating station surely and certainly lends support to the smaller stations and works to our advantage as a larger network. We do get preferential treatment when it comes to dealing with audio music companies or technical support suppliers or even in sales and advertising.”

“Larger players also have greater plans and policies to retain employees and cut down attrition. As a bigger network, transfers, promotions, larger portfolios and larger roles can be provided to employees, to ensure that the attrition rates of radio stations are limited,” she noted.

Divya Radhakrishnan, Senior Vice President at TME, observed, “Consequently, regional stations do have an upper hand. The advantages of regional players will exactly be the advantage that a local newspaper has in terms of its hold on the geographic pulse, which is why to date we don’t have a national newspaper in India.”

In terms of challenges she added, “They may not be able to keep pace with sourcing talent and content as the national players, who would have deeper pockets.”

S Venkatesh, Senior Vice President, Lintas Media Group, pointed out, “The advertising pie from Local to Local and National to Local is about 50 per cent. One of the challenges a local player faces today is getting a share in the National to Local pie, and this is largely because of lack of sales and marketing support. While a large player has the option to float discounted packages on a network deal, a local player loses ground.”

He further said, “With single frequency still being a constraint, a larger player will push local strong players to align themselves for sales and marketing support to consolidate and ensure growth in revenues.”

Tomorrow: Future of regional radio stations

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