With the acquisition of Radio City, the Jagran group has consolidated its hold on potential advertising markets. In an exclusive interview with exchange4media, Apurva Purohit, President, Jagran Group speaks about key issues facing private radio stations and trends to witness in 2016 in the sector.
The first stage of the Phase III auctions has been the watershed moment for the sector. From a holistic view, how important has it been for the Indian FM industry and where does it go from here?
2015 surely has been a great year for the industry and for MBL. Stage 1 of the Phase 3 rollout suggests that finally the government is serious about expansion of FM. Having said that FM will reach out to newer geographies, newer audiences and the footprint is only going to be music for everyone’s ears only when part 2 of Phase 3 launches. With the dramatic increase in reach that will happen then there is going to be an increased interest and investment in the sector. Also with the current stations delivering high margins for leading networks such as ourselves, the extension of our licenses only means that we have a long period of sustainable growth before us which is something every investor wants. The industry is definitely poised for growth rate of 15-18% CAGR.
Radio City would continue to have the most efficient footprint of markets it operates in. With the addition of the 11 cities we bid for in phase 3, our network presence would be in the important cities with high concentration of the right advertiser audience. Many of these cities are blossoming and adding significantly to the growth of the Indian economy. Developing businesses and industries are opening up newer opportunities thereby leading to enhanced levels of affluence.
Radio has lagged behind digital, TV and Print in terms of ad revenue share. How much change do you forsee in this situation post the end of Phase III and once new stations become operationally capable.
FM has been stagnant for the past decade. It was available and fulfilled the needs of approx. 86 cities as opposed to TV and Print with a national footprint. So, obviously the investments were commensurate. With an increase in the depth of penetration in existing cities with new frequencies and the width coming in the next past of licenses, we see spends on radio growing from a current wallet share of about 4% to about 6% overall.
With FDI having been increased in the radio sector, is the growth in the FM sector set to pick up pace?
FDI will certainly see a positive reflection on the industry. Post Phase III expansion, the industry will definitely welcome a fresh infusion of funds & a strategic partnership with foreign players who have been in the global radio scenario for some time now. This will give the radio players an impetus to learn and replicate best practices.
Radio City is in a very strong position with the acquisition by Jagran Group. What are the plans for the future and how are you looking at building synergies with Radio Mantra?
In the media industry especially I have always maintained that one needs to be a part of a larger network as there are huge synergies in every function. The basic synergies would definitely be in the marketing & the ad sales place. Jagran has a very strong footprint in the North markets, primarily in the Tier II & Tier III towns. With the Radio City & Radio Mantra combination, we have dominance in high potential markets and thus deliver the maximum impact for our national clients. We also have a dominant footprint in the most important clusters for local advertisers’ viz., Maharashtra, Uttar Pradesh & Rajasthan. For a local, regional advertiser to grow in the cluster, Radio City could be a fantastic and cost effective growth engine.
On the other hand, Jagran also has a very strong presence in print, activation & outdoor. Though they were present in Radio, it was only concentrated in the North markets. Radio City fills the need gap & completes the network. As a group we can now leverage each other’s strength and offer 360 degree marketing solution to the advertiser that includes on-air, on-ground, digital and outdoor. This definitely makes us a strong player and a leader in the industry.
Though the Phase III auctions have been carried out, there are still certain issues that radio operators want resolved, for example, migration fee rationalization, bandwidth spacing, tower infrastructure? Is the Pvt FM space heading in the right direction and what are the expectations in 2016?
We are in talks with MIB and Prasar Bharti to sort several unfair operational issues that have cropped up. Since some of them are sub-judice, it would be inappropriate for me to comment right now.
Which are the key trends in radio advertising that you expect to see in 2016? How can the radio industry take advantage of the expansion of FM to deliver strong brand campaigns?
The first quarter of 2016 will witness three distinct trends: Expansion, Consolidation and Dominance. The emergence of a number of new stations, dual frequency, new geographies, new cities will come into play. One will witness new entrants in market. Tailoring of the content to suit sensibilities across varied geographies will be essential. Phase III will also increase the advertising prospects for the small town businesses that need cost effective advertising options. Today, we have figures and facts which support what evangelists of the medium have been saying for a long time. It is a medium which delivers great ROI, has a very attractive CPT and is able to deliver not only frequency but a national reach for a brand builder. Effective utilisation of the medium will go a long way in attaining the larger share of the advertising pie that the industry had been vying for since long.