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Tier II-III is MY FM's secret weapon

Tier II-III is MY FM's secret weapon

Author | Simran Sabherwal | Friday, Jul 24,2015 8:48 AM

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Tier II-III is MY FM's secret weapon

MY FM, the radio arm of the Dainik Bhaskar Group, started its operations in 2006 in Jaipur and the next couple of years saw the radio operator expand across seven states with the addition of 16 more stations to become the fourth largest radio network in India. Not surprisingly, the radio operator’s strategy was to follow the pattern of its parent company and focus on its reach in the Tier II and Tier III markets. While the metros promise higher ad rates, research has shown that Tier II and III towns have overtaken metros when it comes to self-employment and even purchasing power. 

However, the launch was soon followed by a period when business sentiments were hit by the global financial crisis affecting various sectors, including the nascent FM radio industry in India and in particular the ad-rates. But MY FM was able to break even in three years’ time and then turn PAT positive in four and a half years as it worked on concentrating on its key markets and differentiating itself from its competitors.

LEARNING ALONG THE WAY

Looking back, MY FM's CEO Harrish Bhatia, a veteran with the DB Group, says, “The channel has become a dominant player in the markets we operate in and it was the first time clients were witnessing radio in these markets. There was a lot of learning for us; how radio functions and performs but we mastered the art soon.” He adds, “We have grown almost 50 per cent more than the industry in the last five years. With the industry growing at CAGR of 12 per cent, we have grown by about 18 per cent. The journey has been exciting, challenging and encouraging, also because what we have done in the market, our competitors have not even thought along those lines.”

With “choc-a-bloc” inventories, MY FM raised its ad rates by 20 per cent in March 2015 (net realization would be around 15 per cent). Currently, the ad rates range between Rs 150 to Rs 600 per 10 seconds, depending on the market, the time band, client, etc. The addition of new categories of advertisers, e-commerce and automobiles, on radio boosted the top-line. Besides, the traditional radio advertisers, realty, local life-style, education, other categories in the local market, health and movies, opened up to advertising on the medium. The continued focus on local retail player has resulted in retail local advertisers share in the ad-pie being at 65 per cent as against 35 per cent  of the national advertisers.

Bhatia says, “ Radio is a local medium only and that is where the opportunity lies because there are advertisers in those markets who do not have any corporate offices and have no idea how to make themselves a brand. Radio gives them value for money and the only medium that they can afford.” Commenting on the strategic role radio played during the elections, he says, “Compared to the elections held in 2009, when we struggled to get clients on board, this time we didn’t have to struggle during elections.”

USING RADIO EFFECTIVELY

With radio being primarily a local player, tactical and effective usage of the medium can help the brand and media planners deliver results. However, Bhatia believes that many clients have not understood the power of radio.  He says, “Unfortunately, most clients who are not on radio think that because they don’t consume radio, their target audience is also not consuming it, which is wrong.  One has to delink his own consumption viz-a-viz the consumption of the target audience as many times you are not the target audience of your product.” 

While the serious players on radio understand and pay the right value, Bhatia adds that, looking ahead, while radio rates will increase, radio operators will have to create more value for advertisers.

While content integration is now a standard across the board, MY FM has seen success by selling inventories of non FCTs and non-spot category, an innovation seen to be novelty in markets where MY FM operates. The station also looks to create value through sponsorships and creating on-ground property to meet the clients need.

With radio becoming closer to its listeners, Bhatia says the expectation of listeners in MY FM’s core markets is different compared to the metro audiences. The listeners in the Tier II and III markets look to radio to add value to them on a day-to-day basis, in addition to music and entertainment, thus compelling MY FM to be differentiated. Innovations in the content space have resulted in actor Shekhar Suman being roped in as an RJ and even airing a radio documentary.

THE SCIENCE OF PLAYING SONGS

With all stations playing the same Bollywood numbers (barring the English stations), and taking their brand positioning around Bollywood, MY FM does not have any brand positioning and relies in the science of playing songs. This is done by playing songs according to the day-part, eg, melodious and slow tempo music at late night. Bhatia explains, “While the song may be the same, how and when it is played is a science. If you have a brand positioning, you are sometimes compelled to play certain kinds of songs. Fortunately we have not chosen a brand personality, so I play songs as per the mood of the time, day and where it fits and as per the speed of the song.  Very few brands have that choice in the radio industry.”

THE PHASE III CONUNDRUM

Radio’s share in the overall ad-pie has remained between three to four percent over the last five years. This has been attributed to the limited reach of radio and all radio players have put their bets on the long-delayed Phase III (tentatively expected to be now held in late July/early August now) to up their share. Bhatia believes that in the next three to four years if the radio expansion radio takes place as per Phase III plan, radio’s share in the ad-pie should go up to 8-10 per cent.

Commenting on the auctions, Bhatia says that MY FM will be aggressive bidders in the auction and will look at expanding the network further. Sticking to the company’s core markets areas, MY FM is likely not to bid for the scarce frequency in the metros. He says, “If you ask me an open question about whether we will look into metros or not?  My answer is very clear—Can I become profitable in three years time, if somebody can show me on a piece of paper that it is possible, I will take it. We are not sure of that. So we are happy with what we are doing and expand in our core markets and become a more dominant player here.”

CONSOLIDATION - THE ORDER OF THE DAY

A signal that a particular industry is maturing is when players start going down the route of M&A (mergers and acquisition). In the last few months, the Indian Radio industry has witnessed two such deals – Dainik Jagran acquiring Radio City and Radio Mirchi putting in its bid for Oye FM .  Commenting on this trend, Bhatia says, “Consolidation is good for the industry because that means more focused players will play a dominant role. As far as we are concerned, we have made our point very clear earlier that wherever we can become profitable in  looking at that.”

THE ROAD AHEAD

As radio operators bet big on digital and launching multiple channels  and genres and catering to niche audiences (playing music that does not find space on FM) on this platform, MY FM is treading on this platform carefully. With no monetization model yet in place and regulations still unclear, MY FM stance “not yet sure of the model of the digital space,” and high royalty cost of music rights, has the station holding this out for the future.

With Phase III being looked as the gamechanger and future growth driver, Bhatia believes that people will start looking at radio with a different perspective and advertisers, especially new businesses, will realize that radio is a high impact local medium that delivers value for money and so Bhatia signs off with, “Great times ahead for MY FM”.

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