Laying a fertile ground for radio in 2012

2011 is being hailed as a landmark year for radio, with the announcement of Phase III, among other things. But will it spur listenership and revenues?

e4m by Priyanka Nair
Updated: Jan 10, 2012 7:40 AM
Laying a fertile ground for radio in 2012

The year 2011 saw the radio medium consolidate its true position and potential in advertisers’ blueprints. However, though radio has 5 per cent share of the media pie, the medium has not yet reached the stage where it has become a ‘must have’ in media plans, often being knocked off in the first phase itself.

Here’s a look at how 2011 was for the Indian FM industry.

Positive expectations on the threshold of Phase III
The Indian FM industry has a lot of expectations from Phase III and while we don’t like to speculate, we hope that Phase III will open the doors to new markets for all FM players as well as help each one of them to better differentiate themselves with reference to content. The natural progression would then be increased listenership, better revenues and a larger market penetration.

Commenting on this, Harshad Jain, Business Head, Fever FM, said, “With the announcement of FM Phase III, 2011 will be milestone year for the radio industry. Be it FDI or other opportunities that Phase III brings along with it, the year can be termed as a transformational period for the industry. In other words, one can easily say that this year will shape the growth strategies and approach for most players for the next two or three years. The year 2011 has been a challenging year, not just for the radio industry, but also for the Indian economy as a whole. Every player in the industry has taken a very cautious approach, be it existing operations or scaling up. With radio emerging as a more localised medium, 2011 has also seen growth both in terms of numbers of listeners and advertisers.”

On a similar positive note, Suresh Sanyasi, National Sales Director, Radio Indigo, remarked, “With the advent of Phase III, we can only hope to expand our horizons, our investments and, of course, our reach. It’s only been about the growth for the industry considering the backlash we’ve suffered with the so-called recession in 2009 and 2010. 2011 has been a remarkably positive year.”

Harrish M Bhatia, CEO, My FM, noted that radio as a medium was growing in India, especially in Tier II and III towns. “It is interesting to note that while global slowdown and stock market crash affected metros, retail advertising remained unaffected.”

Broadcasters welcome new changes
Broadcasters have been permitted the carriage of AIR news bulletins on their stations. Also, content featuring certain categories like information related to sporting events, traffic and weather, coverage of cultural events, festivals, coverage of topics pertaining to examinations, results, admissions, career counseling, availability of employment opportunities, public announcements pertaining to civic amenities like electricity, water supply, natural calamities and health alerts, among others, as provided by the local administration, will be treated as non-news and current affairs broadcast will be permissible on private FM radio stations.

Commenting on this, Radio Indigo’s Sanyasi said, “To know that we can finally broadcast news, increase foreign direct investment and perhaps spread our wings to smaller cities was truly a remarkable time in the Indian radio Industry. We’re finally in the race to reach international broadcasting standards.”

Increase in advertising opportunities
With a growing listener base, advertisers are now more open to allocating a larger share of their budgets towards radio advertising. The current 5 per cent share of radio in the media pie is expected to double to almost 10 per cent once Phase III is implemented.

The economic slowdown has in the past proven to work to the advantage of the radio industry. Radio being the most economical medium with a high ROI, it is preferred by marketers during lean times. Moreover, the push of major FMCG companies into rural areas will make radio a medium of choice in areas where television penetration is low and illiteracy is high.

Ashit Kukian, COO, Radio City, commented, “The year 2011 has been fairly good for the industry in terms of revenues, particularly in comparison to other media. Moreover, smaller markets have shown robust growth. All this, coupled with the increase in effective use of radio, makes us reasonably happy. We have been seeing more and more advertisers across categories using radio far more creatively and effectively. Of course, the Phase III announcement has been a huge milestone too. It is going to redefine the future of the medium.”

My FM’s Bhatia added here, “Radio as a medium was on the priority list of retail advertisers, with My FM garnering the highest retail market share. Moreover, government schemes and rural development incentives ensure employment, which leads to further increase in consumer spending.”

Music Royalty
The Bombay High Court’s judgment, freeing Radio City from paying royalties or licence fees to the Indian Performing Rights Society (IPRS) made singers, music composers and lyricists see red. But it was this landmark order that fixed the royalty rate for sound recordings on FM radio, paving the way for a revenue-sharing model.

Giving his views on the royalty issue, Rabe T Iyer, Business Head, Big FM, said, “Performance royalty and music royalties, which were a huge for the radio industry, are going to come down sharply as performance royalty is no longer payable. With music royalty slated to come down to 2-4 per cent of revenues, at par with international markets, it will boost margins for radio players. If we were to pick one component, I would say that it would be a strong and innovative programming team. Programming is always the centre of a strong radio station. Without it, the rest does not matter.”

Mobility of the medium has increased listenership
Radio is the one medium that anyone can access on the go. With new and interesting content and a strong connect to Bollywood, new listeners are added everyday and people stay tuned for a longer time. Advertisers have found radio to be a great medium to not only reach their audiences, but also to interact with them. The growing listenership and their involvement in the medium would lead to increase in revenues.

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