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Chapter 5 - Analysis of Fm Radio Advertising Content

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Chapter 5 - Analysis of Fm Radio Advertising Content CHAPTER 5 - ANALYSIS OF FM RADIO ADVERTISING CONTENT 194 A. Overview This chapter is aims to analyse communication strategies and different trends used by FM Radio Advertisements in general and in the selected research area Pune and Lucknow. Chapter provides brief about the Current State of the FM Radio hidustry, FM Radio Programming, Industry Landscape, Revenue and Analysis of FM Radio Advertisements in Pune and Lucknow. The Researcher has analysed the product categories of FM Radio Advertisements (in each time slot). Communication strategies and some general trends about the FM Radio Advertisements in each location viz. Pune and Lucknow. B. Introduction The Researcher has chosen two FM Radio Station in each selected research area (Pune and Lucknow) through simple random method without replacement. The selected FM Radio Stations in Pune are Radio Mirchi and Radio City and in Lucknow Radio Mirchi and Red FM. Data coding sheets were used to record the description of FM Radio Advertisements. Each time slot was analysed for 15 consecutive days. The Researcher reviewed the previous studies also for the better understanding and the background information of the research topic. C. Current State of the FM Radio Industry The FM Radio sector in India has come a long way and the road ahead is equally exciting. Going by the numbers, India's FM Radio industry accounts for just four per cent of India's total advertising. The small share of FM Radio industry in the overall advertising pie is no surprise considering that radio is not considered to be the primary advertising medium, but it is still very effective in executing regional advertising campaigns. 195 Currently, the advertising revenues comprise more than 85-90 per cent of the total revenue generated by FM Radio companies.^^ The number of FM Radio Stations can be expected to grow multi-fold during the third phase of expansion, attracting the attention of both domestic and international players. The sector is expected to generate revenue of around INR 14 billion in 2012-13, with 245 private FM Radio Stations operating in 86 cities, and has been growing at a CAGR of 14% annually. ^According to IRS 2012 Q @ data, radio has an estimated audience of 158 million people (out of which FM Radio accounts for 106 million), as compared to 563 million in the TV segment and 352 million in the print sector. Advertising revenues comprise more than 85% -90% of the total revenue generated by FM Radio companies; non FCT sales can contribute up to 20% of a radio company's total revenue today. ^^ Many large companies are now achieving EBIDTA break even after 50%-60% of their license period has expired. This implies that they have very little time left to recoup their accumulated losses. Given limited inventory and revenue growth opportunities, profitability, has been largely achieved by companies by controlling their costs by centralizing their operations, enhancing their employees' productivity and networking their stations. The key challenges faced by industry today include limited inventory, inability to demonstrate ROI and slow recovery of ad effective rates (ERs). Therefore the need of hour is for the radio industry to collaborate and implement a measurement system the supports the growth of the industry. Given that smart phone shipments to India are growing at more than 60% per annum and the cost of broadband is expected to reduce to FNR 250 per user per month^^, it is clear that is only a matter of time before internet radio gains significantly in popularity, as audience ^^ www.radioandmusic.com 64 , www.cii.in ^^ http://www.ey.com/IN/en/Newsroom/News-releases/PR_Indias-FM-radio-segment-to-generate- INR14-bn-in-2012-13 ^^http://www.avendus.coni/Files/Fund%20Performance%20PDF/Avendus_Report- India%27s_Mobile_Intemet-2013.pdf 196 move away from music channels to genre specific and niche ones. This could affect the value of FM Radio license in the middle to long term. With the implementation of Phase III, with 839 frequencies being made available for auction, radio is expected to provide advertiser with a much deeper reach. ^^ More than 50% of FM Radio consumption is in homes, followed by people listening in transit (Mobile phones and in car listening) and out of home listening at restaurants, office and shops. Around 25% of total radio listenership is now on mobile phones, fuelled by handset manufacturers that have made FM Radio as standard feature in most of their models. Some radio companies claimed that their research indicates that mobile phones listenership in metros comprises more than 75% of their total listenership.^^ This is also reflected by the fact that many FM Radio companies. Including Radio Mirchi, Radio City and Big FM, among others, have now commenced radio service on internet. Since the internet and terrestrial FM Radio cater to different sets of audiences, they are both expected to co-exist. *^ http://pitchonnet.com/blog/2013/04/22/phase-iii-marketers-media-owners-gung-ho-about-radio- advertising/ ** http://pitchonnet.com/blog/2013/04/22/phase-iii-marketers-media-owners-gung-ho-about-radio- advertising/ 197 D. FM Radio Programming The average composition of an hour of radio programming varies significantly across different radio companies, cities and time bands. Broadly following break-up is the norm: Table 5.1 - FM Radio programming content (Minute/Hour) Large Station- Prime Large station- Non- Smaller Time prime time Station Music 32-40 40-50 40-52 Advertisements 14-17 5-10 4-11 Promotions and 2-5 1-3 1-3 Stationalities Jock talk 4-6 4-7 3-6 Source: EY survey analysis 2013 The analysis given above does not include the time from midnight to 7a.m. and clearly indicates that demand for prime time radio in large cities is significant. 1. Programming Genre All stations define music formats such as contemporary, retro, mixed, etc. Some stations broadcast programmes in English and alternate languages. Some use the same format consistently throughout the day, while others use different format during different time band. Most stations provide same genre of content. Furthermore, given the large amounts paid to acquire license, the content must appeal to a large audience based to most effective monetize investments, and therefore, radio stations generally broadcast content and formats that have mass appeal. 198 However, some stations are beginning to experiment to differentiate their content from that of other stations. Big FM has launched a travelogue format on its stations, which provides details about various tourist destinations in India, while fever FM has introduced radio dramas such as the Ramayana, Gandhi, Bose and Baal Gopal. Radio companies are also experimenting with specific genres. For example. Radio One has transformed its stations in Delhi and Mumbai and only offers English music on these. This helps them attract advertisers looking for target audience groups. Radio One has also differentiated itself in other cities such as in Kolkata, where it airs retro music and in Chennai, where it only broadcast on-demand music. Their inability to be innovative in their FM Radio programming is driving radio companies to launch online radio stations that cater to niche and specialized tastes. Radio Mirchi has four online radio stations - Meethi Mirchi, which airs modem Bollywood songs, Purani Jeans, which broadcasts retro Bollywood songs, Mirchi Edge which provides music beyond Bollywood and Club Mirchi, which airs Hindi and English club mixes. Radio city also operates three online stations - Web Radio Live, Freedom Radio and Non-Stop Indipop. ii. Regulations Governing Programming Content There are restrictions on the type of content on FM Radio Stations can air. According to the Grant of Permission Agreement (GOPA), all FM licenses are required to follow AlR's content and advertising code. ^^ Furthermore, FM Radio Stations are not permitted to broadcast their own news bulletins. This is expected to change after roll-out of phase III, with radio players being allowed to air news bulletins on the AIR. E. Industry Landscape Prasar Bharti operates All India Radio (AIR), India's public sector FM Radio service. Air stations broadcast from 267 transmitters that are installed at 246 places across India and its ^"^ National Consultation on Community Radio Policy-EDAA.in 199 FM Radio Stations reach around 42% of India's population. Furthermore, 248 new FM transmitters are being installed in the country under various schemes approved under the eleventh five year plan to further augment AIR's FM terrestrial coverage. AIR is expected to reach around 54% of India's population on implementation of this project. ^" AIR does not have any FM Radio Stations in 160 of the cities included in phase III license auctions. Prasar Bharti proposes to provide FM transmitters with program production facilities at 20 of these cities. This scheme has been proposed in twelfth plan, subject to availability of funds. Consequently, AIR radio requires more than 500 transmitters to increase its coverage to more than 80% of the country. i. Revenue The industry's revenues have been estimated at INR 14.2 billion for 2012-13, and have been growing at a CAGR of 14% over the last three years.^' However, the rate of growth is slowing down due to limited expansion opportunities and the overall economic slowdown affecting all segments of media. Revenue Growth in FM Radio is Driven By • Launch of new stations in the A+ and A category towns, allowing for more programming variety to emerge and for new listeners to be acquired. At present there are only 4-9 stations available in these towns, in contrast there are many more TV charmels, newspapers, magazines, outdoor sites and websites available. • Launch of stations across more tier II and tier III cities, which enables radio companies to provide advertisers with a bouquet of channels that can support brand launches across states or regions as a substitute for print or regional TV.
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