FM players expect boom in small-town India

21 Feb,2012

 

By Robin Thomas

 

Radio has come a long way since the transistor era. Today, listeners have multiple access to FM radio through mobile phones, in-car listenership, particularly during drive time, restaurants, coffee shops and public transport to name a few, an FM radio phenomenon that’s peculiar to urban India.

 

In addition to this, FM stations are said to earn huge chunk of their advertising revenues from the metros. But all this could change with the soon-to-be-launched Phase 3 that will witness the addition of 839 FM stations in nearly 300 new cities having a population of one lakh and above. This is expected to further increase the reach of private FM stations across the country, which, in turn, will lead to a spike in the advertising share of the medium.

 

While the metros are saturated with radio players and with advertisers looking for options to widen their nets, industry observers are of the view that the next phase of growth in FM radio will come from the tier 2 and tier 3 cities. This phenomenon, they say, will explode in a big way once Phase 3 becomes a reality.

 

But before one proceeds to identify how lucrative these markets could turn out to be, it would be ideal to verify the effectiveness that radio stations at these small cities and towns display and whether they carry a certain edge over the other sought-after mediums, television and print, in these markets?

 

MxMIndia spoke to various industry players, including media agencies, to find out their views on the effectiveness of FM radio in Tier 2 and Tier 3 cities.

 

Most industry players are of the view that time spent on radio in small towns and cities is much more than in metros like Mumbai and Delhi. Besides, most of the non-metros are said to face a lot of power cuts, hence more time is spent on listening to radio, which becomes an alternative source of entertainment and information.

 

“Radio is extremely effective in Tier 2 and 3 cities. In the smaller towns, the share of radio is higher than what it is in the bigger towns. In some markets, the share of radio is as high as 20 per cent of the print market. This is a reflection of the effectiveness of radio” said Prashant Panday, CEO, Radio Mirchi.

 

With such effectiveness in the smaller towns and cities, most big advertisers these days are shifting their focus beyond metros, particularly towards the rural markets. Radio is believed to play an effective and constructive role in delivering better ROIs (Return on Investment) for brands in these markets, particularly as other mediums are either too expensive or do not provide good reach.

 

“Since the level of activity in these markets is lower than in metros, people have more time to spend with themselves. This is where radio fills the gap. An increase in number of FM-enabled handsets has further increased the consumption of radio,” pointed out Harrish M Bhatia, CEO, MY FM.

 

“Radio measurement surveys conducted by RAM have proved that the average time spent listening to radio per day is 244 minutes in Nagpur and 206 minutes in Jaipur as compared to 127 minutes in Mumbai and 124 minutes in Delhi (Source: RAM Sweeps 1.0),” he added.

 

According to Narendra Kumar Alambara, Vice President, Starcom Mediavest Group, Chennai, both retail and national brands will gain by using radio in the smaller markets. While retail will be able to gauge the efficacy of the medium in the market, national brands will be able to tap into these markets with more focus. “Radio is as good as any medium in smaller towns. Given the smaller geographies and the relative newness of FM in these markets, it has that edge, but ultimately the medium has to transcend from being just an entertainment/information media into being a medium that can deliver results for the brand.”

 

While national advertisers are increasingly flocking to the tier 2 and tier 3 markets, local advertisers such as retail outlets, education institutes, real estate, auto outlets and others are also said to be increasingly advertising on radio. While metros may bring a significant chunk of revenues for larger FM stations, it is learnt that the advertising revenues from tier 2 and tier 3 markets are growing significantly year on year.

 

The challenges, too, are many for FM radio in these growth markets. The challenges relate to filling up the entire available inventory. Local businesses are not strong enough to fill it up. So radio stations have to rely heavily on business from national clients. Apart from this, for some stations there is the constant battle to keep profitability intact.

 

R Venkata Subramanian, Senior Director-Investments, MPG India noted: “The is no strong local media in many of these tier 2 and 3 cities, and this is where radio has the potential to be a highly effective and reach building medium. The challenges, however, include the emotional connect with the RJs and how effective the FM station actually is. There is a need for better radio commercials. One other challenge for the radio industry in these markets is the lack of a good credible measurement system, which will measure the effectiveness of radio commercials and listenership.”

 

But a Big FM spokesperson countered: “The radio, as a medium, enjoys much higher visibility and it is the only medium that people can relate to as it is customized to those markets and hence it will have a much better appeal.”

 

Nowadays, a lot of advertisers use television and print as a lead reach medium whereas radio is used as an amplifying medium. Industry observers are of the view that after Phase III expansion, radio is likely to be seen by advertisers and marketers as a reach medium, especially for the national advertisers. As a result more advertisers are likely to use radio-led advertisements instead of using it just a complementary advertisement medium.

 

But Mr Alambara is of the opinion that most FM station in the markets have not been able to create and sustain a distinct local identity while maintaining their overall brand persona. “Media brands work best when they can relate to, and bond with, the local populace seamlessly,” he said.

 

But the real magic of FM radio, its reach, effectiveness in metros, mini metros and rural markets is likely to be seen only after the launch of FM Phase III. As of now, the cities which do not have private FM radio are eagerly waiting to experience the medium.

 

Big story image from Clipart, Microsoft Word

 

Post a Comment 

2 responses to “FM players expect boom in small-town India”

  1. Prashant Thomas says:

    Please launch private stations in Bhavnagar, Gujarat.
    There is great potential in this city.
    Waiting with increasing desperation!

  2. Dranilparikh says:

    we cannot listen in north gujarat alistner except on internet try to instole a relay station at palanpur thanks

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