Television

"The adoption of multiple frequencies will mark the next inflation point in radio" : Naveen Chandra- Radio Mirchi SVP & National sales head Naveen Chandra

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The media industry has recently been eyeing the advantages that radio is promising to offer, but when it comes to the monies, advertisers are still apprehensive to bet big on the medium. As the radio industry in India evolves progressively from mass to niche, the industry is setting its targets to rake in the moolah. However, obstacles are inevitable and the biggest threat is of under valuation in proportion to its reach and accessibility.

In a free flowing conversation, Radio Mirchi SVP and National sales head Naveen Chandra shares his views on the scope of the medium in India, which he believes will be fuelled following the Government's sanction of a multiple frequency approach adopted by a single radio operator. He tells Indiantelevision.com's Renelle Snelleksz that this will mark "the next inflection point in radio." Geared to take on the big guns of print and television, this radio player has set high standards for itself and demands a premium as it moves into the radio era.

Excerpts:

Could you shed some light on Radio Mirchi's sales and media strategy?

As a market leader we have been pioneering efforts to look at things very differently. As a medium, radio is very unique because it can be both National and local at the same time. There is no parallel to this, for instance television is national by nature, and although regional television does come close, it is still very fragmented and exits in certain pockets. In terms of a National network, even print does not have editions across the country and is more regionalized. Thus we are a medium that's does not have limitations of geography, which places us very uniquely to conduct a national or local campaign.

The second thing about radio is that if you look at Tam data radio lures advertisers from across different product categories. While there are some categories that will use print or niche channels like FMCG, the auto, telecom and banking sectors will not advertise on GEC's. Radio in this respect is an all encompassing medium as it offers a solution to a wide spectrum of categories that advertise on different genres of print and TV.

Which are the biggest categories as revenue drivers on Radio Mirchi? How do they stack up percentage wise?

Banking and finance contribute to 11 -12 per cent, media and entertainment 10 - 11 per cent, telecom 9 per cent, retail and real estate 8 - 10 per cent, automobiles 7 - 8 per cent and durables (which on an annual basis is cyclical).

Which are the new entrants that are flocking to radio?

We recently conducted an IPO marketing seminar with merchant bankers to get them to look at the medium positively as it can provide returns due its large reach, which exceeds a Star Plus or Times Of India. Besides radio can also provide a lot of on-ground and BTL brand building activities that attract audiences to consumer the product.

How do you justify the fact that radio exceeds the reach of Star Plus or TOI?

If you look at five minutes of continuous viewing on any television channel, you will notice that it is lower than the reach of radio. Using one simple metric - to consume television you need cable connectivity, to consume print you need literacy but to consume radio you nothing but to enjoy good music. Therefore radio by definition, reaches 99 per cent of the population and the reach will always be larger than any other medium.

What is the current reach for the station nationally?

Currently, 1.7 crore people tune into Radio Mirchi daily across 10 stations that include the four key metros Mumbai, Delhi, Kolkata, Chennai, as well as Bangalore, Hyderabad, Ahmedabad, Indore, Jaipur. Stations in Patna, Jalandhar and Goa have recently been added.

What are your plans to increase your network across the country?

We are looking to launch another 20 stations across the country within the next six months.

What's the revenue growth that Radio Mirchi has seen over this fiscal?

We have seen good growth over this year, however I will not be able to share exact numbers until our annual report is out.

But we have marked about 50 - 60 per cent revenue growth on radio.

What is the current revenue generating model that radio operates on and how does it compare with television and print advertising rates?

For radio we follow ILT research that helps us to operate on a cost per reach (in thousands) model, so while our rates are high, our cost per thousand is very low. Typically print and TV operate on the on cost per thousand (CPT) approach but at about Rs 1300 - 1400 depending on the channel.

Our rate is Rs 70 per thousand people, which is very low in comparison to television and print. But as a means of comparison, one ad in print is equivalent to about 30 ads on radio, so in that sense it is much lower.

'The reach of radio exceeds a Star Plus or Times Of India'

What's the ad growth curve that the station has seen over this year?

With our focus towards a lot more on corporate driven advertising, if you look at the ad growth we have seen good growth over the last four to five years. Additionally, the ad durations have come down significantly from about 45 seconds to about 15 seconds on an average because the advertising environment has become more promotional led than as branding activities.

In terms of spot rates, what is the margin between Radio Mirchi rates and your closest competitor?

In Mumbai, our rate would be Rs 1,800 for 10 seconds, while other stations would range between Rs 400 - 1000 for the same.

What is the current market size for radio in India?

It presently stands at about Rs 500 - 600 crores.

Could you highlight key benefits of radio as a medium?

Radio is very linear medium, for instance in New York there are 89 radio stations but the average number of stations a person listens to is 1.7, which is under two. Essentially, this indicates a high loyalty towards radio stations as programs are seamless and it's not like every hour there is different show. The characteristic of radio is such that it is very personal and intense and therefore is consumed as a medium of 'one,' it's a mass as well as a personal medium. While for television, every half hour there is differentiated content which forces the viewer to keep shifting in and out of channels. Similarly, a Friends fan will watch the show on which ever channel it beams, so even if cricket had to shift to something like B4U, then everyone would flock there even if they have never seen the channel before.

Therefore, for radio the research we conduct points to many unduplicated audiences that are loyal to one station alone. Thus, many unduplicated audiences will continue to be present but will not be reached even if one operator were to buy out a set five to seven stations.

However, acquisitions will increase your presence across the country, so are you looking to buy out other stations?

Well, we don't know that yet. But in a sense the next inflection point in radio will be multiple frequencies.

With India experiencing a boom in radio, what are the key differentiators for Radio Mirchi in this cluttered environment?

Our key differentiator would be our programming and jocks which are very contemporary. Through a lot of analysis and research we cater to the needs of listeners. We often tie up with Bollywood to premiere music on our station.

Radio has a lot of elements that a listener can identify with like for instance a radio jock. Also, every radio station has a particular 'stationality.'

In more mature markets, often clients only advertise on stations that are a natural extension of their brand and its values? How far away is India on that evolutionary scale?

Let me give an example - There was a time when Warner Brothers would advertise on Go 92.5FM because it was English and niche, but today advertisers such as these are seeing the benefits of a mass radio stations as well.

With television further fragmenting into 'niche' specific channel offerings, how long before radio also branches out into the realm of niche stations? Given that Go 92.5 FM grew quickly extinct and resorted to mass appeal, what barriers would radio encounter before it adopts a niche approach?

Once the Government approves of a multiple frequency model, where a single radio operator will have different frequencies, it is then that radio will experiment and take the route of niche stations. But this will not take shape unless all the radio stations that are scheduled to launch this year roll out there plans.

What do you see as the way forward for the radio industry in India?

Currently, radio only occupies two per cent of an advertiser's ad pie expenditure and that is dispensable. As a medium I feel our rate structure is under priced, the average cost for a radio campaign is about Rs 60, 00,000 across eight to nine markets. The challenge is to increase this by three times.

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