MUMBAI: As the radio industry gears up for Phase III auctions in 2013-2014, big players are forming aggressive expansion plans to penetrate in the tier II and tier III cities and on the other hand, smaller players are hoping to attain leadership of these markets by strengthening their brand position.
The auction will see the launch of 839 more stations across 294 cities which is stated to expand the reach of the medium at a large scale. Radio will then grow from reaching 20 per cent of the population to reaching 90 per cent of India’s population.
Speaking with Radioandmusic.com, Big FM CFO Asheesh Chatterjee said, “Phase III will expand the reach and witness us moving towards mass India. Reach was the fundamental thing that was restricting the growth of radio as a medium.”
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The growth is also expected to increase radio’s share in the total advertising pie which currently commands a mere four per cent, while worldwide radio is around 10-12 per cent. Chatterjee also added that radio will grow at a rate of 300 per cent approximately to reach a market size of around Rs 6000 crore.
“That 12 per cent growth in the ad pie did not happen here as there was no reach. Once Phase III comes about, the journey from four to 12 will happen fast. The adex will also expand from Rs 30,00-33,000 crore to reach around 50,000-60,00crore. So what we are largely seeing is that radio may expand from Rs 1500 crore to around Rs 5000-6000 crore,” he stated.
As players strategize around these points and form expansion plans, comparatively smaller players like My FM are aiming to achieve leadership in these markets and have commenced working towards it.
My FM CEO Harrish Bhatia said, “We are already one of the largest growing radio brands in the country and we think the future is excellent for radio. In Q3, we grew by almost 23 per cent over last year so we are doing well. We have very aggressive expansion plans post Phase III auctions, and we will be the number one brand in the tier II and tier III markets which are the growing markets.”
But even as the industry rejoices and awaits the roll-out of the expansion policy, the issue regarding high reserve fees continues to pose a threat to their strategies. With the EGoM having given clearance and the Finance Minister expecting a easy processing, the radio players are still waiting for the government to address the issues of high bid prices in certain cities.
If the issues are not resolved, the auctions might meet a similar fate as the 2G auctions as most players are not ready to pay a heavy amount of Rs 15 crores for a town like Sahranpur.
“There are challenges which the government will have to address. We have all seen how the telecom auctions failed, so I am sure in radio also they will make the necessary changes once they understand the challenges. But, wherever we think that the stations are viable, we will bid for it. Once the government makes the corrections we will go for it again. Who is going to give 15 crore for Sahranpur? So therefore, the government will have to make corrections there,” commented Bhatia.
Once the FM phase III policy is implemented, it is set to bring about a plethora of opportunities to innovate in content and in turn increase the turnover through more advertisers coming on-board.
Chatterjee stated, “Many radio players are innovating and in between all the clutter of information with the internet, it’s difficult to see the difference with radio being the audio medium. There is innovation happening and there is more that will happen.”
With around 2000 brands currently advertising on Big FM on a monthly basis, he added that the growth in the sector will come from changing consumption trends which are already being witnessed in metros and smaller towns as well.
He mentioned, “We need to see where the growth in advertising is going to come from. It will come as people move from necessities to luxuries to super luxuries. In places like Mumbai, the lifestyles are changing. Even in tier II and III towns, the consumption trend is changing. Advertisers need a mass medium to create a mass pull for their product. It cannot be print due to literacy, cannot be TV due to electricity. So it’s only radio as it is fully growth oriented.”
Meanwhile, My FM is pretty confident of its growth in the sector due to its innovative brand integrations done earlier.
“Whichever brand has done integration with us for any solution, have always been very innovative ones. We have done various integrations in Punjab; have done borderless radio and more so it depends on the interest level of the players to innovate at what level,” stated Bhatia.
Also with channel spacing being reduced and additional frequencies being brought in, it will give a chance for more content to come into radio. As of now, many radio players are aiming to get in differentiated content like news, sports, debates and various regional language based programs.
With the government also looking to allocate free news for FM radio stations, it will just help in taking radio forward to the next level.
Giving an example for the same, Chatterjee highlighted, “When you have eight stations in Mumbai, you cannot largely offer content clarity or diversity. But imagine if there are 25 stations in Mumbai, then there can be a station solely dedicated to Gujarati or Marathi, sports, news, debates and more. Metro markets have become stagnant as there are no additional frequencies to have channels catering to different kinds of audiences. If the needs of a large segment of the audience are not getting covered, the variety is not happening as the number of options is very limited.”
With more frequencies opening up, it further signifies that there is growth left in metros as well as the other smaller towns. This in turn will ensure content differentiation, enabling the listenership base to grow.
2013-2014 is expected to propel radio as a strong medium and emerge as a tool of social transformation by growing at a large scale and in turn engaging the audiences through various aspects as well.
