FICCI-KPMG-Report-13-FRAMES

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116 The power of a billion: Realizing the Indian dream “ With radio penetration being as high as 70-80 percent, there is a universal acceptance of radio as a medium among listeners. However, advertisers are yet to understand the return on investment that a medium such as radio offers. They continue to invest majority of their budget on heavily cluttered media like TV and print. “ - Harrish M Bhatia Chief Executive Officer, DB Corp Ltd. (Radio Division) Radio – An integral part of a marketing plan © 2013 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Though radio has been one of the oldest mediums in India, its true expansion only took place in 2001 when the government deregulated the medium and allowed frequencies to be owned by private players. With the advent of over 40 players in the medium and its availability in 86 of the largest cities in the country, there was a huge focus from the networks to showcase radio’s attractiveness to the advertiser and equally an interest from the advertisers to test this medium as part of their advertising mix. While initially advertisers used the medium as a support and an add-on to larger and more traditional media like TV and print, and a frequency builder to enhance brand recall, over a period of time they have started realizing that the true potential of the medium is far greater than just as a support medium. Radio today has thus started becoming an integral part of a media plan for the following reasons; • It is the only medium which is local, live and interactive, thus advertisers can actually create geographically localized and segmented communication stimuli for their customers, use radio to reach out to specific pockets of audiences and actually get real time responses to their communication. Advertisers can use radio to have a two way communication with their consumers and measure response to their brands while in the case of traditional media it is usually a one way and more passive communication. • The RJs on radio by virtue of the medium’s personalized nature have a far stronger connection and emotional engagement with listeners than any other medium’s spokespeople. As a consequence RJs are very powerful influencers in the consumers mind and can be an important source of information dissemination. • Radio is also very complementary in nature to TV advertising. In fact research proves that apart from their own promos, TV channels have found radio ads as the next significant source of building recall for their content. In fact a single source data analysis done by rating companies has shown that radio adds new audiences to a TV plan beyond a certain budget in a national plan. If 10 percent of a given TV budget is redeployed onto radio, the effectiveness of the campaign in building awareness increases on average by 15 percent • Because of the complementary nature of the time when TV and radio are listened to, even on a single day it is better to use radio during the day and TV in the evening to build efficiencies in a media plan. • Radio is also far more cost effective than print at a local level. It gets advertisers the same reach at 1/3rd the cost of print in a city. • Increasingly a radio plus outdoor or radio plus on ground kind of marketing activation has demonstrated higher recall than using more passive media like print. Because of the fact that common people view radio as their platform and are very comfortable with the medium, they tend to respond to it far easily. ( eg A recent activity done by Radio City saw nearly 80000 auditions across 15 cties ) • Radio’s reach at a local level is higher than most other media except the GEC channels and thus demonstrates the widespread impact it can have in transmitting the advertisers’ message to consumers. With the advent of Phase 3 where FM will become available across nearly 300 more cities, its reach will only go up exponentially. As advertisers look beyond the metros and mini metros for growth, the availability of FM in Tier -2 and 3 towns will provide a cost effective choice to them to reach out to potential consumers in these cities. More importantly, it will become available as a local medium to advertise on for thousands of retailers in these cities who today have practically no cost effective way of advertising and reaching out to buyers. Phase 3 is expected to change the nature of communication in smaller towns as well give a powerful tool to local businesses to expand and grow. Apurva Purohit CEO, Radio City Unless otherwise noted, all information included in this column/ article was provided by the author. The views and opinions expressed herein are those of the authors and do not necessarily represent the views and opinions of KPMG in India.
The power of a billion: Realizing the Indian dream 117 Local advertising spend increases The macro-economic challenges plaguing the overall advertising market continued to hamper the growth of radio industry as well. Advertising was driven mainly by automobile, FMCG and retail sectors while telecom and BFSI restricted their budgets. Sports, NGOs and agriculture were some of the new categories advertising on Radio 5 . The first three quarters saw a considerable reduction in national advertisements as the national advertisers chose to cut their ad spends in light of a slowing economy, although the growth in national advertisements picked up in last quarter of the year during the festive season. Phase 3 will take radio to newer towns which will help the market to expand and also enable growth of radio medium as a category. The recent announcement by the Finance minister in the 2013 budget on the rollout of 839 stations across 294 cities is an encouraging development for the radio industry. Youth continue to be the primary listeners of radio Indian Readership Survey or IRS is one of the largest readership surveys conducted in India. It also captures listenership for radio. According to IRS 2012 Q3 findings, the listenership of radio increased from 155 million to 159 million from Q1 2012 to Q3 2012 registering a growth of 6.1 percent compared to 6.4 percent growth of Television during the same period. Majority of radio listenership comes from the age group of 20-40 years of age. As a result stations continue to focus on youth by developing youth centric programming. Age Group % listenership Below 20 yrs 27% 20-40 yrs 48% “ National advertisers are increasingly launching local products to target the markets in smaller cities. While local/regional brands also continue to thrive. The geographical size and diversity of this market requires customised mass media solutions. Post phase III, radio can play an important role in effectively targeting this segment. “ - Asheesh Chatterjee CFO, Reliance Broadcast Network Limited >40 yrs 26% Source: IRS Q3 2012 The reduction in budgets of national advertisers was partially compensated by a strong growth rate exhibited by local businesses which were somewhat insulated from slowdown in the economy – especially in Tier II and III cities. The local segment now comprises nearly 50 percent of overall advertising revenue for the industry with significant difference across major networks. For example, Radio Mirchi, local advertising stands at ~40 percent and for MY FM it is 75 percent 5 . Share of local advertising Source: KPMG in India analysis based on industry discussions © 2013 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 05. Industry discussions conducted by KPMG in India
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Acknowledgement We acknowledge the
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FICCI-KPMG-Report-13-FRAMES

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