Radio stations face small town problems

A little while ago, Airtel launched a massive radio campaign in Uttar Pradesh, specifically for the western UP market, where the company was facing tough competition from Idea. The media plan included all kinds of radio stations -- those belonging to the large networks as well as the individual, small players.

Unfortunately, this is one of the very few instances, where a national advertiser has used the individual or small radio network to promote its product.

Out of the 245-odd private FM stations in the country, more than 60 per cent belong to the large networks, such as Radio Mirchi, Big FM and the lot. These stations garner the lion's share of the advertising revenue that goes to radio. The preferred ones also include stations that are part of a network and primarily have a presence in all four metros.

Out of the Rs 880 crore (as per GroupM) of advertising money that goes to radio, these large networks corner around 80-85 per cent. The other 82-odd stations are either not part of any large network, or have presence in a maximum of five or six small towns.

These stations have to largely depend on local advertisers – this contributes 70 per cent of their revenue.

When the private FM stations entered the 90-odd small towns in India, with each station airing its unique content, radio emerged as a localized medium.

"Smaller radio stations also enjoy more acceptability in their area of operation over larger radio networks for their in-depth knowledge and better understanding of the area's language, customs, likes and dislikes."

However, this doesn't reflect in the way radio is being bought by national advertisers. Why do they shy away from these small radio stations?

"Larger networks offer a quick-fix media plan to planners," says Nabhojit Kuila, director sales, Radio Indigo. However, he admits that big radio networks provide wider reach, especially when the national advertisers look at a pan-India campaign.

Looking at various types of advertisers, FMCG and consumer durables, by and large, prefer larger networks for their reach. Retail, local telecom circles, vernacular media channels and promotions for local events, at times, prefer single-city or smaller network stations.

However, this is not the only issue, for the small radio operators also have to wage the battle of perception and unfamiliarity with media planners, when it comes to getting advertisers on board. "A large network has brand credibility, which the individual stations lack. This makes it tougher for the latter to convince the advertisers – who are also metro-based – on their core competencies. It is difficult for them to overcome the perception biases and remove the advertisers' apprehensions," says Harrish M Bhatia, chief operating officer, My FM.

The other disadvantage for the small-town, standalone stations is that the media planners do not consume these stations as consumers, which, in a way, could have changed the perception.

Nishant Mittal, chief executive officer, Radio Misty, hits the nail, when he points out, "The biggest handicap in selling small radio stations is the limited geographical awareness on the part of media planners and advertisers. In our industry, any campaign beyond Kolkata implies moving into the north-east. And within that, a majority of industry representatives fail to recognise territories other than Assam."

In the case of smaller radio networks, suggests Mittal, "One has to first sell the city and then the product."

For those radio stations, which are part of a large media group, the job becomes easier, as they already share a great rapport with planners and advertisers. "In fact, when it comes to sales, package deals are the order of the day, where both print and radio come bundled together," agrees Kamal Krishnan, head, sales and marketing, Radio Mango.

But for several other radio networks, maintaining independent sales team across the country is unfeasible.

That's why they either end up outsourcing their sales function, or prefer forming a consortium with a larger player, which again, is a positive move for the industry. A case in point is Radio Mantra and Radio Misty, which have sales alliances with Radio Mirchi and Radio One, respectively.

For larger radio networks, these smaller radio stations prove to be an economical answer to any local requirement of their clients, which the network itself is unable to fulfill when it does not have presence in a particular region or smaller city.

In addition to perception and accessibility biases, smaller radio networks have to battle the price war too.

As Kuila of Radio Indigo, says, "Larger network stations hold their rates on key markets such as Mumbai and Delhi, and either give away smaller markets at very low rates or as free add-ons. On the contrary, smaller networks try to hold on to their rates, as those few stations are their bread and butter."

This creates tremendous pressure on smaller networks to sustain their rates, as constant comparisons are made with the rates of the larger network stations.