India Radio Forum: Radio needs to be repositioned from a frequency medium to a reach medium

By Sapna Nair , afaqs!, Mumbai | In Media Publishing | May 20, 2010
The growth witnessed by the Indian radio industry in the last eight years is incomparable

While radio stations fight for a visible place in the advertisers' media plans, the encouraging news is that the Indian radio industry is the fastest growing in the world. Addressing the India Radio Forum held in Mumbai, Vikram Sakhuja, chief executive officer, South Asia, GroupM, said that the Indian radio industry has grown 36 per cent CAGR since 2002. The ad expenditure on radio, however, has managed to increase from 2.2 per cent to 4.4 per cent. The worldwide average is about 5.5 per cent, while in markets such as Columbia, the spends are as high as 27.4 per cent.

Examining the issue, Sakhuja said that the revenue was a result of awareness, availability, trial, repeat, consumption frequency and price. All these levers need to be worked on to build revenue. Since advertising revenue is the primary source for the Indian FM industry, the key levers to be looked at are - more clients, more stations, more spots, more day parts, more weeks and more price.

& #BANNER1 & #Sakhuja said that out of 323 GroupM clients, 139 were active on radio - and for all these clients, the top five cities (three-four stations in each city) account for 60 per cent of the ad spends. The spends on television were 20 times more than that on radio. Radio stations, he said, must explore which of the levers will lead to growth - either by increasing the number of advertisers or by increasing their spends, adding that getting more clients is a slower way of growing the medium.

Perception of radio as a medium, he said, also needed to change. Apart from being considered an intimate, intrusive, interactive and mobile medium, radio's key proposition is perceived to be a frequency medium or one that supports activation. Often, this works as a hindrance and radio stations fight to retain their relevance.

"Clients pay a premium for reach and not frequency. Frequency implies cheap and plentiful and hence, radio is used as a top up in plans," Sakhuja said.

There is a need to de-commoditise radio as well. He confessed that buyers look at buying time bands and spots like commodities, without much thought to it. "Can we make radio a standalone medium for continuous brand plans by relooking at pricing and efficiency?" he questioned.

The way to grow for radio, Sakhuja said, was to considerably increase the share of advertising expenditure on the medium. Radio stations must de-commoditise inventory by encouraging the use of RAM (Radio Audience Measurement) and instead of looking at day parts and spots, look at programmes and reach/frequency guidelines. Re-positioning radio as a standalone medium capable of delivering reach and not as a frequency medium is critical to the growth of the medium.