Will radio cut into print?
Conventional wisdom is that it will. But, as with most questions that conventional wisdom tries to answer, the truth is a bit more complex.
First, the costs involved. For example, for a one-time insertion in The Times of India, Mumbai edition, the cost is Rs 1,600 per cc. A 52-cc ad works out to Rs 83,200. And TV rates are astronomical. According to STAR India, a 30-second prime time slot on STAR Plus costs between Rs 10-12 lakh. Now take radio. A 10-second slot on Radio City for which STAR provides content, costs around Rs 5,000, and unlike a print ad, is not lost in a maze of other advertisements being the only one on at a particular point in programming - the same crucial advantage that TV has. Radio broadcasters, crucially dependent on advertising revenue, are hoping that such differences will divert at least a share of print advertising into their hands.
However, that may not be as easy as it sounds. First the differences. A big chunk of newspaper advertising is contact intensive - where a telephone number or an address is involved. Because of their contact intensive nature, analysts say that these are likely to stay with print. For example, for someone seeking to sell a car, or a small business that depends on phone calls, it does not make much sense to advertise on the radio, as drivers, a prime target for FM radio, are unlikely to pause to jot down the numbers. And, unless there is something really alluring, others too are unlikely to reach for their pens or pencils. "Radio advertising has a different function compared to print advertising. Local or retail advertising, or small advertisers who cannot afford print advertising may be attracted to radio," opines Bharat Kapadia, managing editor and associate publisher, the Mumbai-based Chitralekha group.
On the other hand, broadcasters point to the advantage that radio has. "While you are just one ad among many in a newspaper, on the radio you can have five to six exposures of 30 seconds over a week. That really gets your message across," says Sumantra Dutta, chief operating officer, Radio Division, STAR India. It is in this area that the migration from print to radio will be seen the most, say media planners. For a small promotion, such as discounts at a city shop, the media budget is very small, in the order of a few lakhs. That could buy two big ads in a city paper, perhaps only one. While on radio, for the same amount, the discount sale can be advertised several times. "Radio, by offering a focussed activity within city limits, and at a much cheaper rate than the one-time opportunity cost of a newspaper advertisement, will attract such advertising," points out a senior media planner based in Mumbai.
Radio could also encourage advertisers to migrate by offering radio advertisements with a call-in number and prizes. Research has indicated that Indians are responsive to promotion-oriented advertising. For example, when Radio City Bangalore last year ran a contest asking listeners for their favourite tunes, callers jammed its phone lines with more than 20,000 entries in just three days. The prize? A humble new radio.
History could be a guide. In 1993, AIR, a Government monopoly, went in for an innovation - it began to lease a fraction of its airtime to private companies, and charged $65 (about Rs 2,925) for an hour of programming on prime-time slots. Broadcasters who were savvy enough to catch the bargain made a killing, selling advertising for $128 (about Rs 5,750 a minute). When, in March 2000 the Ministry of Information & Broadcasting auctioned full-fledged radio broadcasting licenses to private operators - the birth of the present FM radio - major cities like Mumbai, New Delhi and Hyderabad received the highest bids, reflecting where a bulk of the advertisement will be coming from.
The potential is enormous. The industry estimates that the size of the total advertising market in India in 2001-2002 was Rs 8,600 crore. Of this, radio just had a paltry 2 per cent. Television commanded Rs 3,600 crore. In more developed advertising markets, radio commands 7 per cent to 13 per cent of the total advertising pie. The potential reach is also phenomenal. AIR reaches about 94 per cent of the population, and consumer electronics manufacturer Philips India, estimates that by 2007, 260 cities, meaning nearly 70 per cent of the country, will have access to FM. With the coming of a new medium, advertisers are likely to allocate their budgets more efficiently from one medium to another.
In a 2001 report on the FM market, the Federation of Indian Chambers of Commerce and Industry (FICCI) predicts at least 5 per cent of the advertising pie going to radio by 2006. And there are optimists who believe that radio can reach 8 per cent to 10 per cent of the advertising market in 10 years.
However, fundamental problems could come in the way. In all these countries, the rise was because radio reached out to a particular stratum of society that could buy the products advertised. To take an example, Classic FM in London advertises Rolls Royces. On the other hand, despite India's huge population, a recent PriceWaterhouseCoopers report indicated that in India the ratio of advertising expenditure to GDP is at an abysmal 0.4 per cent. This narrow reach could destroy radio's biggest advantage over print in India - its greater reach.
Right now, growth is more likely to come from existing media. "The media that radio cuts into will vary across clients and categories," points out Pat Vinayak, senior business director, and head of the western region, Carat India. The reach of FM is also hemmed in by technology. AIR's impressive reach is through AM transmitters, while FM has a lesser reach - around 75 kilometres in range. Most FM stations have factored this into the programming mix. "Crucial to the success of FM is the local touch, as FM is a very city specific medium," says Aditya Patwardhan, head of programming, WIN 94.6.
While right now technology or choice is limiting the reach of radio, future growth would depend on fundamental conditions. Ironically, in Indian conditions, greater reach for the radio could easily have translated into a much bigger advantage because of one of the country's most glaring problems - illiteracy. Again, in an irony of sorts, while illiteracy may favour radio, right now, another factor, the kind of products that are advertised might blunt this advantage to a large extent.
Again, like print, radio ownership is also concentrated in a few hands, most with cross-media holdings who are planning to offer cross-media packages to subsidise their new medium, effectively targeting existing clients.
The crux of the battle therefore will be to expand the market. © 2002 agencyfaqs!