Monday, October 30, 2006

Chennai is awash with FM radio stations

The second coming
R. Ravikumar

Chennai is awash with FM radio stations, with more to come. Find out how they all plan to add ears to their lives.Your late mornings will never be the same again," avows an FM station. "We will rekindle the romance in you every day after you dispatch your children to school and husband to work," it goes on, addressing lonely housewives."The traffic at Anna Flyover is moving at a snail's pace, so please avoid that junction if you can," a friendly note of caution to those at the wheel, from another FM station.Of late, the FM radio space in Chennai has been bustling with activity following the implementation of Phase II of FM radio privatisation. The transition to a revenue-sharing regime from the earlier fixed-fee licensing model seems to have changed the business dynamics, and the space is now drawing more players. The Chennai FM story could well be replicating the cities across the country.As of now, apart from AIR's Rainbow FM, there are five FM stations - Suriyan FM (from the Sun group), Hello FM (from Malar Publications) , Big FM (Adlabs Films Ltd, a Reliance ADAG company), Radio Mirchi (Entertainment Network India Ltd) and Radio City (from Music Broadcast Pvt Ltd). In addition to these, Muthoot Finance Ltd, which has got a licence, and Radio Mid-Day West (India) Ltd, a Radio One-BBC World combine, are all set to venture into the space soon. All for a share of just a little over 2.4 per cent of the Rs 13,200-crore ad industry.Though ad avoidance by listeners in radio is almost nil in comparison with 68 per cent in newspaper and 44 per cent in TV, and local reach makes radio a very effective medium of advertisement, the share of 2.4 per cent is very small."Many media planners may not be considering radio as one of the primary media for communication. They have been primarily focusing on mass media such as print and TV. Especially after the recent flow of channels into markets beyond metros, it is high time radio is studied and looked at more seriously," says Siddhartha Mukherjee, Director - Communications, TAM Media Research.According to TAM Media Research, of the overall ad industry size of Rs 13,200 crore in the year 2005, radio could manage to rake in just Rs 317 crore, which is 20 per cent more than the Rs 220 crore registered in 2004.However, according to Tarun Katial, Chief Operating Officer - FM Initiative, Adlabs Films Ltd, the ad pie will certainly grow over a period. "Ad revenue is purely based on the reach of the medium. In 2005, there were less than 30 frequencies in just seven cities. It's now going to reach over 330 frequencies across the country," says Katial. He sees the medium getting 15 per cent of the ad spend by 2010. Prashant Panday, Deputy CEO, Radio Mirchi, also says the ad pie will grow to 14 per cent by then. "Even without any proper mechanism in place for audience research, it will grow to 7 per cent. Once a research mechanism falls into place, it will certainly reach 13-14 per cent," he says.According to Radio AdEx, a division of TAM Media Research, during January-December 2005, FM radio ad revenues were in the range of Rs 90 crore in Mumbai, Rs 87 crore in Delhi, Rs 30 crore in Kolkata and Rs 21 crore in Chennai.But, during the period there were only three FM channels in Chennai (Rainbow, Suriyan and Radio Mirchi). According to industry sources, during January-August 2006, the ad revenues in Chennai alone grew by 31 per cent in comparison with the same period in the previous year.K. Srinivasa Ragavan, Station Director - Chennai, All India Radio, says Rainbow FM earned Rs 1 crore during 2005, and is growing at 80 per cent. "The FMCG sector and Government service organisations contribute over 50 per cent of the total ad revenues," he says.In the previous fiscal, Radio Mirchi registered Rs 120-crore revenues and Rs 35.5 crore in the first quarter of this year, which, according to Panday, is a growth of 69 per cent over the same period last year. Of the total revenues, Chennai's contribution is 10-12 per cent, he says. "And the contributions mostly come from FMCG, auto, telecom, retail and the durables segments."L.V. Navaneeth, Station Head - Chennai, Radio One, sees revenues flowing in from retail, banking and finance and telecom. "Retail is one of the larger categories, followed by finance, banking, telecom, FMCG, consumer durables and even the media industry," he says.However, Mukherjee of TAM Media says, on the basis of January-September 2006 data, that it is quite clear conventional media such as press and TV too take much help from radio to reach out to their audience.While Big FM charges up to Rs 1,800 for a 10-second slot, Radio Mirchi charges, for an evenly distributed campaign (across prime time, afternoon, evening and late night), rates of Rs 1,100-1,200 per 10-second slot. For a campaign with a higher prime time component, the rate could go up to Rs 1,600-2,000.For a campaign that does not use prime time at all, the rate may be Rs 700-800. "Pricing is also a function of the size of the deal, time of the season and so on. The biggest determinant of pricing, however, is client returns - we gain only when the clients come back again and again," says Panday."We are doing missionary work in spreading research numbers to our advertising agency and media agency partners. We are pioneers of research in the country. We also offer clients brand solutions and suggest ways and means of using radio effectively. We develop radio commercials for clients who need this service at no cost. And lastly, all the marketing that we do goes towards building listenership, " he adds. Big FM too claims to provide advertising solutions.
http://www.thehindu businessline. com/catalyst/ 2006/10/19/ stories/20061019 00020100. htm
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Alokesh Gupta