RadioandMusic
| 22 Feb 2020
Radio must think Big: Prashant Panday

We begin our LEADERSHIP series with a freewheeling chat with a young veteran - Prashant Panday, Executive Director & CEO ENIL , who, in a chat with Pavan R Chawla, believes Radio in India can hit a market share of 9 to 10%  and that Radio is now the near-default second medium in national media plans. Panday believes Radio needs to think big for the betterment of the industry, and suggests that the top 10 Radio Networks should help RAM with a voluntary corpus to help the Radio Industry through more cities on the RAM grid. He also believes that the Radio Industry must collectively begin charging Film producers for the "invaluable marketing services" it provides new releases. Excerpts from the conversation.

You've been in Radio for ten years now. Please recount briefly your background for our readers.

I came from a background of FMCG and also a bit of advertising. I've worked with brands like Pepsi, Hindustan Lever and Modi Revlon. My perspective was always one of a consumer marketer. I have also spent three-and-a-half years in Mudra, where I had a very puristic brand building approach of a focus on scientific research, and thereafter, the engineering aspect of figuring out how to implement and apply the technology. So the Mudra stint was invaluable because it was a puristic approach to brand-building. Ultimately, I exited FMCG and got into Media, somewhere in August 2000, so it's been ten years now, and throughout, I've been with Radio Mirchi.

Why did you choose media?

Well, mainly because the entertainment industry was coming up, and it was obvious media would be a fast-growth sector. It wasn't as if there was phenomenal talent coming into the Media industry. On the creative side there were some excellent talent, but on the business and managerial side, well, media was not really the area of choice for many professionals. But of course in the last 10 years, things have changed dramatically. Today you find top-notch professionals and successful individuals from various sectors like Telecom, Banking, Insurance and Finance   and FMCG heading towards M&E. There is a drastic change in the way business is being run today.

You obviously liked your entry into media, because you've been in the space for ten years running now. How has it been working with a demanding boss like Vineet Jain?

Oh, excellent. Overall, my journey has been very good and Times Group has been a nice place to work in,  as we are given a lot of freedom in terms of operation,  though we are challenged quarter on quarter on results, by and large one can determine the strategy and execute things in one's own way, and this is a very good part about working with the Times Group.

Give us an overview of your reading of the Radio Industry, poised as it is to enter Phase 3.

I think there is a lot of life left in Radio, and at least for the next six to seven years,  we will be able to see tremendous development. There is obviously Phase III which everyone knows about,  and which I think will take three years to fructify, and by that time, I am hoping there will be something which we call Phase IV,  which will get announced by the government. To me, Phase IV would basically mean that in the metro markets or towns the government will ultimately open up far more  channels than the number we have today. For instance, if we have 8 to 10 channels in a city with a separation of 800 kilohertz between two channels and that can be reduced to 400 kilohertz, it would double the number of stations in a city, taking it to 16 to 20 stations. And if in future more spectrum can be got, it could take the number of channels to 25 in a city .When this happens, we will have more programming formats, revenue growth, more license fee to government and more opportunities for broadcasters to develop the medium. So that should take another 3 or 4 years, and overall, in the next 5 to 6 years, Radio should have developed as a medium in India.

Where do you see the share of Radio in the overall advertising pie, from today to the end of Phase III to the end of Phase IV that you and the industry would definitely be hoping for?

Today, Radio is around 4 ?  to 5 % of the ad industry. See, this is my personal view and I could be wrong too, but I think that at the end of three years when Phase III has fully rolled out, the share of radio could climb to as high as 7 %. But when Phase IV rolls out and you have 25 channels available in metros, it could go to 9 %, which is almost equal to the worldwide average which is 8 ? %. But we will be still far from countries like North America, the US and Canada where the share of radio is 13 to 14 percent. In fact, there are islands like Srilanka and the Philippines where radio commands an even higher share of around 15%. But across Australia, New Zealand, South Africa, France, Belgium, Spain… where the share of radio is 9% on the average. But there are also a lot of laggards where radio has to undergo a lot of hurdles due to inadequate government support and licensing and the space not being properly opened up. There the average share is 4%. But I really believe India has the potential to beat the world average -- I fail to see why India cannot reach 9% or even higher with the help of liberalization steps and opening up more radio stations.

Though Radio is a tiny 3-4% shareholder in the advertising market nationally, you believe Radio can eyeball television for advertising spends notwithstanding its smaller share in the business…

We know that television is a broad band and focuses all over the country, while radio is a telescopic beam that focuses on a particular area. It is a fact that radio is cheaper because it delivers huge numbers and costs far lesser than television, but in reality when the advertiser starts putting in the money, radio is also quite expensive. Today you cannot get a good radio campaign across the country in less than 75 lakhs to 1 crore (rupees) in one month. I'll give you an example. When you buy a TV campaign… let's say you spend Rs 5 crore a month on a television plan -- which is a fairly good amount of money even in today's market – you will buy around 40 to 50 channels. Even the Number One channel there, let's say a Star Plus, will not get more than 60-70 lakh rupees  And the cheapest amongst these channels will sell at what… anything between 2 and 7 to 8 lakhs each? On the contrary, in Radio, I don't think we pick up any campaign which is less than 20-25 lakhs, and a crore-rupee deal is not a big deal any longer. And there are many deals that come at more than a core rupee now  And I'm talking a four, five or six week period; I'm not talking about three or four months. Only last week we signed a crore-and-a-half deal, but there's no major celebration – it's ok, it's one more deal. It's a premium deal, and from a state government too.

So, on the CPT basis, you say Radio is very cheap, but the outlays of radio are higher than the outlay on most individual TV channels. Today, the fourth largest GEC makes around 225 to 250 crores of ad revenues a year. Radio Mirchi  made 230 crores. I imagine that the fifth largest GEC would be making around 100 crores a year.

How did the economic slowdown impact Radio? Which are the biggest advertiser categories/brands that have featured on radio?

The biggest category has always been FMCG because it is the biggest category our country creates. For television it is around 70% while for radio it is only about 16 to 17 % of the business. Also, we have a very big spending coming from the BFI [Banking, Finance and Insurance],  Durables, Auto, Entertainment and Telecom are the next big spenders. The above six are the major sectors investing in advertising and these make at least 70-80% of radio advertising; it is the core. Real Estate and Education are the other important retail segments. So radio advertising is very fragmented and concerns a lot of segments unlike television that depends on FMCG  Now see the impact of that. In the economic slowdown, FMCG was not affected and hence television continued to do well, while print depended a lot on Real Estate and Banking, and these two mainstay segments were the worst affected. Of course  Auto and Education kept doing well for print, but still print was badly hit.

But because radio advertising is a mix of all the sectors, it was somewhere in between. I'd say it did neither good nor bad. So increasingly, what we'll see happening is that in radio, the share of retail will keep increasing as we can get more money out of it. Our pricing is higher with retail, and we prefer retail as it gives us more money but it definitely takes in more efforts  The trend is such, and worldwide, Radio has about 60 to 80 % of retail advertising. In India, retail occupies about 35 to 40 % of radio advertising but this will change in next 3 to 4 years.

What is your estimation on the mix of strategic: tactical advertising in Radio today?

It's mostly brand building campaigns on radio. And while a strong multi-station FM network does deliver good reach, that cannot be the selling story for Radio as television definitely delivers higher reach. What helps advertising on Radio with national campaigns is the media multiplier concept which, as you know, has to do with the fact that in a multiple-media world, an advertiser has a better chance of catching up with a larger number of people by giving them more exposure. Look at the way Indian advertising is going -- largely, now, the mainstay is Television, followed by Print which is smaller than Television. And today an advertiser may choose to opt between Television and Print, but will be very likely to use Radio as the second medium. As we know, a combination of two or three mediums helps multiply the effectiveness of the campaign. So he might spend  say  5 crore on either a television or a print campaign, but spends 1 crore on Radio campaign  as the second medium, which is a common choice in both cases. In fact, today on radio I heard the exact same Asian Paints campaign that I watched on television, and the effect of the radio spot was that it helped me replay the television spot in my mind. So Radio is like the aalu (potatoes) in a sabzi (vegetable dish), which adds a lot of flavour to the dish  It rounds off and completes the media plan  very effectively; it is a highly effective multiplier,  and to my  mind, no advertisers can afford to ignore Radio.

So, most of the brand-building advertisements coming out today are a combination of either television and radio or print and radio, and radio is a part of  most bulk campaigns, which are brand campaigns and not call-to-action campaigns. Of course, for all call-to-action requirements, radio delivers the best because of the urgency and frequency aspects.

Your views on the delay in initiating RAM in Hyderabad and Chennai?

RAM has been ready with Chennai and Hyderabad for a long time now, but broadcasters have not supported this effort of theirs. I don't expect RAM to fund the expansion. Why should they? They are a research agency. Broadcasters and agencies have to fund the expansion!

I think RAM can do a lot more, but broadcasters have to chip in too. How can RAM expand coverage if broadcasters do not agree to pay for it? Also, if sample sizes have to increase, then broadcasters have to pay more.

In cities and towns not covered by RAM, what do you use to sell your stations? Most radio stations primarily use marketing buzz awareness to sell in such centres, and some also use IRS depending upon how it shows them. What do you use, primarily?

We use  IRS data, and more importantly, there is a lot of buzz in every local market. We do a lot of activation in every single one of our towns, activation creates a lot of buzz. The brand goes out everywhere – with a  marathon, a walkathon, a music activity, a Ganesh Utsav, or, as is on currently, integrating everywhere into the local Navratri celebrations. The brand lives every month in about 50 or 60 events across the country, and whichever city you are in, you will experience the brand across various touch points in the city.

What is your view on the order on music royalties?

It's a good order, because it is bringing the Indian royalty regime finally in line with the worldwide trend, which is what should have been the practice in India over the past so many years. All they've done is ki  jo iss industry  mein itna extortion chal raha tha, jo loot machi thi, wo hat gayi hai! (All the extremely unfair extortion that was rampant for so many years in the industry, has been removed).

With more than half of the remaining development happening in the coming 5 to 6 years, how are you planning to approach phase III?

Now with the music royalty issue sorted out, there is at least a possibility of viability in the smaller towns. Therefore I think Phase III will now become interesting for all broadcasters and if they do not bid wrongly, or throw money, then everybody will be able to make small but reasonably successful businesses in the small towns. And when that happens, not only will Radio be viable, but even the Music industry will start earning royalty in a rational way. Rather than extorting from a small number of broadcasters, they will be able to make a larger amount of money from a wider presence across the country.

Both industries are completely mutually dependent too…

They just cannot survive without Radio as they are dependent on us…

Just as Radio is completely dependent upon Music…

… To promote music, it is Radio which is the number one medium, not television. There is not a single television channel that has found success in Music. MTV has now reduced music to 30 % and so have the others. Many other channels that claim to be music channels are actually movie-promotion channels. There is not a single TV channel today that promotes music. Music promotion is done only on Radio. Whenever a new movie is launched, we are inundated with calls from labels asking us to play a track 15, 20 times  a day. My music team is pestered! India's biggest music label has stipulated in its agreement with us that we guarantee a certain minimum number of airplays to their songs. At a FICCI forum, a music label head had said that English albums sales have crashed because there are no English radio stations. So if you are making losses because we play your songs, why ask for minimum airplay guarantees? Why not stipulate a maximum number of airplays to cut your losses?

The times have changed and people are no more buying as much music on the physical format like CDs. When we play a certain song on radio, it gains popularity and people prefer to download it from the telcos. Moreover, the promotional benefits Radio gives to a new movie by playing its new songs and through the RJ talk around the music are unimaginable. The Radio airplay also drives a lot of footfalls into cinema halls in the first week of film releases, and it's the first and possibly the second week that makes or breaks most new films today. I feel that all of us as the Radio Industry should wake up and charge for the work that we do for the film companies. But today we are star-struck if film stars visit our stations, and so we give the film companies free promotion for their films and music. We are fools. We need to always remember that we are in this business to make money for the shareholders and not to create friendly relationships with various artistes.

Suggest two things you believe the Radio Industry needs to help make it better overall.

The first thing we need is Big Thinking. Some radio broadcasters sit and crib about small amounts like 5 or 6 lakhs that RAM asks them to pay to add additional cities. In fact, the top 10-12 Radio broadcasters should come together and contribute a crore, 70, 50, or 50 lakhs each… whatever. Go to LV with a corpus of 4, 5 or 6 crores and ask him what can you do for the industry? Add more cities (for RAM) and make the setup more far reaching? Instead of carping about measurements, we need to invest into the industry to help it grow.

Second, there is a lot more financial smartness needed in Radio than in TV or Print. This is because those businesses are long-term businesses that have justified losses on the grounds of future potential. The questions asked of a relatively recent broadsheet in Mumbai about the losses it's still making after 5 years of existence will not be as scathing, perhaps, as those that an investor in Radio will ask of the network if, five years into operations, it is still making losses, because as things stand, it has only five more years of the license left. So financial acumen and smartness is critical in Radio.

On the talent front in the radio space… a senior radio official in another big network told me that around 70% of the new talent they hire is fresh, i.e. without Radio experienced. What's the Mirchi experience or preference?

(Laughs) I am quite happy to hear that other broadcasters are saying they hire fresh talent,  but I think they love to poach! The truth is that they hire people only from within media;  in fact, from Radio itself. But we do not hire from competition at all. Not even one person working with Radio Mirchi – and we have 750 employees -- has worked with any other radio station. This is because we believe that jobs are not about going and working at a certain place. When we are hiring an individual, we do not look at the talent he or she possesses as much as we look at whether his or her values fit the values of the organization.

Is that why you gave up on an RJ who was identified in a Mirchi talent hunt?

Yes. One very popular jock was discovered in a talent hunt initiated by Radio Mirchi. But we did not hire her as we found in her a fitment issue with the values of our brand. She is extremely talented, but she just didn't have a fit with our brand. See we are a sunshine brand, a happy brand, we add joy to your life. We don't take people's pants off or create a hype or tamasha on every occasion. We have a certain defined brand personality and our jobs fit our brand personality. When we defined our brand name Mirchi, our Chairman made a statement: Once you have tasted Mirchi, everything else will feel bland.... When we are coming up with an initiative, we do not think of what are competitors are doing. We just aim to come up with something that adds Sunshine to the tense lives of listeners.

So as a rule you don't hire people from radio at all…

Never. They might not be freshers, they can be experienced,  but definitely not from the radio space. We train these people in our company but never send them for training to some outside radio college. Our corporate marketing team works hard and travels from station to station to give our employees hardcore training. Also, we do not train outsiders for the sole reason that our brand has a personality that is reflected in our jobs. If we train outsiders, they will go and work somewhere else and we don't want this to happen.

Also, we believe in coming out with something fresh. We were the first in Mumbai to launch a retro music show, Puraani Jeans, and within 15 days it was copied by two other stations. Then we rolled out 1990's music in the afternoon, and then devotional music for mornings,  and all of this was copied by other channels. We introduced something called â€?Gaanon Ki Ladi' where we play six songs back to back. That concept too got copied. We have always tried to come up fresh and spicy content, which is the brief to our content team. Our station id jingles resembles the Google logo (always changing, always reflecting the  mood of the day) – if Sachin has scored a double century or India has won a match, the jingle will reflect that mood.

Today, content and sales have to work hand in hand, keeping listeners' needs topmost, but also looking for opportunities to increase the salability. How do you help cross-pollination between Sales and Creative?

We have created a special team called the Creative Services Team, the CST, and 15 of our best programming people are deputed to it. They are the ones who ideate on behalf of clients. They are all radio creative people and they know how to use radio in the best possible way. And then we typically give the solution to clients and this where we make big bucks and we get big market shares. Our sales philosophy is reflected in the nomenclature. It is called the Response Team, which has to understand the client's brand and its needs and respond to them with a solution. It is partly grooming and partly training that gives our Response Team such brand orientation.

How will you approach Phase 3? What cities on your wish list, and why?

Since the royalty issue has now been resolved, we are buoyant about Phase III. Bidding is still many months away. Even the policy has not been announced yet. We are still to make up our mind on which cities will we bid for.