MUMBAI: After spending 12 years in the radio industry in Red FM and Suryan FM, B. Surendar is among the senior personalities who have seen radio in its good and bad times.

B.Surendar, Chief Operating Officer, Red FM / Suryan FM  talks about the changes in buyer behaviour and how radio has managed to develop as one of the top priorities in the minds of advertisers today.

Excerpts: 

Tell us about the category of advertisers pitching radio for advertising.

There used to be a time when radio attracted fewer advertising categories and clients. So it was easier to highlight key categories, advertisers, etc but now advertising on radio happens across all categories. Now the biggest area for improvement in radio advertising is in the depth of consumption  i.e the spend level on radio has to go up. Already there are some categories which are spending better on radio compared to others via automobiles, e-commerce, BFSI, real estate, retail, etc.

When did advertisers realize that radio is one of the important mediums?

It took a bit of time initially as the first five years was all about selected categories namely FMCG, Television, Retail, etc taking to radio. The main turning point came about immediately after the Phase II geographical expansion into the tier two and tier three cities when the medium’s overall reach increased drastically. Consequently, a variety of new advertisers tried the medium and stayed with it.

Also, one felt that in the initial stage threshold level spends were not committed on radio as it was a new medium which in turn affected the response the advertisers got. Once the spend per campaign improved, this value for money medium delivered excellent results

Now people are more learned about the medium, they actually understand how it works.

One of the recent examples is that od brand OLX which is using radio very effectively. In fact, they have cut down their budgets for other mediums but have increased it on radio as compared to last year and they are using it as a reach medium and not just as a reminder one.

It’s been my 12^th year and I see people using the medium better and better. I am happy not only with the fact that it is being used more creatively and effectively but most importantly with the fact that they are beginning to spend the minimum amounts required for the medium to deliver a better response.

What is the future of traditional radio in India?

The traditional radio in India will grow and survive in future just the way print media has done in the past few years. Radio has just started growing and we are getting into more than 200 cities and the expansion is going to continue with batch three of Phase III. As the geographical reach of radio grows exponentially, mass categories like  FMCG, Telecom, etc will hopefully use this strong local medium a lot better . While the biggest category, FMCG  is spending on radio even now there is tremendous scope to increase the same.

Radio share of the ad pie in India has been 4 to 5 per cent whereas globally the share is 7 to 10 per cent. Where does India lack in terms of growth in radio share?

Radio is one of the most controlled mediums in India. We have primarily music and entertainment on radio – and no news. Also, the launch of radio happened very gradually in India. Initially, it was made available only in a few cities and the higher license fee model was not even viable for most radio players. Phase 2 has been better for radio because the government came up with the revenue sharing model. Metro cities had picked up first while the medium and small cities took some time due to high music royalties and other expenses that were disproportionate to their market potential. Honestly speaking, radio expansion is still happening in a highly controlled manner compared to an expansion of other mediums like television or digital. That is the main reason why the share of radio in the overall ad pie is not growing dramatically enough. It started with two per cent, moved to three and now is moving closer to five per cent.  In India, there is potential to grow it higher than even 10 per cent if the restrictions are reduced or even better, removed.

Music royalties are expensive and radio has become less talk and more music. Don't you think if we had more talk radio and less music, things would be different?

It is all about market forces. The number of licenses is less and so the genres are less. So when compared to developed countries which boast of around 25 stations in a top metro city, India has up to 8 to 9 only. So, licenses per city are less and we have entertainment and music as the key genre and no news on private FM. Once news and current affairs come in, there will be much better balanced in content and product differentiation.

Talk radio can surely happen then. One of the stations in Delhi had tried a sort of a talk radio format for women but that niche initiative probably did not give enough returns because talk radio and news & current affairs work well together. Abroad, it is not uncommon that breaking stories happen first on radio. Without news and current affairs, talk radio will not be as big as it should be. So once news genre is opened up, talk radio will be an interesting and viable option. As far as the music genre is concerned, there is no doubt the listeners love RJ talk, sparklers or humour capsules but they do not at the expense of music and so the overall talk time has to be comparatively less.

How beneficial has it been for radio players to start a new genre of radio in the same city like Red FM has Redtro now?

A lot of new genres have been explored, not only by players who have got new licenses but also by the existing players. They have gone into other genres like English, Retro, etc and some players have changed to Hindi/ Bollywood in the regional markets. So the radio players have been trying to get into new, differentiated content and that is an on-going affair. Retro music is being explored in depth after new players like Redtro entered the market.  Both advertisers and listeners are receiving it extremely well.

In stage 2 of Phase III, lesser bidders participated due to which the government faced losses. The reason given by the players are the stations have been costly.

I wouldn’t say it was that bad. Batch 1 and 2 of Phase III generated a lot of revenue for the government. If you compare Batch 1 with Batch 2 there were bigger cities on offer in Batch 1. So, it’s also got to do with the size of the markets being offered. If you offer A category cities, obviously the bidding value is going to be much higher.  The industry is definitely expanding. At the end of Batch 1, 150 cities were covered and in Batch 2 hopefully, a total of 200 will be covered. There were some inconsistencies in the basic bid price formula for cities with varying market potential and the same needs to be corrected. The feedback has been given to Telecom Regulatory Authority of India (TRAI) and the government and am sure they will surely look into it going forward. I feel Batch 1 and 2 of Phase 3 expansion was fairly successful and if certain corrections are made, further expansion is definitely possible.

A measurement system is in place only for stations in A and A+ categories. But we have observed larger investments in B and C categories also and for them, no measurement system is in place. So do you feel the need to have one?

Of course, this is necessary to grow the medium faster and increase the share of radio in the overall media pie. As marketers would start targeting more than 100 plus cities through radio in future, there is a need to have a more simple, credible and acceptable measurement currency and the research should cover more cities. People now understand how radio works and this step will help efforts to increase the spend on this highly flexible medium.

The Copyright Board was dissolved in 2012 and there are only talks about having one on board. As per research, issues in licensing are faced in the industry. What do you have to say about it?

As compared to a few years back, it is more organized now. Music royalty was an issue that was halting the progress of radio some time back, particularly in the medium and small stations. I wouldn’t think it is as big a factor now.