Marketing: Radio Gaga!

Spurred by the birth of private FM and Net radio stations, the medium is on a comeback trail. Only, its new focus is the urban not-so-old. Will advertisers bite?

To borrow three-quarters of a phrase from the most happening sound-place on the Net, www.thewomb.com, it is the digital re-birth of a medium. Digital, because this is the d-age. And digital, because part of this re-birth is being mid-wifed by the www. Radio is the medium, and, suddenly, circa 2000, India is re-discovering it. Radio is retro. Radio is cool. Radio is chic. Grooves Sushil Pandit, 49, Director, The Hive, a Delhi-based advertising hot-shop: ''(Radio's) going to be exciting. We'd all forgotten it, but it's time to go gaga all right.''

Private FM radio stations: Where things stand

The stakes were high. Between March 1 and March 15, 2000, 27 companies made successful bids for 101 FM stations spread across 40 cities. Bid amounts ranged from Rs 22 lakh (for Cuttack) to Rs 9.75 crore (for Mumbai). Even stations to be located in non-metropolitan cities like Nagpur and Madurai attracted huge bids as only a single frequency was auctioned in these centres (monopolies are attractive). The companies that clinched the deal-from media heavyweights like Bennett, Coleman & Co. and Living Media (publishers of BT) to newbies like Dream Radio and Hind Broadcasting-are now waiting for the Government Of India to issue them the letters of intent. That done, they need to obtain clearances from the Wireless Planning & Coordination Cell and the Standing Advisory Committee on Radio Frequency Allocation, both of which come under the Ministry of Communications.

Only then can companies commence building the base-stations and the towers required. The result? Don't expect to see any great activity in the private FM market till early 2001. With several companies having shelled out fairly huge sums of money as licence-fees, expect to see a repeat of what happened in the cellular phones market in the FM radio stations scene. Bottomline: wait till mid-2001 for the radio boom; until then, satisfy yourself with the bang the medium is creating on the Net.

It isn't good old Akashvani (literally, voice from the sky) that's suddenly back in vogue. Nor is the medium making a return in its stereotyped, friend-of-the-farmer rural avatar. In a strange reversal of roles, the return of radio, once considered the best vehicle to reach rural audiences, is, essentially, an urban phenomenon driven by FM and Net radio. In March, 2000, 27 companies made successful bids to operate FM stations in 40 centres. The total bid amount? Rs 425 crore. And, at last count, there were at least 15 India-centric radio stations on the Net.

Forget, for a moment, the fact that the very term rock-and-roll was coined by a radio jockey (RJ for short) who went under the name of Moondog (real name: Alan Freed). Discount the strong counter-culture flavour associated with the medium, courtesy underground radio stations that sought to preserve free speech. Even ignore the nugget that soap operas, as we now know them, began their life on the radio (first sponsor: P&G's Ivory). Still, the lure of the medium in urban India today is unmistakable. Print is boring. Television, once considered an urban phenomenon, has actually turned out to be for the masses. Radio, though, is as underground as a rave in Goa. And almost as cool. Says Yuri, 46, an RJ based in Delhi: ''We're seeing a renaissance in radio.''

Whoever said the Net was the world's first personal medium was giving radio a large berth. No one, but no one, listens to radio in a group. And if a listener needs her daily fix of bhangra-pop at say, 6:00 every evening, and knows that she's certain to find some playing on the local b-p FM station, nothing is going to stop her from tuning in. (God forbid, there won't be a b-p station, but who knows?)

The good news for companies entering the radio business is that switching channels (read: stations) is almost unknown: research shows that there is negligible surfing. No remotes. No zapping. Explains Kartik Iyer, 34, Associate Vice-President, Lintas India: ''At one level, radio is a passive medium. The housewife listens to it at the subliminal level when she's cooking; the working woman, while she's commuting. At another level, it is a personal medium. The listener tunes in because she relates to the content or to the RJ.''

Like all things retro, radio will appeal most to the young urban audience in the 18 to 35 age group. Coincidentally, this is the segment that boasts the greatest purchasing power. Agrees Gautam Radia, 31, CEO, Millennium Broadcast, which is the FM licencee in three cities: ''Radio has the ability to deliver to finely-targeted audiences.''

Being cool isn't just a state of mind; it is a great positioning statement. Ergo, a slew of advertisers targeting their wares at the young well-heeled urbanite is likely to descend on radio. From the perspective of costs, there couldn't be a better medium. A 10-second spot on a private FM station in Bangalore or Delhi could cost anything between Rs 400 and Rs 550; small money when compared to the ad-tariffs on television. True, the telly boasts a greater reach, but advertisers could prefer to reach a smaller better-quality audience than a large one.

A study carried out by the Federation of Indian Chambers of Commerce & Industry and consulting firm Andersen Consulting forecasts that revenues from radio advertising in India will be Rs 720 crore by 2002, and Rs 1,200 crore by 2005. Another study, this one by Lintas, paints a bleaker picture: by 2010, revenues from radio advertising will amount to Rs 690 crore, and account for 3.50 per cent of total ad-revenues.

The companies that have made successful bids (bids is what they'll be until the GOI sends them a letter of intent) to operate private FM stations aren't losing their sleep over these numbers. Their logic is shrouded in optimism. One company claims radio advertising in the US accounts for 10 per cent of the total advertising pie (it doesn't; it accounts for 3.50 per cent); another claims that the proportion of radio advertising to all advertising has grown from 3 per cent to 5.80 per cent over the last four years in the UK (it has); and still others make vague claims about radio being the fastest-growing advertising medium in many parts of the developed world (it is, and it isn't).

The emergence of private FM stations is certain to increase the quantum of radio advertising in the country, much like the satellite channels did to the quantum of television advertising in the country. Agrees G. Krishnan, 40, Executive Director, India Today Group, which has won bids to operate FM stations in three centres: ''When there was just Doordarshan, it could generate Rs 600 crore (in ad revenues); today, the private television channels are able to generate Rs 2,250 crore.'' Seconds Goyal: ''Currently, radio accounts for under 2 per cent of the total ad-spend. This can be increased to between 8 and 10 per cent.'' Supply, radio companies feel, will engender its own demand.

The Net has, in its typically quiet way, contributed to the reincarnation of radio. Already, many NRIs and several early adopters listen to India-centric radio stations on the Net. Says Ron Victor, 35, President & CEO, Homeland Networks Corp., a US-based company that launched its Net-station www.radioofindia.com in September, 1999: ''The moment Net access is available in cars and stand-alone devices, the penetration of Net radio will increase manifold.''

Take one counter-culture icon, albeit a dated one, like the radio. Juxtapose that with another great counter-culture icon, the Net, and the result is a surge in the number of 'unofficial' radio stations. Although India doesn't boast any such at this point in time, a few could emerge as the Net-costs decrease. Net radio, believes Raman Nanda, 40, CEO, www.media-arc.com, an Indian site broadcasting streaming audio news, will use the natural characteristics of the Net to offer listeners a better radio experience: ''The Net enables 24-hour call-ins, chat-sessions, and commentaries. It allows the world to be the studio-audience.''

Setting up a Net radio station isn't cheap, although it could cost less than a third of what it takes to build a bricks-and-mortar radio station. Regulations about the legality of the radio stations on the Net are nebulous: some companies operating such stations say a licence from Indian Performer's Rights Society (IPRs) is a must. Others do not.

Companies seeking to establish a radio presence on the Net are counting on two factors: Net-radio works even with low-speed 33 kbps modems, and the primary target-group for both the Net and the new radio is the same. Add to that benefits like on-line shopping that Net radio can offer (Like what you hear? Click here to buy the CD), and stations like media-arc and radioofindia seem to be on a sound wicket.

That apart, stations such as these are also hoping that the availability of a passive medium (radio) on an active one (the Net) will help them create an impact. Says Radia of Millennium Broadcast: ''Many people prefer listening to radio while surfing the Net.'' Adds Sam Miller, 38, Managing Editor (South Asia), BBC World Service: ''(the audience for radio on the Net) is very upscale, young, and with a high level of education.''

It's time to accept the truth: none of these organisations are going to make money in a hurry. On top of the steep licence-fees they have agreed to pay, companies seeking to operate FM stations will have to invest heavily in transmission-infrastructure and programming. Predicts Arjun Sawhny, 49, Partner, KPMG: ''It will only be in the sixth year of operations that these companies can hope to make some headway.''

If one were to factor in the economics of the licensing arrangement, it would probably take longer. Here's why: companies pay their final bid amounts as the licence-fee for the first year, and 15 per cent more every year thereafter. Expect to see the large players in this segment consolidating their positions, and the others dying an impecunious death.

Even the Net radio stations will take time to turn in profits. The bulk of their revenues will come from advertising-subscription isn't such a great idea-and traditional radio stations are likely to be the first choice of advertisers.

Since local content will drive the re-emergence of radio, companies expect to see a spurt in retail advertising on the medium. Agrees Pandit of The Hive: ''I see a lot of (ad) revenue coming in from traders and local retailers as this is a segment that has been left largely untapped by other media.''

At the other end of the spectrum, the mainstream companies could use radio to reach out to individuals and households in the higher Socio-Economic Classification (SEC) groups.

Content, though, will remain the singular differentiator for radio stations. Says B. Narayanaswamy, 42, Executive Director, Indica Research: ''All companies (setting up radio stations) need to have a clear content strategy in place. In fact, the same station can devise ways to lure different age-groups from the same SEC at different times of the day: target the husband during peak commute hours in the morning, the housewife between 11:00 a.m. and 3:00 p.m, the younger audience in the evenings, and the prime consuming segments late at night.''

Creating content would require companies to invest in people. That won't be easy. Good RJs are hard to find, and the few who are around juggle radio with a full-time job. Like Mayank Trivedi, a 31-year-old product manager with a transnational, who takes off an hour every Monday to host a show on FM radio. And that's at the front end; finding back-end technicians and producers is far tougher.

Given the medium's decline over the last two decades, the best and the brightest headed for television. Muses Sawhny of KPMG: ''There's going to be a rush for talent, training schools for radio professionals will mushroom, colleges will offer diplomas in radio advertising and marketing, and working for the local radio station will become legit.''

Is the radio boom really on? Some station-heads like Nischint Chawla, 36, CEO, Radio Mid-Day, seem to think so: ''Like other media, radio too has evolved and progressed over the years. This is the next phase.'' Agrees Miller of bbc World Service, which has 25 million listeners every week in India: ''The radio business in India is headed up and up. FM will initiate a radio revolution in India.''

But will advertisers, companies on whose advertising-buck the future of the industry depends, bite? That depends on you. What would you rather be: a telly-junkie or a radio-head? Turn on, tune in, drop out...