Alternative Sources of Revenue on Radio

ALTERNATIVE SOURCES OF REVENUE ON RADIO

@RADIO CITY 91.1 FM

BANGALORE

PUNE

BY: ABHIJEET PRASAD SUMMER TRAINEEBANGALORE

SYNOPSIS OBJECTIVE

TO UNDERSTAND RADIO AS MEDIUM OF COMMUNICATION.

TO ASSESS AND UNDERSTAND THE NEEDS OF CLIENT OF RADIO.

TO EXPLORE AVENUES FOR ALTERNATIVE REVENUE ON RADIO AND ITS GROWTH

RADIO INDUSTRY

EMERGENCE OF FM RADIO.

CURRENT SCENARIO OF RADIO INDUSTRY

FUTURE GROWHT OPPORTUNITIES AND EVALUATING THEM

4

• Business model is mainly advertising driven• Impacted by the global recession, growth in the last two quarters of 2008 was slow because

of slowdown in the advertising industry• A cost effective medium for advertisers as it has more penetration and reach compared to the

traditional print and television• Controlled by few business groups having sizable stake in different media properties• Mainly an act of diversification from existing media players as an risk mitigation exercise with

slowdown experienced in traditional media outlets such as print.

Radio Industry

• Regulated and recently privatized• Phase II licensing made the business viable• Has huge infrastructure setup costs• Oligopoly and witnesses price wars• Overall growth rate is impressive

FEATURES OF RADIO INDUSTRY

• Highly fragmented and regulated• Top 5 players part of large media groups control 63%

radio stations• Top 5 players earn 40% of total revenue• More than 240 private radio stations• Slowdown in promoter’s primary business activity

has resulted in diversification in radio business• 2004-2008 CAGR ~9% (realized)

Key indicators

• Consolidation in the industry• News and current affairs broadcast for content

differentiation• Phase III licensing to ease industry expansion• New stations to result in more fragmentation• Advertising revenue generation from national to local

base• 2009-2013 CAGR ~15.4% (projected)

Future drivers

*CII-KPMG (2005) Indian entertainment industry, Focus 2010: Dreams to Reality.**KPMG (2009) "In the interval... But ready for the next act." FICCI-KPMG Media & Entertainment Industry Report.`

CHARACTERISTICS OF FM RADIO INDUSTRY IN INDIA

04/08/2023 6

• 18% of all private FM stations in metro markets• Metro markets contribute maximum revenue to the

industry• No room for expansion in metro markets – metro

markets already have maximum number of permitted stations in operation.

• Witness fierce competition

The metro market phenomenon

• Radio globally is optimized for local advertisers but Indian Radio industry vies for advertisers with national presence. The mix currently is in favor of National advertisers.

• Advertisers who provide big business are largely based out of metro markets.

• Advertisers give maximum business to market leaders who have large presence, egg. Radio Mirchi, Big FM.Radio city

• Radio commands 4% of total advertising revenue.• Industry expert opine that small players distort

market by virtue of their inability to support large advertisers.

Advertiser driven

Size of Indian Advertising Industry – INR 221 bn (2008)

CURRENT SCENARIO OF RADIO INDUSTRY

CURRENT SCENARIOKEY DEVELOPMENTS

MERGER AND ACQUISATIONS

Bennett Coleman & Company acquires Virgin Radio UK for Rs.448 Crores.

Radio Netherland inks deal with Radio Chaska for music contents.

INDIAN STATION GOES INTERNATIONAL

Reliance Anil Dirubhai launches a 24 *7 FM Station Internationally.

Annual marketing budget spent on Radio as an Advertising Media

% of the total budget spent on radio advertising No. %

0-10 36 60

11-20 16 27

20-30 8 13

Total 60 100

DATA ANALYSIS

SAMPLE SIZE: 60 SAMPLE: Corporate and Retail Clients

Ranking of various advertising medium according to the preference of the sample

Advertising Media No. of sample %

Television 12 20

Print 27 45

Radio 2 3.34

Outdoor 16 26.67

Internet 3 5

Total 60 100

12

272

163

TelevisionPrintRadioOutdoorInternet

Success ratio of advertising campaigns on radio

Response No. of samples Percentage

Yes 40 66No 10 17

Can't say 10 17

Total 60 100

Objective of advertising in Radio

Objective of Advertising Campaigns done on Radio No. of sample Percentage

Brand Recall 30 50

Promtion of new schemes and offers 20 33

Launch of new Store or Product 10 17

Total 60 100

Preference of Radio Station

FM channels No. of samples Percentage

Radio City 10 17

Radio Mirchi 18 30

Radio One 20 33

Big Fm 6 10

Fever 2 3

Radio Indigo 4 7

Total 60 100

Preference of Radio Station

Innovative programme preferred by clients

Objective of Advertising Campaigns done on Radio No. of sample Percentage

LIVE CHAT SHOW FOR LISTENERS 15 40

LIVE BIDDING SHOW 2 3.33

REALTY SHOW OR TALENT HUNT SHOW 15 40

ON THE MOVE SHOW 28 46.66

TOTAL 60 100

Key findings:Out of the sixty clients survey only a small percentage i.e 3.33 % consider radio as primary or number one medium for communication.

The total percentage of Advertising budget allocated to radio is very small compare to other medias vis- a- vis and even the that also is comparatively less compared to international industry standards.

The clients are not happy Radio stations converting them to 100% Kannada, as they consider Radio as a cosmopolitan medium and their TG is a mixture of people living in Bangalore and Karnataka which is supposed to be a cosmopolitan region.

Clients are unable to measure the reach the Radio is fetching them, compare to other forms of media like print or television.

Radio stations should be making more interactive and customer oriented programs and should be judicious in playing what type of music should be played when. A special attention should be given to this feature as music is the connecting link between listeners and station and its success depends on the music specially.

Clients want stations to constantly innovate the programme so that there is no repetition & listener interest is not lost over the period of time.

KEY RECOMMENDATIONS :Radio should reposition itself as a medium of Communication by promoting itself robustly as primary media of communication.

Radio should work out special Packages for its regular clients, in terms of value addition provided to them.

Radio should develop some sort of yardstick which should help Clients to measure the reach of a campaign on Radio. Radio as an industry should work on it and develop a solution for it. For example any customer coming through the channel of radio station

Radio should focus n all those sectors which are still not approached by radio and are focused on other media,

As it is one of the cost effective medium and mass media, it should also play an important role in the society as any other media, it will improve the point of view of companies and listeners towards medium.

Radio is considered a part of cosmopolitan life, so the programming should be catering to their needs and not specific language people. It should rework

on its programming in a way that satisfies every one As because it may fetch you the listener ship but they won’t fetch advertisers because of demographics.

AVENUES OF ALTERNATE REVENUE Alternative Revenue is non-traditional, significant and sustainable revenue streams for business, via the creation of commercially sponsored networks.

In the Radio industry which is still at a development stage, and where there advertisement is the main source of revenue with stiff competition between players to increase their market share it’s important to look for an alternative way for revenue generation to stay ahead in the competitive industry

In Radio Industry, one of the alternative way of revenue generation is doing the BTL (below the line) activities. This stream of revenue generation is non –traditional and innovative. The idea is to find similar non traditional source of revenue generation.

TWO PATHS FOR ALTERNATIVE REVENUE GENERATION: DIVERSIFICATION OF BUSINESS

INNOVATING THE PRESENT FORMAT

DIVERSIFICATIN OF BUSINESS :

ONLINE RADIO - INTERNET RADIO

COMMUNITY RADIO

INDIA’S FIRST INTERNATIONAL STATION

SUGGESTED IDEAS FOR FORMAT CHANGE : LIVE CHAT SHOWS

LIVE BIDDING SHOWS

REALTY SHOW OR TALENT HUNT SHOWS

i. Voice of Radio or Band of Radio

ii. Star on Radio

iii. RJ in you

ON THE MOVE SHOW

PROMOTING EXHIBITION SHOW FOR DIFFERNET INDUSTRY

PROVIDING ONLINE CONTENT TO CLUB MEMBERS

ESTABLISHING A NETWORK OF STATION INTERNATIONALLY

FOCUSSING ON GROWING SECTORS

INTERNET & WEBSITES FULLL UTILISATION

CONCLUSION

Thank you