Impact of Radio on Business Opportunity

Impact of Radio on Business Opportunity

Presented By,Amitabh Chaitanya

PGDMA- NAARM Rajendra Nagar, Hyderabad

Outline

• Historical Prospect• Present Radio Scenario• Now Radio is known for….• Recent Study• Benefits of Radio• Medison Finding for sales increase by

Advt.• Certain issues

Historical Prospect

• 1936- All India Radio formed• After Independence transferred under Ministry of I&B.• Six radio Station during Independence.• All India Radio`s network had expanded by the mid-1990s

to around 146 AM stations.• In 1994 there had been almost 85 FM stations and 73 short

wave stations that connected the entire country.• Three major goals –

• to achieve political integration• to attain economic development• to achieve social modernization.

• The oldest radio station of India, All India Radio or Akashvani is one of the largest radio networks in the world.

Present Radio Scenario- A Paradigm Shift

• In 2009, Indian radio industry stood at US$ 171.38 million• Expected to grow at a CAGR of 19 % over 2010-14• Reach a size of US$ 360.32 million by 2014.• In 2009, total 248 Channels are operational including the

21 channels operationalized in the phase I.• In the financial year 2008-09 the Government has earned

US$ 10.78 million (approx.) from various private FM stations.

• 35 FM stations were operationalized during the year against 53 pending FM stations.

• The policy on community radio was liberalized during the year 2008 to bring in the civil society and voluntary organizations working on not -for-profit basis under its ambit.

• India's demographic composition (70% below 35 years) ensures an attractive market for entertainment.

Now Radio is known for…

• Boodikote in Karnataka that covered the 2005 Panchayat elections live.

• Giving a voice to people, community radio has helped to make village communities more confident — of raising their concerns and getting redress and of combating social ills such as alcoholism and dowry.

• Educational programmes through Gyanvani.

• The survey found that the frequency of listening increased over the previous past two years.

• Delhi registered the highest growth rates- 35%. • The percentage of heavy listeners also increased from 11% prior to

the entry of private FM players to 63% after their entry. • In Kolkata- 20% to 75%, and the percentage of heavy listenership

increased from 5% to 19%.

• India's FM radio sector: Understanding the growth imperatives, recorded an average revenue growth of over 30% over the last year and expect to maintain that growth over the next two years.

Some of the Recent Study

• The Indian radio sector is poised to get an estimated investment of half a billion dollars in the next 24 months, industry experts pointed out.

• Radio advertising, which presently has two per cent of the country`s total ad-spend, would see a substantial rise over the next 10 years on account of increased listenership catering to a wide-population base.

• Share of Radio advertising was 3.8 % in 2008; expected to reach 5.2 % in 2013.

Benefits of Radio advertisement

• Far Reach- •Less Cost of Advt.•Repetition•Greater reach•Program from Lab to Land•Uneducated village folk•Complements a faster-paced lifestyle•Advertising costs just 15 percent that of television.

•Less Cost of Advt.•Repetition•Greater reach•Program from Lab to Land•Uneducated village folk•Complements a faster-paced lifestyle•Advertising costs just 15 percent that of television.

Different forms of Radios(1)Satellite Radio(2)HD Radio(3)Internet Radio

• Advertising is the sole source of revenue for radio in India. Currently, the sector generates annual revenues of INR 2.2 billion and is growing at around 20 percent annually. This implies a marginal rise in radio's share in the advertising pie to around 1.9 percent.

Country Advt. Spending (%)

US 13

Spain 9

Sri Lanka 21

India <2India

Spending

Potential- 10-12%

India Spending

Potential- 10-12%

Global

Spending-

8%Global

Spending-

8%

Pie diagram showing the profile of advertisers (Source: www.televisionpoint.com)

Graph showing the revenue composition of radio

Graph showing the ad spend across countries (Source: www.sebi.gov.in)

Year Print TV Radio Cinema Outdoor Internet

2000 49.0% 39.3% 2.5% 0.5% 8.4% 0.3%

2001 48.4% 40.6% 2.7% 0.4% 7.5% 0.4%

2002 47.2% 41.9% 2.9% 0.7% 7.0% 0.4%

2003 46.6% 43.0% 2.9% 0.7% 6.5% 0.4%

2004

2010

46.3%

45.7%

43.7%

49.5%

2.9%

4.7%

0.6%

1.0%

6.0%

10.0%

0.3%

2.5%

Media Spends as % of Total Ad Spend

Table showing media spends in the total ad spend (Source:

www.sebi.gov.in)

Some of the Medison Finding

• People listen to FM at home (70%), while driving (32%), at public places (9%) and at the office (7%).

• Almost 51% of the people listen to FM for an average time of one hour and another 39% listen to FM for a longer period of 1-3 hours.

• Sunday listenership is dramatically low with only 10% of the people tuning in to FM vs. weekdays where the number of tune-ins is as high as 94%.

• Globally, the local retail segment constitutes a large part of radio's advertising income.

• CII-KPMG report, while local advertising contributes 70% of radio revenues in the United States of America, in India, the share of local advertising is only about 8% of radio revenues.

• On an average every FMCG seen 4.0% growth in terms of sale through radio broadcasting.

• Agriculturally related companies observed consistent growth with 11% increase in sales through radio advertising.

• Music industry observed 9% growth in sales and recalling of music in both urban and rural area.

• Many TV live shows advertise through radio and seen growth of 15% among youth especially.

• Volume of business for miscellaneous programmes like sports, certain premier events has also increased considerably.

Certain issues with radio

• Lack of clarity on music royalties• Lack of one collective society representing all

copyright owners• No automatic licensing of music to radio broadcasters• Owner(s) have better remedies such as filing of a suit

in Civil Court and obtaining injunction, but there is no proper Tribunal for obtaining a quick license.

• Advertising is a discretionary expenditure and is the first one to be pruned in case of an economic slowdown.

• Intense competition between the FM radio operators. All of them are clamoring for the same advertisers, listeners and need to procure similar content.

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