RADIO ADVERTISING

Executive SummaryAdvertising in general expresses the positioning. Powerful advertising is the result of powerful planning. Great ideas and great ad campaigns dont just pop out from no where, they are built on the key communication points that motivate sales. Radio is entirely a medium of sound, which evokes smells, sensations and visual images which brings the listeners imaginations into play radio advertising is one of the tools of advertising which is effectively used for communication and positioning. It is one of the foundations for effective and successful advertising. Radio can be used effectively for advertisement since it can target the large audience because of its high reach. Radio is good at increasing awareness about the brand and business and helping in building the brand image. Radio advertising needs to do perform three things: - grab the attention of the listeners in less than 3 seconds - make an offer - give the listener all the information to act on the offer. Radio advertising is relatively low cost targeting to all the people irrespective of SEC A, B or C. it is one of the most intimate and involving of all media it is great for conveying immediacy i.e. grand openings, sales, promotions and special events at local and national level. This survey will be useful for Advertising Avenues to know which would be the most effective radio channel for placing advertisement and the best time slot for the advertisement based on the listening habits, the perceptions and the preferences of radio listeners. This research would also help to determine whether radio is an effective medium for advertising products, which would help to determine if more efforts need to be focused on radio as a medium. The survey would also be useful to help you to know which areas you should concentrate your advertising efforts and save the cost.

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RADIO ADVERTISING The Project included structured questionnaire to help determine the listening habits of the people on FM Radio and also Personal Interview with Sales Manager of all four FM Radio channels, content analysis of all four radio. The FM Channels that the advertisers need to focus their advertising efforts are Radio Mirchi and Go based on the target audience and analysis and to concentrate more efforts on afternoon time slot to target the youngsters Radio advertising is mostly suitable for the retailers at the local level. This medium is also suitable for the real estate developer, corporates, shopping malls, etc.

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RADIO ADVERTISING

INTRODUCTIONOld media dont die! They just bounce back in new avatars. Not so long ago radio had been written off as fuddy-duddy, down market and not so cool. Television and later new media were touted to being the media of the future. But thanks to technology radio is making a comeback. In fact, in its new avatar-fm-radio is all set too become the hippest, coolest and most with -it medium. FM radio is a new entity altogether and has to deal with new market dynamics. Media owners dealing with new markets will virtually have to draw up their strategies as they go along, create programming that is new, innovative and grab away eyeballs from TV sets and make them tune into their radio sets. Its a whole new challenge and competition is never far away. Ad revenues will also not be easy to come by, as advertisers will expect media players to put their money where their speakers are before they commit large sums of money towards radio advertising. The other challenge for radio in attracting advertisers is the nature of the mediumradio has always considered being a reminder medium. The involvement of listeners to radio is low, Vis a Vis television or print media. However in spite of the various challenges the emergence of private FM stations is certain to increase the quantum of radio advertising in the country , much like satellite channels did to the quantum of television advertising in the country. That should open up a vast new market of consumers-100 million Indian households own an estimated 150 million radios, outnumbering television sets 3:1. The geographical area covered by radio in India is as high as 98 percent and the penetration level is approximately 97 percent. But FM presently covers only 17 percent of the area and 21 % of the population of India through transmitters. Currently radio has just 2 percent of the 9000 crore Indian advertising market according to an Arthur Andersons survey. Globally depending on each country, radio has a 5 % to 12 % of the advertising cake. On the higher side are countries like the United States with 13 %, Canada with 12.7% and Spain with 9.1%. FM station executives are not forthcoming on multi-platform strategies as yet. Given that radio has penetrated into 100 million homes and a FM set costs around Rs. 50/- FICCI estimates FMs share to revy up from the present 1.5 percent to 5 % in five years.

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RADIO ADVERTISING While TV is a family medium, radio is personalized. Also advertising of certain product seems to work very well while some might not. For example, cellular phone service or auto related products would have a good impact when advertised on radio is primarily known as a drive time medium most people who turn in are doing so while commuting. Thus the potential if FM is better is bigger town, as the car population is much bigger. This would be the key when evaluating the medium. Also one must not forgot that radio continues to be a medium that has tremendous reach among the poor and marginalized sections of society. With the coming of more channels, and the emergence of lifestyle advertising, radio will become a push and pull medium. As said earlier, is not just making a comeback but is being reincarnated into a new avatar.

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RADIO ADVERTISING

RADIO OVERVIEW IN INDIAThe past couple of years have witnessed a flurry of activity in the radio sector. An industry that accounted for nearly Rs. 150 crores worth of advertising surely needs to be studied closer than ever before. The current situation of the radio industry is akin to that of the TV industry in the early and mid 1990s. Further, with the possibility of a revenue sharing regime being brought in by the Govt. and the sector getting liberalized further, we need to be prepared for a revolution that is staring at us in the face. With the FM stations giving the local press a run for its money, a need gap still existed as far as the monitoring and evaluation of ad spends on radio was concerned. Radio advertising is getting bolder by the day with carefully worded scripts, brilliantly executed situations, the right strategy etc. Though the quality of the commercials has gone up by notches, FMCG companies still continue to bank wholly on television. FMCG brands ought to wake up to this elementary fact, and be a lot more pro-active on the radio front. In light of the fact that in cities like Mumbai and Delhi, radio stations have a far greater reach than print, companies ought to partner with their respective agencies in executing well-strategised radio commercials. Radio is perhaps the most cost-effective and powerful means of communications. Studies indicate that instead of two commercials on television, one commercial on TV and the other on radio gives about a 20 per cent higher brand recall. Also, a television commercial, if put out exactly on radio, works very well as the listener can then visualize the whole ad Agencies and clients are busy evaluating the media and its various stations. And the station heads are busy putting together a veritable package for the listeners, the success of which may lie in differentiation. And if one were to cite reasons for differentiation as a key to success, one would arrive at a logical answer- that the listener would possibly dive in to a particular station only if he is sure of a particular flavor that the station has to offer time and again. This flavor can be a concoction of choice of music, RJs and packaging. And though the station managers may not agree, the radio stations in Mumbai today are sounding pretty much the same. Over the years, publications and TV channels have been using radio as a support medium, as a reminder medium, and as a means of building up frequency. With the proliferation of private radio stations, one expects a definite increase in the usage of radio as a means of cross media 5

RADIO ADVERTISING marketing. This calls for some probing on our part to understand why the gush to market media brands on radio, what has been the learning over the years and with the private players entering, what would be the scenario in the days to come. Advertising drives revenues for a radio station. Therefore, it is of prime importance for the client to establish a market share or listenership To create word of mouth you need to stay close to the listener, you need to have a relationship with the listener, and radio has that relationship. People choose to listen to their radio, you need to feel that youve got a conversation going on between the radio and the listeners, they should be able to feel that they talk back to their radio more than any other medium. Its a medium that talks to the consumers on their level, one-on-one, so its always like a conversation, its like a dialogue medium, and this is why as soon as you start that dialogue your word of mouth propagation has started already. Mumbai has four private players Go 92.5 (Mid-Day Multimedia), Radio City (Star's joint venture), Radio Mirchi, and Red FM (Living Media) besides the two AIR FM players. In Mumbai, FM reach is estimated at 62 per cent. According to IMRB, reach is highest among students and working men; average daily listenership in households with FM access is 54 per cent, as compared with 85 per cent TV viewership. Time spent listening to radio is 105 minutes per day on an average, as compared to average daily TV viewership of 135 minutes. But the time spent listening to radio has increased, and there has also been a significant increase in ownership of music systems, 2-in-1s, and portable radios.

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RADIO ADVERTISING

SOME BASIC TECHNICAL KNOWLEDGEAny radio setup has two parts:

The transmitter The receiver The transmitter takes some sort of message (it could be the sound of someone's voice,

pictures for a TV set, data for a radio modem or whatever), encodes it onto a sine wave and transmits it with radio waves. The receiver receives the radio waves and decodes the message from the sine wave it receives. Both the transmitter and receiver use antennas to radiate and capture the radio signal. When you listen to a radio station and the announcer says, "You are listening to 91.5 fm what the announcer means is that you are listening to a radio station broadcasting an fm radio signal at a frequency of 91.5 megahertz. Megahertz means "millions of cycles per second," so "91.5 megahertz" means that the transmitter at the radio station is operating at a frequency of 91,500,000 cycles per second. Your fm (frequency modulated) radio can tune in to that specific frequency and give you clear reception of that station. All fm radio stations transmit in a band of frequencies between 88 megahertz and 108 megahertz. This band of the radio spectrum is used for no other purpose but fm radio broadcasts. Common frequency band includes the following

AM radio - 535 kilohertz to 1.7 megahertz FM radio - 88 megahertz to 108 megahertz

AM radio has been around a lot longer than FM radio. The first radio broadcasts occurred in 1906 or so, and frequency allocation for AM radio occurred during the 1920s. In the 1920s, radio and electronic capabilities were fairly limited, hence the relatively low frequencies for AM radio. FM radio was invented by a man named Edwin Armstrong in order to make high-fidelity (and static-free) music broadcasting possible. He built the first station in 1939, but FM did not become really popular until the 1960s.

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RADIO ADVERTISING

ROYALTIESFM is primarily a music channel, so the question of royalties is relevant. The Indian Protographic Record Society (IPRS) and Phonographic Performance (P) Ltd. (PPL) are supposed to hold all the rights of royalties. They are demanding Rs. 1,500 per hour (as against Rs. 100 per hour, at which they are supplying music to AIR), PPL is demanding a royalty of Rs. 250 per hour of needle time, the actual duration of a piece of music. The IPRS is demanding Rs. 100 per hour. The IPRS claims royalty for the original composers and authors of music.

COST - ASPECTA Licencee pays Rs. 6000/- per hour. Add Rs. 1,500/- for the music. Add Rs. 3,000/- for the technology, salaries and other expenses. An hour long show thus costs Rs. 10,500. 10 - Minutes have been set aside for advertising. One minute is reserved out of 10 - minutes for social awareness advertising. Thus, advertising time available for sale is 9 - minutes. In other words, 18 advertisements each of 30 seconds can be accommodate in an hour. This is the high target. Besides the tariff card should be modest, considering the limited range and listenership supposing a 30 - seconder costs Rs.500 at prime time for 18 such spots, the total revenue generated is Rs.9,000/- . Another estimate puts the production cost of an hour long programme around Rs.6,000/-. Add Rs.6,000/- of the licensee fee to AIR. Studio hiring costs are between Rs.500 - Rs.1000 an hour. The total expenses are thus Rs.12,500 to Rs.13,000 per hour.

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RADIO ADVERTISING

RADIO ADVERTISINGRadio is still king when it comes to getting your music out there. The best way for a new band to get heard by the public -- and record label executions is over the airwaves. Many people will tell you that radio is king in the realm of music marketing: You'll never be a huge star without a radio hit; once you secure radio play, press and MTV will follow suit; a big tour will not be far off, etc. In many ways, this pattern holds true. However, it is worth noting that there are several examples of highly successful, long-lasting artists, companies-- of all genres who have never had a radio hit. Companies that advertises on FM channels today such as Hindustan Lever (HLL), Dr Morepen, Amul, Castrol, Santro, Britannia, Parle, DSP Merrill Lynch etc are dominating the advertising on each one of the FM channels, be it Radio Mirchi, Win 94.6, Go 92.5 or Radio City. However Coca-Cola and other brands drunk by people of all ages would try to be present in most of the segments. Today, 70 per cent of the advertising comes from big-budget, national advertisers and the balance 30 per cent comes from retail. It is a known fact that retail advertising will grow because radio presents the perfect advertising medium for local businesses in a local environment. But national advertisers are also operational in the local market, implying that it is as important to them as it is to a retail advertiser, if not more. Nevertheless, it is undeniable that radio can be integral in exposing a new artist, new product or services to new fans and taking a local market to a national level. Accordingly, it is extremely difficult to obtain meaningful airplay. Putting it bluntly, successful radio promotion revolves around making and managing relationships. Radio promotion is an art that demands a certain style you may simply neither have nor desire to cultivate. On top of that, it can take a great deal of time to make all the contacts and connections that are required for successful radio promotion.

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RADIO ADVERTISING So, while you should give promotion your best shot and take DIY ("do it yourself") as far as you can by following the guidelines here, you should also be aware that radio promotion is one area where Turning eyes and years away will be the key to success in an industry where the major revenue model, at present, is advertising. Paradoxically, radio currently has only a 2 per cent share of the total advertising pie in India. Globally, depending on country, radio has a 5 per cent to 12 per cent share of the advertising cake. On the higher side are countries like the United States, with 13 per cent, Canada, with 12.7 per cent and Spain, with 9.1 per cent. Advertising agencies that control the national picture will be slow to move on to radio for creative reasons. They have people who love to make television commercials, but don't have anybody who knows how radio works. Here, about 2 per cent of the money spent by advertisers goes to radio, and up till now, all of that went to ALL INDIA RADIO. Hence, sometimes you have radio commercials which you don't quite understand because they took the audio out of television and ran it on radio. Radio advertising can be national, but it is also with FM, a local medium. However, in revenue terms, money from advertising has gone up. Revenue from commercials on AIR, including on Vividh Bharti and Primary Channel (including FM) rose from Rs.393 million in 1990, to Rs808.4 million in 2000, & Rs.600 crores in 2002, representing a growth of about 7.5 per cent per annum. A clear advantage that radio has is that it can easily target city-based audiences. This makes sense if the advertiser, like a food chain that is opening an outlet in Ban galore or Mumbai, wants to target a specific audience. In such cases, it does not make much sense to advertise on TV, and the print medium is too expensive. Radio is the best bet for such smallscale promotions. Radio advertising is aptly suited for local promotions, and once audiences can be targeted, it has tremendous potential to eat into local mediums.

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RADIO ADVERTISING

Consumer opinionsThe evidence from the qualitative research is that young people feel their local FM station is aimed at people like them, but the advertising is not - they feel, probably quite correctly, that most advertising is aimed at adults. However, because radio is a real-time intrusive medium, they have to sit through the full length of any ads which are for irrelevant products. There was evidence of three sorts of advertising memories: Relevant ads which mentioned areas or names of specific interest, e.g. films, outlets selling favoured brands, concerts Vague/ not relevant Memories of ads for local garages, cars and insurance companies - little or no specific detail remembered Sonic Brand Triggers Much evidence of children's ability to pick up on musical SBTs and sing them out loud

ConsiderationIt seems clear from this analysis that children are very selective in their attention, and are strongly influenced by relevance of the brand or product advertised. It would follow that, since they expect most ads to be irrelevant to them, care must be taken in the creative work to overcome this expectation - through linking to the relevant topic, involvement, surprise, tone of voice etc. Tone of voice is a key area with radio: young people can tell when they are being addressed as equals, and when they are not. Young people pick up very strongly on musical Sonic Brand Triggers, even for seemingly irrelevant brands.

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RADIO ADVERTISING

STRATEGIC ROLE OF RADIOAs Commercial Radio developed in the early days, its key strengths were seen as primarily tactical - fast turnaround, low capital cost and local flexibility. These days however, while the traditional strength still apply, radio is increasingly being used for strategic roles. Dominant share of mind Share of mind can be described as the extent to which a brand makes itself salient within the consumer's mind - this is often the most challenging task in sectors where there are several topparity brands, and/or high levels of competitive activity. The ability of radio to create dominant share of mind is a product of its intrusiveness and the high frequency with which ads are broadcast. Brands like the Carphone Warehouse have used this unique characteristic of radio to develop an unassailable lead within their category. Support to other media Young people are of course consumers of several media, and campaigns which use only one medium can miss out on the "media multiplier effect". Because of its inherent characteristics, radio can work in a complementary way to other media. With TV it is traditionally used to add to the length of a campaign or to fill weeks where there is no TV activity - it can also be used to explain products or services in more depth, or to include additional information. Brands in fast-changing areas like retail or financial services often use radio for its ability to put over several different messages as an overlay to a core TV campaign (multiple executions in radio are very inexpensive compared to TV). Radio also works exceptionally well with TV if there is creative synergy, most conspicuously in the form of a Sonic Brand Trigger.

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RADIO ADVERTISING To press, radio above all adds intrusiveness, because levels of ad avoidance with print are so high. Radio can also, like TV, bring things to life - for services or corporate advertising this can be very valuable in adding personality and tone of voice. The "explainer" medium Young people, because of their inexperience, often need the benefits of products or services explained to them before they can make a decision to purchase - for example, a bank account, or a promotional offer. Radio is particularly useful for this as it uses the human voice in real-time. This means that the young people do not have to wade their way through extensive reading material before they even know what the proposition is. Speaking from inside youth culture As the qualitative research illustrates, young people begin to move away from their parents' world of choices and preferences, and to set up their own world independently. Inevitably this means that some media are seen as outside that independent world - newspapers for example. Radio, as a personal "me-medium", allows the advertiser to speak from inside the so-called "youth fortress". As the respondents said in the research, they feel as though the people on the radio treat them like adults - leaving their parents out of the equation. Tone of voice is a key issue with advertising strategies in this territory.

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RADIO ADVERTISING

KEY FACTS TO BE NOTICED Is Radio as a Medium Effective? Till just a few months ago, we also believed Radio to be a "wallpaper" or a "passive" media option, good enough to reach just 8-10% of potential audience, across markets. We always related Radio to the average middle class, which does not have a choice other than listening to some old Hindi songs of the 60's. Many of us living in the big few metros have begun to acknowledge that "Radio seems to be growing, thanks to the private FM stations". But may be we just left it that, merrily continuing to spend our advertising investments, 75-80% on TV, some on Print/outdoor media options, miniscule percentage on Radio or Internet. Not to forget the magazines, if any one of our colleagues remind us that "we need to have a follow-up campaign in select magazines", because housewives need to know more about the product offering. More introspection follows, when our bosses insist otherwise. Think again. Look at some of the facts, backed by numbers, which tell a different story. Listenership V/s Viewership The Radio Multiplier Effect Potential of Radio as a reach medium is as high as Print options (if not more) in Delhi & Mumbai Average time spent listening to Radio is as good as average TV viewing time Prime time definition: is it different by medium? Radio Advertising growth

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RADIO ADVERTISING

LISTENERSHIP V/S VIWERSHIP (000) Metro Mumbai Age 15 29 SEC A1 ,A2 ,B1 ,B2Channel Sony(Max) ZEE (Music) DD Sports ESPN Total Mirchi City Go Red M Total 119 162 139 331 751 800 818 253 516 2387 6 am-9 am 3 5 11 20 39 268 278 87 169 802 9am- 1pm 11 28 25 63 127 246 244 82 160 732 1pm-7 pm 21 26 16 54 117 182 190 55 116 543 7pm-9pm 64 86 71 164 385 79 82 20 58 239 11 pm onwards 20 17 16 30 83 25 24 9 13 71

Source NRS 2005 DATABASE From the above analysis done it can clearly be observed that RADIO has a far better REACH than some the popular Television channels, if television reaches 751 then radio is able to reach 2387 population, one more important thing to be noticed is that radio is again able to reach far more people throughout the day, its only in the night time when TV dominates radio.

StationsMirchi City Red Go

Listenership (in a day) Mumbai (in lakhs) 23 21 14 6

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RADIO ADVERTISING

RADIO MULTIPLIER EFFECT - apart from RRR, another monumental study is the Millward Brown study on radio multiplier effect. Millward Brown conducted the study across October 1999 to April to find out how effective radio advertising can be relative to television. This study involved nearly 5500 interviews in continuous research to track awareness and attitudes to 17 brands. The media tested were Commercial Radio and television in the Central Region of UK. The broad findings of the study proved that radio was, on an average, three-fifths as efficient as television at driving advertising awareness amongst radio listeners; used in conjunction with a television campaign, it proved to be an effective medium; and in general, if 10% of a given television budget is re-deployed onto radio, the efficiency of the campaign in building awareness increases on average by 15% as shown in table below:

(Source:

rab.co.uk)

The study highlighted that radio effectiveness result was achieved at one-seventh of the cost. Of course, this cannot be taken as a thumb rule as there will be wide variance between rates in U.K

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RADIO ADVERTISING and other markets. However, the study makes a strong case for advertisers to divert a small portion of their TV budget to radio. Conclusion Radio offers tremendous opportunities for advertisers and media planners need to explore various options by which they can effectively use radio in their media mix. Conversely, broadcasters need to develop the market by being more responsive to the advertiser's needs. This will provide an opportunity for the market to arrive at the final verdict on the effectiveness of the medium. REACH POTENTIAL OF RADIO HAS DOUBLED OR TRIPLED

In Mumbai and Delhi, every third individual listens to Radio "yesterday". (Base: All Adults, 12 + Years, All SEC)

So much so, at an overall level, Radio offers the potential to reach more than the local Print options. (Caution: we know that you'll use your wisdom, not to compare these numbers, on an apple to apple basis, considering the consumption patterns of the respective media options and their inherent strengths and weaknesses.)

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RADIO ADVERTISING

TIME SPENT LISTENING TO RADIO IS AS MUCH AS TV VIEWING TIME

If we consider anyone who listens to Radio for at least 5 minutes within a 15-minute slot, and treat him as a "listener", then: On an average a Mumbaikar (34% of 12+ Universe) listens to Radio for 2.35 hours a day, while his Delhi counterpart listens for slightly longer at 2.45 hours a day.

This is just about a fraction more or less, when compared to the average TV viewing time in these cities. Interestingly, this intensity of time spent on listening to Radio does not vary too much, be it the upper SEC A or the lower SECs of D/E (whereas we all know the pattern on TV, even within the TV viewing universe). WHAT IS PRIME TIME As expected, popular prime time definitions for Radio and TV are very different. Radio rules in popularity till about late evening, and tapers down, post 6 PM.

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RADIO ADVERTISING Now, when do the actual transactions happen for most "impulse" categories & FMCGs? What happens in case of purchase behaviour when someone listens to Radio on way to a shopping mall? Who was referring to "recency planning" recently? Check it out for yourself. If you are not still convinced about the "power of Radio", here are some additional insights favoring Radio as a good advertising and promotional medium: : Intensity of listening to Radio is higher amongst Males than Females. On the other hand, females are more intense TV viewers. The lower age group of