The radio business is challenging but profitable, says Red FM's Nisha Narayanan

Red FM recently launched its stations in the Chandigarh and Amritsar markets where the channel didn’t have any presence but were crucial for both in terms of music and business. The radio network launched with an exciting event, recently concluding the Swag Fest with Mika Singh on April 22 in Chandigarh. The Swag Fest has always got a tremendous response and what better way to launch it with someone native and popular from the state. BestMediaInfo.com caught up with Nisha Narayanan, COO, Red FM to know more about the launch and the channel’s plans. Excerpts:

How important are the Chandigarh and Amritsar markets for Red FM?

Punjab is a very critical market on two counts. Firstly, the state has a unique, globally recognised music culture; and secondly, it is an affluent state with continuous aspirations. We were not present in this market until now, which has both rich musical content and fresh business prospects. It was only critical for us to be present in this market.

What made you bring Mika Singh on board as the face of the station in Chandigarh?

Swag Fest is an immensely popular IP (intellectual property) that Red has introduced a few years ago. The response has always been overwhelming. Mika is not just a musical superstar, but also the foremost youth icon of the Punjabi ‘swag’ subculture. That’s exactly why we thought we should launch the new stations with all our RJs on stage with Mika.

Red FM has been always positive on concerts. So it was natural for us to take that route in a vivacious and celebratory market like Punjab. However, we’ve never taken on board a brand ambassador, essentially because we don’t believe in that route. For Red FM, the listener is our biggest superstar. And we celebrate him/her every day.

Competition radio channels have roped in names like Anu Malik, Hrithik Roshan, Anil Kapoor and so on for various shows. Isn't getting a celebrity as an RJ an expensive affair? How effective is it?

Getting a celebrity as an RJ is definitely quite expensive. We believe that when you have a celebrity on air, you are limiting your image and style. At Red FM, we would rather have real people as RJs. We love to have celebrities over to the station (and we often make quite a ‘song and dance’ about it), but we wouldn’t want to extend their glamour into the RJ space. Our RJs bring in a lot of community perspective, because they have that just-one-of-us identity among listeners. A celebrity belongs to a different orbit and it’s only good to have a movie celebrity or a star cricketer on the station, once in a while, as a marketing strategy.

Red FM won 13 stations in the second batch of Phase 3 auctions. How many have you launched yet and how many are remaining?

Totally, we won 22 stations in Phase 3. We’ve launched all the stations from the first batch, except Jammu and Srinagar. The 13 stations that we’ve won in the second batch of Phase 3 will be launched before the end of this year.

A substantial amount of investment has gone in buying the new stations. How are you looking at monetising the newer stations?

We need to invest a lot to establish the business, both in terms of marketing spends and human resources. Technology and transmission is a one-time cost, but investments made on the talent front actually take you quite far. Add to that the one-time capital and operating costs, it takes anywhere from 24 to 36 months for things to settle down. It all depends on the market conditions of the station’s landscape.

In certain markets, where we are already in a formidable position, we will take about 24 months to break even. But in completely new markets like Bihar, we might just take a little longer than that.

Will all of them be branded as Red FM? What will be the programming strategy for these stations?

All the stations will be Red FM in name and spirit. They all will be what Red FM stands for -- young, irreverent, fresh, local and providers of  ‘unstoppable entertainment’ and a 'provocative entertainer' as it has always been. It is beyond this that the local ethos of the market will be captured by the station in their respective cities. Having said that, at the core of the brand is our proposition – Bajate Raho!

Is Red FM looking at branded content? How far has branded content gone on radio?

I’ve never felt that you should go and decide to do branded content in a particular city. Red FM always looks for opportunities to co-create and jointly curate content that can be engaging for the listener. The moment we get such mandates, we are happy to extend it everywhere. There has to be a deep content connect with the brand promise. We don’t do it for the sake of doing it. But the moment something riveting comes our way, we go all out.

What will be the scale of marketing activities around the new launches?

Ours has been a 360-degree approach. Impact outdoor, ambient media, out-of-home disruption, and anything that triggers a trail of buzz marketing. The central idea has always been to capture the agenda of a day in the life of a listener.

Radio stations have always had a high cost of maintenance – be it paying for government licences, music licences, royalty and other expenses. Is Red FM profitable?

Yes, it is quite profitable. It is definitely challenging to run the radio business, where there are a lot of hurdles like licences, royalty and so on. And the moment we are dependent on the traditional business model, the going gets tough. I have always been a firm believer that we need to push through on-air innovations and non-traditional revenue. It is therefore that we’ve gone into flagship events, landmark concerts and digital initiatives. One definitely cannot continue to make much by only running a radio station and selling standard inventory.

Secondly, by the virtue of being a fairly large and an evenly spread network, economies of scale work in our favour. Our balanced presence across the country helps us give a better return on investment (ROI) to the client, along with a customised reach to every client. We are a one-stop shop with single-window clearance for each one of our advertisers.

Do you offer bundled business deals? Is bundling a profitable business proposition for radio?

Bundling is a tool for sales maximisation. It does help us to increase the topline because all our offerings within the ‘bundle’ are individually robust in their promise. A combination of radio inventory and experiential platforms creates a lot of innovation for advertisers. And more often than not, it increases delight for the listeners. Bundling has been profitable for us only because we bind it well.

A lot of expenditure goes in activation and events. Doesn't that devalue the radio station's inventory?

We do events only if the event breaks even. While it is a cost, it is also profitable in more ways than one. We create a mind space that goes beyond radio and we generate a lot of digital and on-air content for the channel. If correctly integrated with the primary medium, it does not devalue but rather showcases the station inventory better.

As an industry, radio channels are bleeding. Is there really a way to turn things around?

Being a large network within a media conglomerate, we haven’t bled so much. The smaller players tend to bleed because of their limitations to deliver reach and variety.

About 100 new stations were launched in Phase 3, adding to the existing 223 stations. So, with 60 per cent increase in inventory, why has radio grown at only 10-11 per cent?

In a lot of markets out there, we are still converting radio to be the primary medium for advertising. It’s crisp, it’s smart, it’s economical, and yet a secondary option. I think that more conversions need to happen. Also there is also the undeniable truth of limited inventory. Not always does optimum capacity create upward price revision. I would still think that if we look at radio as a medium of music and voice, there is a lot one can do to create profits.

In terms of inventory, a lot of uptake happens in the so-called ‘prime time’, while the rest of the day parts are not really used. In radio, there is no such thing as prime time. While television is consumed through appointment viewing (and one knows that out there, evening time is prime time), in case of radio, the listener tunes in whenever they feel like. Some of the listeners are tuning in the morning and many in the afternoon and yet some others late in the night. In radio, audiences shift; they don’t arrive and leave. We treat many kinds of audiences throughout the day. It is because of the classic ‘prime time’ myth that a lot of inventory is being wasted.

Are advertisers looking at radio seriously?

Advertisers are looking at radio seriously and considering it much more than before. Radio has the advantage of localising content and creating pictures in your thoughts. We always have looked at radio as the ‘theatre of the mind’. Red FM, for one, has always been a station for expression. Thankfully, clients also now understand that power.

Radio still seems to be a distant cousin of print, TV and digital. In the US, radio takes up a stable 12 per cent of the media pie. What is not going right for radio in India?

There are no cousins in the media space, but rather constituents. It is up to the scheme of each brand with which it designs its media plan. Radio is currently at a 4-5 per cent of the total advertising pie, and with all the expansion and evangelisation in place, we should aim for a 10 per cent share in the next few years.

Is the structure of FM in India right in the sense that individual stations in small towns drastically increase investments?

The whole licensing process should be merit-based. The award of a licence should be the basis of the programming content that you promise. That’s how we can achieve content variety with capital parity. Like on TV, there’s a sports channel, a kids’ channel, a cuisine channel, a travel channel and so on. It is based on these product proposals that the government should be allotting licences. Somebody with a welfare channel for women may not be charged a huge fee compared to somebody who launches a sports channel; where the government should collect a higher fee. Something like that would have perhaps worked better, because we all pay such huge licence fees. And that too because the bidding template is exactly borrowed from telecom licensing.

This doesn’t mean that we are not profitable. The top five channels are doing well. But to say that we do not bleed is not correct. We still bleed on individual stations and the deepest wound is the huge OTEF/licensing fee that we pay to the government.

What kind of growth do you see for the industry this year?

The growth for radio in this year, as per what GroupM predicts, is about 10-11 per cent. Madison, on the other hand, predicts the pace to be a little over 14 per cent growth. We too are looking at a double figure growth for the industry considering the multiplicity of channels. New channels are coming where choices were extremely limited, while fresh differentiated channels are coming where there have been multiple frequencies. Even Red FM has spread itself in newer markets and hopes to contribute to this projected growth in a big way.

Do you think geo-targeting of ads on television is a competition to radio?

It is more of a competition within television channels. We are not wary of perceived competition. We would rather combat the actual.

When will radio find another Ameen Sayani? The entire country used to be hooked to his Binaca Geetmala.

I won’t say that we’ve not been able to create superstars in radio. For instance, we have created RJ Malishka in Mumbai. The times were different back then. The style of speaking and engaging was heralding in nature and the audience capture was pan-India. It would be unfair to compare today’s RJs with someone of the previous era. That period was more cinema-centric. Radio today is life-centric.

How has Red FM’s sponsorship of Sunrisers Hyderabad helped your brand?

When cricket and creativity meet, the partnership has to be fantastic, energetic and positively exhausting. This is our fourth year of association with Sunrisers Hyderabad. We are a cinema and cricket craving nation, and hence an association that combines both consistently works. A lot of content is produced within that association, which only benefits us.

On a personal note, what takes your time other than radio?

I love spending time with my dogs. Apart from that, I love reading. That’s the only time I get to communicate in silence.

You are among a very few CEOs who are very prolific on Facebook. Why so?

I am on social media to primarily understand how it functions. I post a lot of random stuff there. It opens my eyes to what people may or may not react to. Being on social media gives me a perspective on how people are consuming and reacting to content and digital, and that is the way forward anyway. Though that, again, is quite social in its way!

Info@BestMediaInfo.com