Will digital radio hit the right note for advertisers?

New Delhi: With I&B secretary Sanjay Jaju announcing the plans to roll out digital radio in 13 metro cities, the advertising industry is expected to get yet another medium to reach out to the audiences. 

Digital radio as a concept feels familiar yet refreshingly novel. This duality persists across all aspects of technology.

While evidence suggests that digital radio could revolutionise the medium, there is significant hesitation within the industry. Although the technology has been in use globally for two decades, it remains relatively unknown in India.

This paradox—potential vs. hesitation—is what fuels ongoing debates on whether digital radio will become a star performer or a quiet spectator in the country's media landscape.

What is digital radio? 

Digital radio, as mentioned before, is not a new technology. It has been around for over two decades. Unlike the current radio technology prevalent in India, digital radio transmits digital signals. 

This means that the audio signal is converted into a digital code before being transmitted over the airwaves. Once the signal is received, it is converted back into an analogue signal and played through a speaker. Whereas in analogue radio, the signals are directly transmitted over the airwaves. 

At present, India has an analogue radio service which is carried out in Medium Wave (MW) (526–1606 KHz), Short Wave (SW) (6–22 MHz), and VHF-II (88–108 MHz) spectrum bands. VHF-II band is popularly known as the FM band due to the deployment of Frequency Modulation (FM) technology in this band.

Presently radio signals are largely transmitted in analog mode in the country. Analog terrestrial radio broadcasting when compared with digital mode is inefficient and suffers from operational restrictions, as mentioned in the TRAI consultation paper. 

Digital radio offers an extremely clear audio experience and allows a single frequency to carry more than three channels. In analogue, on the other hand, one frequency is able to carry only one channel. 

Additionally, it can provide value-added text such as news and traffic updates. The range of digital broadcasts is significantly larger than FM, which is limited to urban areas.

Another noteworthy feature of digital radio is its early warning signal capability, which can alert listeners to disasters such as earthquakes, floods, and storms. Furthermore, a digital receiver can automatically switch to another channel when it goes out of range.

How ‘India friendly’ is digital radio

All India Radio (AIR), a subsidiary of India’s public service broadcaster Prasar Bharti, has been testing out digital radio in various parts of the country.  ‘News on AIR’ and ‘Raagam,’ a music channel, is currently being broadcasted by AIR on digital radio through Digital Radio Mondiale (DRM). 

Digital Radio Mondiale (DRM) system, has been developed for terrestrial broadcasting applications in all the frequency bands allocated worldwide for analogue sound broadcasting. 

DRM standard for digital terrestrial radio broadcasting is specially designed for a switchover to digital radio broadcasting from the current analogue radio broadcasting. 

It works across all the radio frequency bands i.e. AM (SW and MW) and the VHF (FM) bands. DRM allows broadcasting of single or small numbers of audio services together allowing it to operate parallel to analog transmission. 

Then comes ‘In Band On Channel’ (IBOC) technology, which is designed to provide vehicular, portable, mobile phone and fixed reception using terrestrial transmitters.

A digital signal is embedded on frequency immediately above and below a standard analogue signal, and the audio and data are transmitted through the AM and FM radio stations, hence providing listeners with the same program, with either HD (less noisy digital radio) or standard analogue radio broadcast (a standard sound quality). 

A significant feature of this technology is its ability to offer simulcasting of analogue and digital signals in the FM band. This would allow for a rational transition for existing FM broadcasters seeking to transition from analogue to digital broadcasting. 

In the US, IBOC is patented as HD Radio and has been functional since 2002. The same HD Radio technology has been deployed in Canada, Philippines, and Mexico. 

AIR has adopted DRM technology for the replacement of its MW and SW transmitters. In addition, public radio service has conducted trials for DRM and HD technologies in VHF II band. As per reports, DRM digital radio receivers have been fitted in approximately 6 million cars in the country which can listen to digital MW services of All India Radio.

According to TRAI, digital radio can be deployed using DRM and HD Radio technologies. DRM and IBOC (HD Radio) use in-band methods. 

In the inband method, digital signals can be transmitted in the frequency gap which is the guard band between analog FM signals. This may enable the deployment of digital technologies in the same band that is used for analogue FM broadcasting at present. 

This will enhance the ease of implementation and facilitate the simultaneous operation of both analogue and digital signals. 

How will digital radio impact the advertising industry or vice-versa

In a conference held on ‘Future of Digital Radio Broadcasting in India,’ organised by ICEA and AROI in New Delhi, Ashruf El-Dinary, Senior Vice President, Xperi, said, “Digital radio brings to the table an improved audio experience, multiple audio programs (music, news, alerts, etc.), and visual metadata.” 

Xperi is a leading electronics manufacturer in the US, which has its products in the segment of HD Radio. 

Ashruf, at length, spoke about the possible linkage of radio broadcasting and IP services, which has the potential to proliferate the listening experience and make digital radio services more interactive. 

He explained, “In this idea, radio stations send metadata - title, artist and other information - related to the program or the music channel of choice, and then the IP services supplement that with additional deep data, such as lyrics, artist, bio or concert events. This way the consumer has new experiences for engaging with your programming and generating new interactions.”

He then imposed this linkage on advertising models and how it can transform advertising on radio. 

Substantiating it with an example of a model that Xperi is trying, he stated, “We have the ability to send visual ads to radio with our metadata solutions. Combining them with an IP link back to the point of sale, we can now have a closed-loop system for advertising directly to sale through radio broadcasting and the radio product. We are making this happen today.”

Radio in India works solely on an ad-based revenue model. Unlike Spotify and Gaana which sustain on a subscription-based model, radio has a single source of revenue. And, advertisers look at metrics of listeners, the number of regular users, before engaging with radio for advertisements. Digital radio has the ability to collect operational analytics and user metrics for broadcasters. 

These monitoring tools can be a valuable insight for both the broadcasters and the advertisers. For broadcasters, it can help improve programming and gain an outlook into what consumers are listening to and consuming on the radio station. 

For advertisers, the data can be beneficial for taking an informed decision about where to showcase their product. It will help them identify target groups, use various methods to target, and quantify their approach. 

How existing private players are looking at digital radio

The challenges that are standing in the way of the adoption of digital radio run parallel with the sentiments of the private players in the radio broadcasting industry. 

The radio industry has a single source of revenue, and that is advertising. Digital radio, although beneficial, is yet to prove itself as a lucrative market. 

Music-streaming platforms such as Spotify and Gaana have a subscription-based model and hence, they sustain. But radio is a free-to-air service and only has ad-based revenue. 

As pointed out by Preeti Nihalini, Chief Operating Officer, Mirchi, “The FM radio industry in the US is worth approximately $323 billion, while the digital audio industry is valued at just $4.3 billion. There’s a huge difference.” 

Nihalini cited the US data since the nation is considered to have an already well-established digital radio industry and a more mature audio advertising space than India. She pointed out that even in a country like the US, digital radio holds only 5% of the total radio audience. 

Private players are yet to digest the idea of digital radio and cite financial and infrastructural burdens. Like Manoj Mathan, heading Mango FM, who said that even a “minor upgrade in CAPEX can be a significant strain on broadcasters.” 

While digital receivers can be found in car stereo systems, it is yet to reach handsets of the general public. People lately have been going gaga over smartphones and these phones do not have basic radio infrastructure. 

As AROI (Association of Radio Operators for India) pointed out, “The cost of a digital receiver, as explained by the DRM., Xperi and ICEA, would depend on volumes. The more the volumes, the less the cost.”

The Indian government, however, is optimistic about digital radio’s potential. Sanjay Jaju emphasized the importance of light-touch regulations and proposed developing an ecosystem for digital broadcasting in remote areas.

TRAI’s consultation paper invited recommendations from stakeholders, including broadcasters and equipment manufacturers, to shape policies for digital radio deployment.

Possible solutions to ease out the deployment of digital radio

The reservations of private players can be soothed out if the government brings in favourable guidelines for digital radio. 

As AROI suggested, “The government should increase the license period for radio broadcasters by five years - from 2030 to 2035 - at no extra cost.” In addition, the AROI suggested financial subsidies to players in the radio industry. 

Simulcasting - both analogue and digital are functional - is another option that can solve myriad problems for broadcasters, as suggested by the government. 

The ICEA (India Cellular and Electronics Association) suggested the introduction of digital radio in the automotive sectors, before reaching individual use devices such as mobile phones and wireless speakers and headsets. 

FICCI (Federation of Indian Chambers of Commerce and Industry) also suggested several solutions to ensure smooth migration: 

• Financial Support: Subsidising upgrade costs and consumer subsidies for digital radio receivers. 
• Retention of FM Transmission: Retaining analogue FM transmission alongside digital broadcasting, especially in Category C and D cities. 
• Pilot Projects: Piloting digital radio in select major cities to assess viability and refining the approach before broader implementation. 
• Policy Guidelines for Channels: Establishing clear policy guidelines regarding additional channels available with digital technology and protecting the interests of existing frequency holders
• License Fees and Royalties: Wavering additional license fee for new digital channels for existing broadcasters and providing clarity on whether the current statutory licensing regime for FM transmission will apply to digital broadcasting