After being on the brink for the last few quarters, radio advertising is finally picking up pace. And this is evident from the optimism of Abraham Thomas, CEO, Radio City 91.1 FM, who sees growth in the medium in 2018. “We believe that most of the pains of the new policies are over, and that will give clarity to the advertisers. Whether it is the small or large size businesses, most problems have been because of lack of clarity in the implementation. We expect next year to be much better because that's a relatively clean year," he said in an interview with BestMediaInfo.com.
Speaking about the growth target of Radio City, he said the radio channel has been performing better than the industry and will continue to do so with local advertising in some markets growing at even more than 50 per cent.
Thomas spoke about the challenges of monetising digital content. "The problem is that audiences have moved to digital but advertisers haven't," he said.
Measurement has been a big issue in the industry. Explaining the complexities of a third party system, Thomas hopes the recent interest shown by industry players in setting up a measurement system will bear fruit.
Branded content is a main source of revenue for radio stations but still we see few innovations being offered to brands. What challenges do you see besides the role of RJs?
Radio is probably the best medium where commercial and content can co-exist. In print, it is well divided. In TV too, you can do only so much brand placement and branded content. Radio has two major strengths – local and live. You can actually talk of content that is relevant to the listener. A newspaper has national, regional, city, entertainment and sports news. A lot of these are not relevant on a day-to-day basis, but all the content on radio is of routine relevance. Hence, it is easy for commercial and content to merge.
The credibility of jocks is very critical. There is so much fragmentation today and so much of fake news that it’s all the more important to get somebody who the listener can trust and who has built this trust over time. The role of the RJ is far more important since he is seen as credible and trustworthy, while influencing people’s thinking. We call ourselves the most influential radio station because in every city, three to four of our RJs are most credible and socially connected. They have a huge number of followers, get identified and people believe them. Their responsibility to maintain that trust is so much more and that’s why, we would never do a direct endorsement.
We push commercial content from a ‘category’ or ‘values of the brand’ point of view. We are extremely conscious about direct endorsement, as the audience know that there’s an agenda. A lot of information is given in an informative manner because we know that we have the power to influence people’s thinking from both content and commercial point of view.
The real estate sector ads are of boasting nature with RJs’ voices in the advertising. Doesn’t that affect credibility?
The audience understands that there is a commercial side to business. But with a credible person, the listeners happen to believe the commercial message to some extent. Consumers are expecting ads. While on digital, you are able to skip the ad, the ad avoidance in radio is probably much lower than television and digital. Even if you say that radio is being criticised for more ads than songs, only the moderate listeners criticise. The reach and time spent is growing, which is a testimony that radio is a great experience for the audience. Radio is best suited to give you random content and it is coming from huge influencers who have huge following who are telling you to check out something.
Radio stations, including Radio City, have started original video content on YouTube or other digital platforms for masses. How did it all happen? Why was the need for it?
We are very clear that we are a radio station – an audio entertainment network. So we do not create well-produced video content like OTT platforms do. Consumers now want to consume beyond pure content. People are getting interested in a lot of surround programming – like what happens behind the scene, what were you thinking when you wrote this song or what is Salil (an RJ) wearing today and how are the radio jockeys interacting among themselves. Demand for this content is sometimes more than the song. When we get celebrities in any of the cities, we have crowds coming to the studio to get a glimpse.
Video City is another dimension of radio where while you are listening to radio and you want to know what is happening inside the station, you can see it on your mobile device. When the RJ is talking, he goes live and over and above that, we have content like celebrity interviews. These get scheduled in between the live content. The entire objective is to add another experiential dimension to radio. When we break into a song on our terrestrial feed, we send the online link to YouTube link of the video of the same song.
It's a very simple technology with not much cost involved. We only need a software to record as in a video conference and stream it online. There is no production or multiple cameras or a director or DOPs. It is one fixed camera.
About being habituated to working behind the scenes, the new generation of radio personalities are extremely active socially. They are visible everywhere right from social media to events to inaugurating shows or premiere nights.
How is this panning out as future revenue stream?
We are already monetising our digital play. Whenever a community is formed where a sizeable bunch of people are interested to consume a certain kind of content, advertisers will follow. We run 47 web radio stations and we're monetising them.
Video City is in beta phase now and is only available for Mumbai. It will start in other cities soon. The interviews that we run on video city also include the older recorded interviews. We also keep putting up our content on YouTube channel.
Considering the kind of investment which goes into production, are the revenues in line with these investments, and if no, when do you see this stream bearing fruits?
It's all automatic and the production costs are almost nothing, as I told you. Video City will be monetisable after six to 10 months only when there is a community of people consuming that content. It's a function of how many people start consuming this content. Video City is more than that for us. It is one more dimension to our offering as we are able to package it with different offerings.
Events or partnership with star-studded events are another revenue stream for radio players. Where does Radio City stand on this front?
One reason is that consumers are multitasking. Radio is probably the most convenient to multitask. One can play games, watch TV, do exercise or do household work along with radio. Advertisers are keen on multimedia offerings because it helps in amplifying. If one is getting X on one medium and Y on another medium, putting them together is much more than X + Y. That's why we have an active calendar of events throughout the year, including four tent-poled properties like Freedom Radio awards (independent artists) and Radio City Super Singer. These are national properties uniformly executed across all 39 markets. In addition, we have regional properties restricted to regions like Maharashtra or Gujarat and then there are local properties (city specific). Freedom Radio Awards is mainly a digital property playing on radio. Last year we had a TV partner and it was telecast on Channel V.
An advertiser who wants to partner with us gets radio, online, television and on ground, hence, the message can be amplified. A lot of our events are multimedia. It builds our brand across these media.
How much do these streams contribute in revenues?
Over 80 per cent of revenues still come from radio as the others are just add-ons. We don't do any property that is not related to radio. Everything starts with radio and then moves on to other media for amplification. It is not to pull audience from other media as much as it is to build the brand. You won’t find anybody who is consuming just one medium today. A print guy consumes radio, a person watching TV also is a consumer of print, digital and radio. We are trying to be present everywhere where our consumer is.
How long should it take to monetise digital?
We have been early investors in digital. We are able to monetise this because it is an add-on to radiocity.in. It is an online reflection of Radio City terrestrial and therefore a lot of our properties go on both and we are able to package it and sell. I believe that if it was standalone, it would have been a huge challenge.
Even though consumers have shifted to digital, advertising is lagging behind. It might be because it is early days and even though data is available, people aren’t used to it much. Some advertising categories have moved to digital quite actively: financial services, automobiles and real estate. The other categories are slow. There are challenges with the medium as in terms of quality and safety of content, which makes people wary of digital. On the other hand, it has an advantage that a lot of analytics are available, though it may not be easily available to everybody. I think it will catch up soon.
Radio stations are partnering with metro stations and airports. Is this limited to marketing activity?
We have separated the platform from the content. Platform is the FM frequency and the radio in the listener’s hand and the content that flows through that platform. Earlier, the thinking was that the platform and content are the same. Now, all of us believe we are no longer radio content creators but multimedia content creators. This content that I am creating for radio, might also go to online/ on the ground, but it will not go in the identical format because every medium has its interesting aspects.
It's about creating content and this is how it will play on radio and this is how it will get adapted for online. In most cases it is never identical because there are differences in the mediums.
Similarly if there are public places where my content can be played out with little customisation, we are more than happy to distribute our content in public places. We got into a deal with Lucknow metro. It is not the same feed that is playing out there; it is a customised content that you created through the understanding of audience and music.
Likewise, we are the only radio station to be curators on Apple music where we have Radio City playlists – called Love Guru, Kasa Kai Mumbai and Suno Na Dilli among others.
Is this also from revenue point of view, or just a marketing act?
If you build a community, advertisers will follow. So the objective is to go in that direction but it takes some time to build a community of people following. The initial thought is to display content as much as possible.
As new listeners push real growth, how are FM stations able to know the number of new audiences in absence of an acceptable measurement system?
We have our own third party monthly research commissioned to an agency. It gives data on each of our cities as to what is working and what's not, what's top of mind and what has highest affinity.
Yes, a common currency is required for advertisers. There have been a lot of meetings to decide on a methodology and create a model that works. There are multiple layers to this – one is cost to accuracy. The more accurate you want, the more expensive it becomes because then you'll have to go for a fully electronic measurement system. But there are many options available, like one moved from a paper diary to a mobile diary. There are also possibilities to now look at how many markets do we need to measure, some markets can be continuous which will need fully electronics systems, while some others can be periodic (maybe once a quarter). We're pretty optimistic that sooner or later we'll have some kind of system in place.
How close are we on this? The Government also proposed a measurement system on the lines of BARC. Does that seem too far from reality?
This time everybody is quite serious and a lot of meetings have been happening trying to arrive at the final model, frequency, markets, methodology, cost and everything. It will have to be commissioned to a third-party agency under the supervision of the industry. Once you reach on a consensus about the methodology, rest will happen sooner.
Yes, the Government too had suggested something and discussions are on. We have responded but if only we can put together a model that works, then the rest will be faster. Broadcasters will have to bear bulk of the cost anyway, and there are many things to be decided – how many markets, how many national players, how many local players and how much will they contribute. It's a long list of discussions and everybody has to agree. Now everybody feels the need for this because the medium has to grow from a five per cent medium to a larger medium and for that, you need measurement.
World over, radio is a very strong medium. Localisation plays a big part in this. How is it in India?
Radio is growing because the local advertising is growing. It has grown to 50 per cent in a lot of markets. The other good thing is that national advertisers are beginning to use radio as a local medium. So, for us, we sometimes get 12 different creatives (for different markets) from the same client. This is because they are able to now see the advantage of local reach, which is why radio is projected to grow faster than any of the traditional media.
How has Radio City performed amidst demonetisation, RERA and GST? What are the revival chances of private FM radio business now?
The top categories of advertisers are Government, real estate, retail, and then, FMCGs, telecom, technology-backed financial services. Local categories are real estate, retail, education, wellness, jewellery and restaurants. Local as a category has become pretty huge.
After RERA and GST, we are expecting real estate players to start coming back. They were hit with RERA formalities. The larger players are back. They are still in the top five categories in radio. For initial one or two quarters, it was pretty substantial, but after that the bigger boys who have been able to get organised with the paperwork have been able to move on.
We have been consistently delivering better than the industry for many quarters. We have been clearly performing above the line. So yes, the sentiment has been subdued with first demonetisation and GST, then RERA. While three or four of the bigger categories slowed down, the other categories are growing. So overall, it’s positive. Government and real estate have been the most hit. But categories like automobiles, telecom and electrical are growing.
Festivities revived the mood till October but we hear the remaining part of the quarter is going flat. How is this true for Radio City?
We’ve been managing to show positive growth quarter. Our quarter two results are out and we have been showing top line growth on that. If two of the top categories went out, automatically it will be subdued. The other categories like FMCG and automobiles are doing very well, so it’s not like everyone has gone down. It’s just these two categories which have caused a slowdown.
Election season has kicked off and this momentum will continue till 2019. How optimistic are you about it in terms of FM industry’s revival?
I don’t know. These days, elections have many last minute deliberations. Earlier, they used to spend for 30-45 days, now they spend 10 days. And because of elections in one market, a lot of national advertisers take a backseat because of code of conduct. We expect next year to be much better because that's a relatively clean year. A bigger reason for the earlier slowdown was the lack of clarity.
What kind of growth are you expecting in 2018?
Right now, it’s too early to look at any kind of projections. It’s difficult to predict. Targets are always high. We believe that most of the pains of the new policies are over, and that will give clarity to the advertisers. Whether it is the small or large size businesses, most problems have been because of lack of clarity in the implementation.
Currently with 39 stations, we cover almost 69 per cent of the population. We have been very prudent in terms of markets and their potential and the cost at which it becomes viable. We have the largest network in Maharashtra. UP and Rajasthan are big markets for us. So if the right markets are available at the right price, we will look at it.
News is still away from private radio stations. Do you think it is time that the restriction should be lifted?
Every time there is a crisis, the authorities first come to radio. They understand the power of the radio, they understand the trust, credibility and reach. They have to figure out a methodology of how this can be allowed, which is where discussions are happening.