LV, as LV Krishnan, the CEO of TAM Media Research is fondly known, is one of India's most respected media professionals and an authority on media research with more than 18 years of rich experience. After completing post-graduation in Mathematics and Astrophysics, he became part of the Indian Media planning community in 1992, when he joined Mediacom (Grey India) to work on Bayer and P&G brands, after which, in 1995, he joined JWT to take custody of media for Unilever personal products. In 1998 he joined Starcom, where his trailblazing work on Coke saw him win Starcom's most prestigious global media award, North Star, for strategizing and execution of innovative media planning. As CEO of TAM Media Research, LV has been spearheading the company's efforts to help provide perspective on a complex industry such as media....

In conversation with Pavan R Chawla, LV speaks of Radio in India – a fledgling, struggling but spirited medium which, given the extremely restrictive environment made available to it, has delivered to its highest potential. He speaks of the need for extremely strong contributions from local advertising, financial and marketing muscle from cross-media holdings in Radio, and more, if it is to succeed in Phase III.

When compared to the mature and thriving global markets, Radio in India is still a pre-teenager. Please briefly assess the current scenario, and how you think Radio has performed in the extremely restrictive environment given to it?

Radio, which is coming out of infancy, just doesn't have the free liberated environment television enjoys, due to strong restrictions on both, the programming  content -- which ensures there isn't much you can experiment with on Radio – and on the business side  thanks to a very strong regimented licensing exercise limiting the number of players in each of the markets. In television, you can launch as many channels as you want by just applying for licenses,  and you can air whatever content you want so long as you are careful to adhere to the basic broadcast norms.

These restrictions on Radio have limited its growth as a medium. So from the listener's  perspective, the amount of freedom he enjoys on television is not available to him on radio. He can listen to only a limited number of stations,  and because of content restrictions,  there is a certain amount of similarity in content across FM stations.

However, in spite of these restrictions, the players in Radio have actually done great work by innovating to woo the listeners and capture their attention with the content they are producing. They are also working towards promotion and marketing to make the listener tune in to their stations. They have brought in a lot of local issues into the content. They have got new artistes/RJs who have created waves on radio and made them even larger than life,  also thereby solving the purpose of local advertisers to help in marching forward to communicate the prime message to local audiences.

So from that perspective, radio has, within the constrained environment, delivered to its highest potential.

Apart from the restrictive licensing and royalty issues, what is hampering the growth of Radio as a business proposition?

What is still a lag is the opportunity for more number of players in the market with a variety of content on offer and the cost of running the radio stations overall. Radio ideally should have been the cheapest medium that exists. Cheapest in terms of content, delivery and also from the consumer perspective. And unfortunately, as the consumer is accessing radio at zero cost, running a radio station still remains very expensive considering licensing and the content cost. So overall, reading the market for the last few years since we've been in the radio segment,  it is a  tough medium which is in its infancy and still struggling before it can walk and run soon.

In that kind of context, three years back,  we thought that measurement could help and broaden the entire scope of radio. And it's when TAM and a mix of broadcasters, advertising agencies and advertisers came together in an endeavour to bring in value to the entire (Radio) exercise through audience measurement.

What is the RAM report card, in your view?

In the three years since we started RAM, it has definitely expanded the scope of bringing in advertising to Radio, because it removed the old cobwebs from the minds of advertisers.

The first cobweb that was broken was advertisers' perception that  radio is an in-car-listening medium. That myth got shattered when it was established that just around 25% listening was happening out-of-home. And that people were listening to radio through mobile phones, and not only in the car. Also that around 75-80% of the listening was in-home!

The second cobweb that got broken was the strong perception that Radio was solely a youth- or a college-going-student medium. RAM reports revealed that the audience comprised more of housewives, and office-going males too; not just the youth. Housewives comprised a big proportion of afternoon and evening listening audience.

This revelation changed the kind of advertisers who approached Radio, and the kind of products that were brought into advertising. A lot of FMCG manufacturers started looking at radio with quite a bit of clarity because they were looking at housewives. Also, drive-time advertising got eased out to get into advertising in the afternoon and the mid-morning band, and even the late night band became extremely popular.

The third myth was that all the listening happens over weekdays, and weekends are usually oriented to time spent on TV. But RAM studies revealed that listening was as popular on weekends as it was on weekdays. It was more addiction to the kind of content that one wanted to listen to and the kind of RJs who came in to propagate that content to the mass audiences. So advertisers started pushing advertisements on the weekends too.

The breaking of these myths enabled a new set of advertisers to walk into the space and thus Radio was looked at as a key medium to advertise on.

Lastly, Radio is dominant in the morning; the trend exhibited in RAM is similar to all markets the world over! That is quite different from TV, as it's prime time is in the evening. For an advertiser, using a combo of TV and Radio to deliver reach and frequency using two different day-parts in crucial markets like Mumbai, Kolkata, Bangalore and Delhi can enable campaign efficiency enhancement. It may also help in making the message more effective in its communication.

Over a period of time, while niche advertisers came in and stood by Radio, what also happened was that national advertisers dominated the medium more than the local advertisers. The bulk of revenue was coming out of national advertising even though FM Radio stations had more of localized content. So even though ideally local advertising should have dominated the medium, the revenue is still largely from national advertising  Revenue from local advertising is still to flow into Radio in a big way. But the future of the medium will be quite localized in nature. The promise definitely is there.

So the future of Radio hinges largely upon an increase in local advertising spends.

Yes. Local advertising on print media is very strong, and it includes categories like real estate, coaching classes  and the education sector. They are huge on print, and they are among the top five categories that contribute to Print revenues. How these will move into Radio or adapt to it as a medium in terms of clear communication,  and how much willingness they have to shift their ads from Print to Radio will actually decide the revenue patterns for future,  because national advertisers are anyway into Radio as a medium.

Also, Print, on an average, has 35000 advertisers while TV and Radio have a long way to go with 3500 & 1500 odd advertisers riding on them. So even if 10% additional Print advertisers spend on Radio, it is a big jump for this medium!

Retail was expected to boom in this country as a category, but that has not happened the way it was envisaged around three years ago. We can expect that retail will start moving from small kirana shops to supermarkets and shopping malls, and as projections been made few years back that the retail boom was supposed to happen between 2007 to 2012  But with the recession that happened in between, in 2009, the potential advertisers are not lost completely but are not among the top five categories.

While advertising has grown definitely and grown faster than the mediums like print and TV, but the base of that growth is much smaller. When we started RAM it was around 3 per cent share of the advertising pie, and today we are talking about four and a half percent  The international average is around between 4 and 5 percent; very few markets are above 5 percent or more.

Even though we are at 4 and a half percent today, the potential to grow is very strong,  and it can even go beyond 5% or even touch 7 to 8 %. But for this Radio Networks will have to work on getting some of the big sectors which are into print, to move to Radio. Also the television advertisers who are spending on secondary and tertiary channels should get into Radio.

Across the world, a majority of the advertising on Radio is local, but in India, Radio is like a common,  second media-multiplying medium of choice today for national campaigns...

Yes, most of the advertising from Radio is coming from national advertisers. When you look at the national advertisers, their idea is to pan their ad message on a national  basis, and then prop up the priority markets with a local media. So obviously for national advertisers, television becomes a primary medium for building the brand, and Radio is being used as a media multiplier. At the same time if they are doing any additional tactical promotional exercises in key local markets, radio could be used an additional medium, or even the key medium itself. And unless that shift happens to make local advertising significantly larger than it currently is when compared to national advertising, this aspect of undervaluing Radio will always be there.

Where do you expect Radio advertising to reach from the Rs 850-odd crores it is currently, after Phase III?

It's very difficult to predict. Today, more than 50% of the total advertising revenue on Radio is contributed by the top six markets (Mumbai, Delhi, Bangalore, Kolkata, Hyderabad and Chennai). And then the remaining markets come in. So what therefore tends to happen is that the smaller towns become more resilient and require very local advertising support. That local support exists, but it's still marginal, considering the kind of cost involved at this point of time. If Phase III does happen with more towns coming into play, it will obviously expand the horizon of reach of Radio as a medium,  but how much of an immediate impact it has on advertising revenues will remain to be seen as the market will see a slow growth approach.

In a presence across just 66 cities and towns, the networks are struggling to break even. How do you think Radio will have fared by the end of Phase III, presuming it rolls out as scheduled without a hitch?

It depends on three conditions actually.

The first is: there are players, like those who already own big networks, not necessarily in Radio but even TV and/or Print. International model benefits from cross-media marketing… we are yet to see that strongly in India!

Second is the fact that station-set-up teams to go and tap that local advertising market strongly – which involves right from the level of classified advertising and service advertising, which are primarily into print and not into radio or any other medium at all. These categories must be brought into Radio.

Third is that the content cost should be cheap enough to allow creating an audience for the medium  at a low cost, and keeping  advertising costs cheap enough to get local advertisers into the medium. If all these things pan out in the logical manner which involves expanding the audiences and the advertising segment, then yes, you can expect to double your revenues.

Only Rs 400-odd crore a year of Radio ad revenue comes from as many as 60 cities and towns today. And Radio is already in the best cities and towns in India. The Phase III locations will obviously be far less lucrative as sources of advertising revenue for Radio…

The potential does exist. See newspapers, for example;  they  survive with the initial investment into district editions! Look at biggest newspapers: in Andhra Pradesh - Eenadu; Bhaskar in Madhya Pradesh… Jagran in UP – they are surviving very well  They are not supported by national but by local advertising,  and that local advertising is helping them to ensure the fact that their local editions do extremely well.

And the interesting fact is that when you look at the advertising in those local editions, more than 75% of those advertisers do not advertise either in TV or on Radio. They are all local advertisers, and that's the potential I'm talking about. They represent a big opportunity for Radio.

Control of costs and smart and aggressive advertising sales plans especially focusing on local advertisers is what should mean the difference between success and failure for Radio in Phase III. The small towns of Phase III will represent the toughest challenge for even the best Radio professionals. But where is the talent that will have to be low in cost and high in skill and commitment?

Existing networks bidding for Phase III will have existing talent pools from which to possibly depute one or two key leaders to go, identify and train people from other mediums, just like Television did in its early days, taking people mostly from print. But for those making their first foray into Radio, the talent costs will be higher. It will be a challenge. Hence, even more is the need for cross-media holdings – a player strong in Print and TV or even existing Radio players can make a big difference in supporting Radio entry for smaller towns and thus aid in building Networks, not just a Radio platform!