Radio's New Mantra

Old is new on radio. If that sounds interesting and slightly paradoxical, it is a strategy that some private FM stations have adopted. Retro is clearly the new thing with Bollywood music starting from the 1960s to the 90s getting some serious airtime. Of the nine FM stations in Mumbai, three play only retro music, in what is turning out to be a very interesting battle for a share of the Rs.225 crore radio advertising pie in the city.

The first off the block was the Anil Ambani-owned 92.7 Big FM, which turned retro in Delhi in 2011 and in Mumbai two years later. Now, of the nine private FM stations in Mumbai, three play retro music. For the two newer entrants, Radio Nasha 91.9 FM, launched this March, followed by Radio Redtro106.4 in July, they already own stations playing contemporary Bollywood music. In that sense, the plan is to attract more advertisers for their retro stations, which typically has listeners in an older age group. Radio Nasha, owned by HT Media, runs the Fever 104FM station, while Digital Radio Broadcasting, part of the Sun-network, owns Red FM.

Retro is really a bet on market segmentation.It’s a trend that has taken-off a bit late in India, but in larger markets like the US, audience segmentation based on the genre of music is the norm, where there are stations that play only hard rock or jazz.

For most part of the private FM station journey in India, the focus has been on Bollywood contemporary music, which was anyway mass. That did not lend itself to any serious differentiation between one station and another barring those who decided to, for instance, play only English music. Besides, by focusing on a genre like retro, stations have the opportunity of reaching out to an audience that is not just more loyal but possess a disproportionate share of the disposable income. Among those advertising on retro stations now include those like LIC and Godrej Properties, not the kind who normally advertised on radio given that the younger audienceis not their prime target. By contrast, the stations with a focus on the youth, typically, have always had advertisers like mobile handset manufacturers.

This is where the audience profile too comes into play. For a retro station, the listener is at least 30 years old and could even have those who are at least twice as old. “With Redtro, we are clearly targeting a more mature audience than that of Red FM,” says Nisha Narayanan, Red FM’s Chief Operating Officer. Radio Nasha runs retro stations in Delhi and Mumbai.

Channels have figured that it’s easy to delight customers in the higher age group –for instance, retro stations have an RD Burman special on his birthday, where only his music is played for a good part of the day. Similarly, audience is more engaged in talk shows around the making of a song or a film. This’s has however been hard to implement on a station playing Bollywood contemporary music.

In the midst of all this, advertising revenue has been slow to come by since radio is still a local medium and it is still early days for those with a retro focus. Of the total Rs.2,000 crore of advertising revenue, the state-owned All India Radio takes away Rs.300 crore. Delhi, with Rs.325 crore is the largest market and it is estimated that the top ten cities account for 70% of the advertising revenue.The idea of increasing the listenership is to attract a larger universe of advertisers.

The bigger concern is around the large sums paidto pick up frequencies in Delhi and Mumbai during the auctions last year and how that money will be recovered.  The lone frequency in Delhi was picked up for Rs.169 crore by HT Media. Mumbai’s two frequencies went for Rs.122.8 crore each to HT Media and Digital Radio Broadcasting. The license is for a period of 15 years and recovering that amount will depend greatly on the growth of advertising, the primary source of revenue for radio stations. In a market with multiple players, this could become a very difficult proposition. Delhi, like Mumbai, has nine private FM stations and this only complicates the story. Narayanan thinks the differentiated genre in India is picking up. “There are clear demarcations in the choice of stations by way of music or language. There is a growth in advertising for stations that are purely on retro format,” she says. For a new kid on the block, it may not be very easy. “The new stations are not very well established and it is natural for an advertiser to drive a hard bargain,” thinks Kunal Jamuar, managing partner, Havas.

By any yardstick, this is going to be a long haul for the radio stations. “Our expectations in the current year are not very high and it is the establishment of a listenership base and product, which are more important. Revenues will follow thereafter,” says Narayanan. That is of little consequence to the retro music lover, as he just enjoys the journey down memory lane.