Radio Active

I am one of those rare radio listeners who use a radio device rather than a mobile phone device to listen to FM Radio. The reason I bought my Philips AE 1595 “pocket” radio in 2008 was I was not ready to let go of my Nokia 6630 phone which didn’t have a radio facility. So, I still use the roller to browse through FM stations which means I cannot easily switch between stations and have to stick to one channel (Which one? I will come to it later). It also means that I have to tolerate the long advertisement breaks, irrespective of the channel, in between the two to three songs that I get to hear in the morning.

FM radio channels in India have lately developed this new style of running shows wherein they play a group of songs together followed by long advertisement breaks. I wonder how the customer (the listener) reacts to this. I asked 5 friends of mine (all of who listen to radio only on their mobile phones) their favorite radio channel. All of them gave a very simple and logical answer “I don’t have a favorite. I switch channels to find one that is playing music.”. A large chunk of FM radio customers comes from the huge population of truck and cab drivers who rely on FM for entertainment in transit. I have seen them too doing the same- switching between channels.

FM, a 14 Bn $ industry, gets 90% of its revenues from advertising. According to an E&Y report on the FM industry, channels are not able to make profits because of two reasons:
1. Inability to demand premium advertising rates
2. High competition
Now, I have an almost over-simplistic solution to these problems. A radio channel needs, more than great RJs and good song selection, a new approach towards running advertisements. They need to do what a lot of TV channels are doing – have short breaks. Currently, the ad time during prime time is around 17 minutes per hour. With shorter breaks, one can achieve around  13 minutes of ad time.
RJ talk ( 2 mins) + Two songs (8 mins) + Ad ( 2mins) + RJ Talk (1 min) + One song (4 mins) + Ad ( 2mins). = 4 minutes of advertisements in 19 minutes.
With the same set of songs being played across channels, the reduced ad time should act as a differentiator. The channel will attract more listeners. It can then demand premium rates(compensating for the slightly reduced ad time) thanks to higher listener stickiness.
Now, what if this approach works and other channels adopt this approach as well? This is exactly what radio channels should want. Once long advertisement breaks stop being a deterrent, listeners will start having favorites. The channels can then differentiate themselves basis their RJs, song selection.

My radio is tuned to Rainbow (102.6 FM). By playing random songs from all eras and fewer advertisements, they have differentiated themselves for me. But, for private FM channels, who are struggling to make profits, the approach of shorter breaks could be the first step in the right direction.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s