There is likely to be a shift in the way companies have been advertising on FM radio channels till now. If industry experts are to be believed, the FM radio industry is in for segmentation within the next one year. As against FM channels catering to anybody and everybody, each one is gearing up to carve a niche for itself with a focused target audience.
Sonjoy Chakroborty, group director (investments), WPP Marketing Communications India, said: "Segmentation in the FM radio industry will take place in a year's time. It will be content-wise and audience-wise segmentation that FM channels will have to undergo in order to survive." In other words, FM channels will specialise in content and cater to different audiences.
Echoes Rajesh Tahil, station director at Go 92: "Segmentation is the radio segment is an absolute necessity. It is ridiculous that all the FM channels would play a similar kind of music. It would be detrimental to the entire radio culture."
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According to Sanjay Hemadi, head of sales at Millennium Broadcast (the Win 94.6 FM channel company), segmentation in the FM industry can take place as early as three months. He says: "It will happen once the channel loyalties build up. Some signs of it are already visible."
"The way channels will segment would be by playing a particular category of songs, catering to the target audience that listens to that kind of music. For example, while one channel will play only Bollywood mixes, the other might play purely English songs and some other may play purely Hindi music," Hemandi adds.
Consider this. The Win 94.6 FM has already started focusing on the 16-35 year age group as its target audience, comprising decision makers and the class and brand-conscious youth. The channel plays a mix of Hindi and English songs. Mid-Day's Go 92.5 FM now targets only the socio economic category (SEC) A and B1. It primarily plays English music. Says Tahil: "We are clear on our strategy and have already started catering to a certain set of audience that is mature, white-collar and upwardly mobile and not typically the teenie bopper kind. We want to be seen as a serious FM player and not an autorickshaw kind of a station."
This also goes for the companies that advertise on FM channels today. Currently, companies such as Hindustan Lever (HLL), Dr Morepen, Amul, Castrol, Santro, Britannia, Parle, DSP Merrill Lynch etc are dominating the advertising on each one of the FM channels, be it Radio Mirchi, Win 94.6, Go 92.5 or Radio City. According to analysts, the opening up of radio waves has provided corporates a direct, localised and cheaper platform to advertise on, compared with print and electronic media. "But soon, companies would want to focus their advertising according to their respective target audience and the suitable time slots on the FM channels," says Chakroborty.
Says Coca-Cola India's spokesperson: "Though one can't deny the possibility of segmentation taking place in the way companies will advertise on FM channels, yet it is rather early to really set a fix on it. Companies are waiting for more information on how channels are going to segment themselves and then take a call on their own strategy. However, as an exception, since Coca-Cola and our other brands are drunk by people of all ages, we would try to be present in most of the segments."
While Times' Radio Mirchi charges the highest rate of Rs 1,000 for a 10-second slot, the rest of the FM channels charge anything between Rs 800 and Rs 900 for a 10-second slot. Compare this with the music channels on television that charge anything between Rs 1,500 and Rs 3,000 for a 10-second slot.
Little surprise that the advertising spend on FM channels is expected to increase significantly. Out of the current overall advertising spend of Rs 8,500 crore in India, 1.8 per cent is dedicated to FM radio advertising. "This is likely to go up to at least 4-5 per cent by the end of the next financial year, with the FM channels roaring," says Hemadi of Win 94.6 FM.
"Companies have not really increased their advertising budget for FM but have now shifted a part of it towards radio and are negotiating for better rates with television channels," S A Shetty, media director at Zenith Media, says.
So, will advertising on television be hit in the process? "TV channels will be hit marginally in the beginning but the first to get hit will be print and outdoor mediums," says Hemadi.
"Companies have not really increased their advertising budget for FM but have now shifted a part of it towards radio and are negotiating for better rates with television channels. Also, companies cannot ignore the private FM channels as an important medium to attract consumers' attention, especially while they are on the move. Moreover, now a FM radio set costs as cheap as Rs 80," says Shetty.
This is not all. In addition to the national advertisers, local advertisers will also soon become strong revenue streams for radio channels. For example, local players in various cities would be able to customise (city-wise) their advertising on FM channels.
The categories that are currently advertised on FM channels comprise automobiles, mutual funds, banks and fast moving consumer goods.