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IIPM : EXECUTIVE EDUCATION

Big FM, backed by the ADA Group, has forced private radio channels to reach grassroots levels, say PALLAVI SRIVASTAVA & RATAN BHAGAT

‘Veni Vidi Vici.’ This is what Emperor Julius Caesar pronounced when he conquered the almighty Romans. In India, we have witnessed the rise of a new Corporate Caesar. He’s a man, who was once virtually written off as one with a playboy image and little business acumen. In less than three years, after he ventured out on his own, he forced tectonic shifts in sectors like telecom and financial services. What are not so well-known are the waves that Anil Ambani created in the least likely area, Radio.

Like his late father, Dhirubhai, and estranged brother Mukesh, Anil thought Big for his Big 92.7 FM channel. Instantly, he created a buzz with a high-profile advertising and promotion strategy that included a brand ambassador like Abhishek Bachchan. Agrees Amit Kumar, Media Analyst, Kotak Securities, “Big 92.7 FM made a big-bang entry in radio; it launched aggressive campaigns, won maximum licenses, invested huge amounts and shook the existing players in the industry.”

B&E presents the Sun Tzu behind Big FM’s tactical warfare. Tactic No 1: Throw Big Bucks

Anil decided to invest Rs.4 billion in the venture to buy transmission equipment, set up infrastructure, and grab licenses in dozens of Indian cities. At the time of its entry, it had won 45 licenses. In comparison, Radio City won 16 licenses during the same phase of bidding. “Since we were clear that our target audience was SEC AB cities, we tactically opted for select markets, which account for 80% of the mass premium audience,” explains Ashit Kukian, Executive VP and National Head (Sales), Radio City.

However, Big FM plans to reach 200 million listeners across 45 cities, 1,000 towns and 50,000 villages.

Within a year, it has launched 40 stations, which makes it the biggest private FM network. “In smaller cities, we have created a ‘Radio Wave’. There are several cities, which had never experienced radio as an entertainment medium and welcomed it with open ears,” says Praveen Malhotra, VP (Sales), Big 92.7 FM. It has had several cities tuned in.

“The growth in radio has been at the bottom of the pyramid. It is our endeavor to attract local audiences and build a brand that connects with, and at, the grassroots,” explains Malhotra. With Big FM’s penetration, there’s suddenly a lot of excitement in virgin markets. For example, Big FM is the first private FM channel to reach cities like Jammu, Srinagar & Guwahati.

Tactic No 2: Create hype

To enter a market already entrenched with strong players, it was imperative for Big FM to make a loud noise, and scream about its product. Logically, it launched an aggressive promotional campaign. Agrees Abneesh Roy, Media Research Analyst, Religare Securities, “With Big FM’s entry, overall marketing spends of the industry have shot up.” Such all-round investments have added to the credibility of the radio sector. “Anil Ambani’s investment strategy alone has given visibility and credibility to the sector. People think that the business is promising,” points out Irfan Ahmed, Manager (Investment Research), EvalueServe. And when such a large business house enters a low-profile mass communications medium, it boosts the confidence of the potential advertisers too. Adds Nikhil Vora, Media Analyst, SSKI India Research, “After Big FM’s entry, the advertising share of the industry has surely gone up.”

Tactic No 3: Think local

Big FM turned out to be the first station in Bangalore to dish out content in the local language. Says Tarun Katial, COO, Big 92.7 FM, “The radio stations are working well in small towns. We have, in fact, revolutionised media and media consumption habits in Tier II and III towns and cities.” It has understood that radio is a local medium and needs to have both localised content and marketing to make it successful. Fortunately for the company, these tactics have made it more attractive to the advertisers. Its pan-India presence makes it a favourable medium to woo potential customers. As Gaurav Dixit, a media planner in a leading media-buying agency, explains, “Since Big FM is present across India, I get more effective advertising rates for my clients than any other radio station.”

Also, regional advertisers choose it due to strong content and wide reach. Revenues in smaller towns come from retailers and local advertisers, who feel that Big FM offers an economical and penetrating medium to grow their brands. At present, 30-40% of the channel’s revenues come from local players. Big FM is perhaps the only private FM network that provides an effective platform for both local advertisers & brands that need a national platform. Adds Dixit, “Clients who want to reach regional population often prefer Big FM; most of the time they state their preference too. Also, the Ambani factor boosts their confidence.”

Tactic No 4: Tie up the back-end

As Anil moves ahead with his grand convergence plans, as he strives to offer all form of content (including gaming, shopping and financial services) on the mobile platform (he owns Reliance Communications), Big FM serves to become a small, but critical, cog, in the giant strategic wheel. Consider the example of how Anil’s acquisition of Adlabs, a movie production and distribution firm, helps the radio network. “Adlabs churns out around 25 movies a year and has the music rights of these movies. Therefore, the cost of content to be provided on the radio channels, essentially music, comes down,” says Kotak Securities’ Kumar. This gives Big 92.7 FM a huge advantage in an industry, which is largely content-driven and where content comprises a major proportion of the overall annual expenditure. Obviously, access to cheap content increases its profitability quotient, as well as adds to the programming quotient.

Clearly, Anil Ambani’s initiatives have made competitors shake with repeated seismic shocks. Big FM is ready for the inevitable earthquake that will change the way the radio industry is managed. It will establish a new blueprint for success that’s likely to be replicated by both existing players & newcomers. After AIR, which ruled the roost for years, Big FM will create a new entertainment mass medium that’s owned, operated & managed by a private player. What’s happened in TV will be repeated in radio. Then, rural and urban India will become One or, rather, 92.7.

For more articles, Click on IIPM Article.

Source : IIPM Editorial, 2008

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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