The company in this article is featured in the Forbes Indonesia's Best of the Best 2019—a list of 50 top performing public companies in Indonesia released in August 2019.
People today tend to spend a lot of time on digital media because it is convenient, but they have still not abandoned conventional media, such as community-based radio, which encourages two-way interaction with its audience. In fact, audiences are spending more time on the radio every year, using their mobile phones to listen in. Nielsen through its Radio Audience Measurement research in 2016 found that Gen-Z and millennials make up 57% of the total radio audience. Even in 2019, further research by the global data analytics company showed that 62% of audiences now simultaneously surf the internet and listen to the radio. President director of Mahaka Radio Integra (MARI) Group, Adrian Syarkawie, says that the digital era is influencing the company’s performance as an audio content provider in a good way.
“At that time [2007 when the company was established], we saw that competition among radio companies had been growing slowly. We were also aware that advertising spending in the media industry was growing at least 7% every year, whereas radio was still growing below that. So the market was promising, and we decided to pursue the business seriously,” Adrian says.
The company , which is part of Erick Thohir’s Mahaka Group, performed well and earned higher revenue than most other radio stations, and went public in 2016. The company currently operates six brands through seven local radio stations: Jakarta-based JAK FM, GEN FM in Jakarta and Surabaya, KIS FM, HOT FM, MUSTANG FM, and MOST Radio. Each radio station targets a different age and music taste market, and MARI has a wide range of audiences. Combining its research with Nielsen, MARI claims that it covers 40-45% of the total conventional listener market share, with its largest audience coming from GEN FM.
“Since the beginning we have set the market positioning of each radio station. We did aim for GEN FM to dominate the pie because it’s made for avid listeners of Indonesian music, who are indeed many. Our next big hope is HOT FM, because it focuses on dangdut—although it will take a while since it just started airing two years ago,” he says.
It may be thought that other digital media such as music and video-streaming platforms would disrupt the performance of conventional media. However, MARI’s performance in 2018 shows otherwise. Along with its total listenership, MARI’s radio spot advertisement grew by over 20% in 2018, which helped the total net revenue of the company to grow by 11.66% to Rp 145.20 billion. As a comparison, a study by Nielsen shows that national advertising expenditure in 2018 increased by 4% to Rp 152 trillion rupiah. Ads play a big part in creating revenue for radio, where advertisers buy radio spots—a segment of audio broadcasting airtime for advertisement.
“Advertisers come to us because we have our listeners, and our listeners are not moving to other platforms because there are things that can only be delivered through radio, and that’s what we have to maintain.” Adrian says, adding: “One of radio’s strengths is how it can get personal with its listeners, compared to any other media.”
Looking at the potential, MARI is also examining the possibility of acquiring other local radio stations outside Jakarta. Adrian says that there have been many offers for the company to open local radio stations in other cities, which shows the great listenership potential, although sales-wise these would not be as high as that in Jakarta. For example, Palembang actually has the highest number of listeners compared to other cities in Indonesia, but not in terms of advertising revenue.
MARI does not feel threatened by the rising trend of digital media. Rather, MARI views it as an opportunity to innovate and widen its audience to the benefit of the company. Last year, MARI with a consortium of four record labels: Musica, Aquarius, My Music, and Trinity, established a joint venture named PT Mahaka Radio Digital, with MARI holding an 80% stake. The venture focuses on its new streaming app, NOICE, which is a one-stop digital platform for all radio stations owned by MARI. As of the middle of this year NOICE had eight channels for users to tune into: the seven conventional radio stations that MARI owns and a religious channel exclusive only to the app.
“We aren’t going to immediately push the promotion for now. We are developing the technology for the app better, so that the app’s server can handle it when we boost the promotion. Hopefully we can launch the app in a new tech format in September-October.”
The app has been downloaded over 200,000 times, and Adrian believes that it has larger market potential with MARI’s large and diverse audiences from its seven radio stations. Moreover, online radio streaming allows NOICE to reach a market outside Jakarta, it encourages interactive broadcaster-audience sessions through embedded chat functions, as well as providing real-time data to the company. NOICE also acts as a library for content that has been aired on the radio and podcasts.
Adrian says that for an audio content provider like MARI, the growing trend of social media and podcasts is actually beneficial. The changing behavior of sharing stories on social media creates new topics, which serve as more content to be discussed on the radio and in podcasts, and so the cycle continues. Content between the app and radio stations is expected to be interchangeable, while NOICE is now working with content creators for the current emerging audio content media and podcasts. It is planning to expand to every segment-business, sports, children and education- once the content and infrastructure are ready. When it is fully operating for monetization NOICE is expected to contribute 10-20% of MARI’s total sales through ads from B2B, and premium content subscription from B2C. It is also planned that video will be available in the future, but only as added value for the user and not to replace audio as the core business.
Nevertheless, Adrian gives an assurance that although MARI has entered the digital sector through NOICE, he does not want advertising from digital to be greater than that from the core conventional radio stations. The digital sector should only support the revenue of the conventional radio stations themselves or else the company’s course will change.
“I believe that each media has its own strength—newspapers, TV, radio, or digital—but the company needs to understand what its strength/appeal is. One shouldn’t change course just because one sees a new trend as a threat, without even understanding its appeal in the first place. MARI was able to push our growth to this extent because we understood what our advertisers were looking for in a radio station.”
Despite still targeting further double-digit growth, Adrian says that MARI’s net income growth this year will not be as high as last year’s as a result of the massive early investment in NOICE and capital allocations to strengthen the newly acquired three radio stations.