Will RAB incentives increase ad spend?

Radio advertising is going on the offensive. The Radio Advertising Bureau (RAB) has identified 12 sectors that under use radio advertising and is approaching companies within these sectors to encourage them to spend more on the medium (MW, last week).

It sounds like the kind of initiative a sector takes when it is on the backfoot, but that’s not the case with radio. According to The Advertising Association, spending on radio advertising rose from &£516m in 1999 to &£595m in 2000.

However, radio is the still the poor relation – ranking after press, television, direct mail and outdoor – accounting for an average of 5.9 per cent of an advertising budget.

The RAB is offering an incentive to those companies prepared to increase their spend on radio air time to more than 5.9 per cent of their budget. Under a scheme called The Creative Multiplier, advertisers will receive free research and recording time as long as they spend more than &£500,000 on air time.

RAB managing director Justin Sampson says: “We want to make sure that growth continues. The reality is that a lot of advertisers feel the need to experiment with the medium before they invest more in it. We’re trying to make that easier.”

MindShare head of radio Howard Bareham thinks that the initiative is important because many clients are cautious about radio advertising. He says: “There’s been a lot of growth over the past few years in targeted radio stations, but there’s something holding some clients back. Some have used radio before and it didn’t work. Some feel that people don’t listen to ads on the radio or that ads don’t work creatively.”

However, Bareham says that creatives must take some blame for marginalising the sector. He adds:”The general feeling is creatives don’t like radio. It’s no big secret.”

It’s this perception of radio advertising that Sampson is trying to change. One of the arguments is that radio is value for money. Research by the RAB conducted with Universal McCann and research group Millward Brown shows that radio advertising is one-fifth as effective as TV but is one-seventh as expensive.

Sampson adds: “Increasingly it’s becoming difficult for agencies to ignore radio advertising because clients are saying, ‘We believe it needs to be considered’. Creatives’ attitude is less of a problem now, but it would be wrong to say it has been completely eradicated.”

Initially, manufacturers of vehicles, breakfast cereals and alcoholic drinks will be targeted, as these are the sectors that use radio the least.

But the RAB intends to target a further nine other sectors, including personal finance, cleaning products, hair products, household retail, personal hygiene, confectionery snacks, beauty aids and cosmetics, toys and games and dairy products.

Apart from arranging face-to-face meetings with up to 50 advertisers, the RAB also planned to reach marketers through last week’s Marketing Forum held on the Oriana. It will also be talking to radio executives and potential advertisers at the Advertiser Summit in October.

The RAB has its work cut out. Kellogg currently spends only three per cent of its &£41.6m advertising budget on radio and says it is satisfied with this level. Kellogg marketing operations and media controller David Walker says: “Radio isn’t good for advertising to younger children because it’s not visual, but it is good for teens and young adults. It’s good as part of an overall campaign, but we wouldn’t use it as a standalone medium.”

Coors Brewing International has devoted about seven per cent of its ad budget to radio, to support the launch of Coors Light in Scotland and Northern Ireland.

Coors marketing manager Ian McLernon says: “Radio works with TV, but TV is critical mass. You can hear the radio, but you can see and hear the TV, and that’s important. At the moment we spend about the right amount on radio, but we still have to see what impact digital TV will have on advertising.”

However, at the other end of the spectrum there are a small band of companies such as The Carphone Warehouse that invest heavily in radio. Sampson estimates that in the extreme radio can account for about 70 per cent of an advertising budget.

One advertiser that has recognised the benefits of radio is Abbey National. The company has been increasing its radio budget for the past three years and spent &£600,000 on the medium in the past year.

Abbey National head of marketing communications Keith Moor thinks that radio advertising fits well with the personal finance sector, “because financial services companies have nothing visual or glossy to offer”.

He says the RAB has also worked with the Government over the past year to reduce the amount of legal caveats at the end of the ads to three so they don’t slow down copy flow.

But he adds: “TV will always be the lead medium, but radio is a great support medium. We’ve had different levels of success on radio, but it works well if you’ve got a good proposition that can be transferred.”

The RAB is showing that it wants to increase radio’s standing in the advertising mix and is being supported by the industry. Simultaneously, clients report that radio stations have become more receptive to their needs.