The proof is not just in the podcasting

More people are tuning in to radio via the Web, but the stations must find more creative ways to keep listeners and advertisers turned on. By Dominic Dudley

The BBC might have proven the demand for online radio, but its genesis is in the commercial world. The first full-time radio station to only broadcast on the internet, Radio HK, was set up by a Californian advertising agency, Hajjar/Kaufman New Media Lab, in February 1995.

At the time Norman Hajjar, president of the agency, said/ “In the next few years any person with a connection to the internet can transmit their programming throughout the world.”

It’s taken a little longer than he imagined, but podcasting is now offering what Hajjar dreamt of – an army of amateur DJs across the world. For commercial radio, already hit by falling numbers of listeners and revenues, it’s both a threat and an opportunity. But with more advertising now online than on radio, commercial broadcasters are ramping up their efforts to attract and keep listeners and advertisers in the new digital world.

“For us, this is a big year for interactive. It is where the future lies,” says EMAP broadcast sales director Karen Stacey. “Radio has fantastic engagement with consumers but in the past year or so it has struggled with return on investment. With online, I’ve got bags of return on investment, the next challenge is what’s the engagement.”

Out with the old ways

The major commercial radio groups are likely to revamp their online offering this year as they try to ensure they grab this opportunity. But there’s much work to be done. Virgin Radio digital media director James Cridland says: “If you look at all the radio websites, pretty well all of them are old-fashioned: it’s a case of ‘we’ve got loads of content, you can have a look if you like and next week we might give you some more’. That’s fine but it’s a very old media way of thinking and it’s not the way the Web is going.”

To entice consumers, radio stations are starting to give the people more control. Radio has always been good at including listeners in phone-in shows and letting them request records. Podcasting now allows them to listen to programmes when they want but more is on the way. Chrysalis Group business development director Ian James suggests, for example, that a station like Galaxy FM could let bands upload content to its sites.

Podcasts have been of limited interest to most advertisers to date. But Stephen Cray, head of digital sales at GCap, which owns Xfm and Capital Radio, says that is changing and he points to Smile and BMW as some of the brands that have started to advertise around podcasts. “Their appetite has grown as more people have taken up digital channels like Sky, Freeview and broadband,” he says. “Digital radio has grown in stature.”

Relatively small audiences have kept many brands away until now, but that is changing. EMAP has close to 6 million users across its websites, many of them linked to radio stations such as Kiss FM and Q Radio. Virgin Radio now gets more digital listeners on some evenings than it does for its analogue output. With the launch earlier this month of a new digital-only channel, Virgin Party Classics, that’s only likely to increase. Advertisers are starting to respond. “We build Web activity into pretty much every radio promotion. It’s no longer an option,” says Cridland.

For EMAP, radio is just one of a range of media it works across, along with magazines and television channels. The challenge is how to encourage the brands that are happy to advertise on traditional media to come online. Stacey is confident that radio could be the right stepping stone.

“With the increase of broadband, brand advertising is so much easier. The biggest challenge for advertisers is how they can do brand advertising online. This is where the growth’s going to be, especially if we make our portfolio easy to buy.”

Bringing the brands online

None of the radio groups can offer advertisers the scale of Google or Yahoo!, but consumers do spend far more time on radio sites than on the big search engines. “When people go online they tune into their radio station through its online site and start navigating elsewhere,” adds Stacey. “What we’re trying to work out is what’s the relationship between our sites and the radio stations. Then you can look at what they did when the ads are being played.”

If the radio groups can show advertisers that people respond to the ads or songs by searching for products or information about bands, then the money could really start rolling in. In the meantime, rival radio groups are working together to find ways of making the most of the opportunities that already exist.

“We work closely with our two main competitors, GCap and Chrysalis,” says Stacey. “For example, we came up with an idea for Vodafone Live, and GCap agreed to do it as well. So the idea went from being a &£400,000 campaign for just EMAP to a &£1m campaign.” With more co-operation like that, radio could yet find a welcome new source of revenue through the internet. And with so much attention focused on convergence, radio could also show other broadcast media how best to cope with the online challenge.