Axed wealth warnings herald new radio riches

There’s a Dime Bar radio commercial featuring Harry Enfield which is a spoof ad for the Armadillo & Dime Bar Warehouse. A series of incomprehensible product benefits are followed by an exaggerated “wealth warning” full of complex and meaningless detail about terms and conditions.

It’s a funny ad because we recognise the doom-laden intonations about “fullcreditavailablebabbleonneedlessly”.

We seem to hear these mandatory warnings in ads all the time, and they are peculiarly noticeable in radio. But wealth warnings don’t do the job they’re supposed to. That is, inform consumers about the risks attached to certain financial transactions.

Many of the warnings are ineffective, or even counter-productive. And they are gradually being reviewed and dismantled.

Last week, the Department of Trade & Industry (DTI) scrapped the “wealth warnings” in mortgage ads on radio (“Your home is at risk if you do not keep up repayments on a mortgage or other loan secured on it”).

Regulation has to look at things from the consumer’s end of the telescope. There has been a tendency to focus on what is broadcast by the advertiser rather than what is received by the consumer.

The DTI White Paper “Modern markets: confident consumers” makes the point that few people take notice of the warnings in TV, cinema and radio ads.

It concludes that the warnings would be more effective if they were issued “when people are actively considering a loan secured on property, when they would have time to read it carefully”.

We recognise the logic of this with TV and cinema, where the warnings are superimposed in text at the bottom of the screen. But it’s even more acute in the case of radio.

It’s no surprise that commercial radio has led the lobbying on this issue, as it has a special case.

Let’s not forget the industry’s famous adage that “there’s no such thing as small print on radio” and every financial mandatory adds to the length of the commercial – so ads become more expensive and creative impact is dented.

Radio ads which carry the same warnings leave a similar sound ringing in the ears of consumers, making it difficult to make a brand distinctive.

So how much do these warnings diminish the effectiveness of radio ads?

It’s something that has seemingly never been tested, but the psychological demotivation felt by advertiser and agency alike is significant when they are required to add on anything up to 20 seconds worth of mandatories.

And, sure enough, while radio’s share of the advertising cake has grown to nearly six per cent, it only carries 2.1 per cent of financial services ads.

The removal of wealth warnings will begin to open up radio advertising to the financial sector. It’s high time we had permission to use the “friendly medium” to speak to our customers on their own terms.

Sheila Lamport is media controller at Barclays Bank.