Capital and MSM’s position burdens them with their responsibility of developing the medium of radio

The radio industry faces a number of challenges as it works to consolidate and develop its gains of the past few years – challenges which were put into focus recently by two contrasting events.

In the same week that the Radio Advertising Bureau sent out a 1995 market report highlighting radio’s success story, the news pages of the trade press were chronicling advertisers’ and agencies’ anger at the Capital/Media Sales Marketing situation.

In summary, the good news from 1995 encompassed both audience and revenue. Commercial radio’s share of all listening topped the BBC for the first time and, by the end of the year, more than six out of ten adults was a listener. This audience growth was driven by local and national stations, adding 1.7 and 1.1 million listeners respectively.

The advertising spend chasing these listeners is also on a steep up-ward curve. The 270m invested in 1995 generated 23 per cent growth more than in 1994. Within radio’s total revenue, the growth of national advertising expenditure has been a key driver – from 47 per cent of the total in 1992 to 56 per cent in 1995. This reflects a positive choice in media, not just a locally driven imperative.

Forecasts for 1996 indicate that radio will maintain its position as the fastest-growing medium by revenue. However, for growth to be sustained, the elements that delivered success must be retained.

Many factors have contributed to this success. The national stations andtheirbrand-marketing ap-proach, the RAB and Rajar (fourth quarter of 1995 excepted) have all contributed to a better understanding and more positive perceptions of the medium. This has been particularly so with clients, who have been far more receptive to the benefits of radio than in the past.

The last thing the radio industry wants is for this carefully developed advertiser feelgood factor to diminish. However, the Incorporated Society of British Advertisiers has been prominent in expressing its concerns over Capital’s dominance of UK radio sales, and its disappointment over the Radio Authority and the Office of Fair Trading’s response (MW April 19).

Phrases such as “rate hardening” and “conditional selling” only serve to reinforce perceptions of radio as a commodity medium, and will prove detrimental.

Capital and MSM are commercial ventures and must by definition seek to maximise revenue across their operations. But the dominance of their position in the market places a burden of responsibility on them for the development of the medium.

Success story or not, advertisers (and their agencies) will simply not sustain radio’s growth if they feel the medium is pricing itself beyond good value.


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