Is commercial radio really dead?

Steve John Owens, a radio producer, presenter and podcaster, explains why it is clear to see that there is still a future for radio and radio advertising…

In 2009, Claire Enders, founder of Enders Analysis, a research service that discusses media, entertainment and telecommunications in Europe, predicted that UK commercial radio could die out within the next 15 to 20 years. Enders put this prediction primarily down to dwindling advertising revenues, she claimed that “revenues from classified, online and search advertising all outstripped those from radio, and that advertising agencies were tuning out of the medium” (Tryhorn, 2009).

Since that day the debate has raged on, with countless authors and respected publications contending both sides of the argument. To fully outline and discuss whether UK commercial radio will indeed meet its demise by 2031, it is firstly necessary to discuss how advertising income revenues stand in the current economic climate, whether other forms of radio are impacting on commercial radio and its overall relationship with a consumer audience.

Initially it is vital to highlight that Enders’ assertion was made at a time when the UK was held in the frosty grip of recession, and many commercial radio stations, including Valleys Radio, Abbey FM and Virgin Radio Groove, were closed down permanently due to this period of economic instability. A shareholder at Abbey FM, Robin Burgess stated at the time that “in the present economic climate and, in particular, the effect the recession is having on media revenues, the directors saw no realistic prospect of the station getting into profit in the foreseeable future” (Goddard, 2009).

In spite of these difficulties, commercial radio stations have in the last few years begun to adapt and are consolidating assets in an effort to save their companies. Let us look at the Global Radio owned Capital as an example. On the 3 January 2011 Capital FM launched across the UK, with the vast majority of programming to its Independent Local Radio stations broadcasting from the existing 95.8 Capital studios in Leicester Square, London. With local output compromising of only a breakfast show and a drive-time show, it is clear that networking the stations was high on the Global Radio agenda.

In a 2009 Global Radio report Goddard (2009: 7) states that “with the commercial radio sector facing declining audiences and falling revenues, it is easy to presume that consolidation will help ensure its continued existence”. With many new players entering the market such as German media group Bauer and Times of India group, who ended 15 years of Virgin Radio and re-branded under Absolute, many experts see this as the end of traditional radio as we know it. Conversely others believe “that the radio industry is limbering up, getting ready to reassert itself as it has done so many times in the past when faced with challenges from other media” (Fleming, 2010: 2).

In contrast to the Capital FM consolidation approach, Real Radio have appreciated that building a wider listener base brings increased revenue, albeit at the possible expense of localness. In answer to this Tony Dowling, station director of Real Radio Wales, stated earlier this year that listeners want “entertainment, music and information that reflects and connects with their lives – they don’t necessarily care whether it’s being broadcast from down the road, the next town or 100 miles away” (BBC, 2011).

Having gone national throughout Wales in January 2011 the Real Radio network has grown its business substantially, in the Q3 2011 Rajar figures the network “reported an average of 21.61 million listening hours a week in the third quarter, up 3.4% when compared to the same period last year and up 1.7% quarter on quarter” (McCabe, 2011a), while also boasting an impressive “average weekly reach of 2.61 million, up 10.0% year on year and 1.7% period on period” (McCabe, 2011a). The phrase “speculate to accumulate” certainly rings true in this case.

To further discuss the reasons why Claire Enders came to this radical prediction it is vital that we explore the evidence she had at her disposal at the time and discover if that evidence still applies in 2012.

“In 1924… many consumers and broadcasters were resistant to over-the-air commercialism and claimed that radio shouldn’t be used to sell products. Then Secretary of Commerce Herbert Hoover, who later became president of the United States, claimed that radio programming shouldn’t be interrupted with senseless advertising.” (Medoff and Kaye, 2011: 131)

How things have changed since Herbert Hoover made those remarks almost 90 years ago. In 2011, advertising is the sole opportunity that commercial radio has to stay in business, whether that be web or on air advertising. Enders’ key argument for the commercial radio sector’s predicted decline over the next two decades came about mainly from diminishing revenues generated by these adverts. She stated that advertisers were expressing a disinterest in radio as a medium to show their commodities and that as a result the commercial radio sector was ceasing to be “commercially viable” (Tryhorn, 2009).

However, studies have shown that radio is still an effective, if not the most effective, advertising medium as Katz (2010: 77) explains “another study… exposed consumers to two radio ads or one TV + two radio ads… what they found was radio ads alone performed better than either the single exposure to TV or newspapers (in terms of brand recall)”. Therefore, it is clear to see that there is still a future for radio and radio advertising.

Read Steve’s full blog here.