Digital killed the analogue star?

Sales ofdigital radios areab out top ass the one-million mark and retailers expecting a bumper performance over the festive period. So when better for a Media Week Question Time on the future of DAB? Mark Banham was there

A sunken auditorium in the bowels of the Royal Society of Arts is somewhere you would be more likely to find critics discussing old masters, than the cream of the radio industry discussing the very future of the medium.

But this was the stunning venue for Media Week’s latest Question Time, where an illustrious panel of agency and radio owners took questions from a veritable who’s who of the radio world.

Among the subjects up for debate – when is the uptake of digital really going to take off? And, when will the advertisers benefit from the switchover? Morag Blazey, managing director of PHD, who also sits on the Institute of Practitioners in Advertising’s radio committee, started the ball rolling, by addressing the formats advertisers may use on the new digital stations.

“I assume there’ll be a move away from spots and space, and a move toward sponsorship and advertiser-funded programming or content,” she predicted.

“I can imagine a day when Sainsbury’s might lease an hour a day on weekdays from a station and will put their own programming in, that will have recipes and ideas for mums on what to cook their children for dinner that night, or healthy eating options that are made realistic and attainable, through the text, screen, or the other visual means available.”

Ralph Bernard, executive chairman of GWR Group, said that radio networks must absorb the switch to digital, when content will be king, using this lack of restriction on programming to attract advertisers and ultimately break the BBC’s stranglehold over the commercial sector.

“Ownership rules have become more relaxed and you can start to play around with content to attract audiences that are not otherwise listening to commercial radio, because you can do something that’s different.

“And the other thing is, because nationally we are able to compete with the BBC, ultimately head on – although we’re not doing it at the moment, but in due course we will be doing that.”

He also believes that with this change in content, will come a new sales model to entice advertisers.

“There’ll be a new business model and I’m quite sure the technology will force upon us the opportunity to create a new business model for selling commercials and commercial messages, and that will be to a much, much bigger audience – and that will ultimately lead to a greater revenue share for commercial radio, so it should be a virtuous circle.”

Neil Hurman, managing partner at Manning Gottlieb OMD hopes that advertisers will see a concentration on content and not just the build-up of channels across the digital multiplexes, with no thought for connections to consumers. “I think it’s a mistake to go forward and worry about channels, there’s only content, there’s only how you get your content to the consumer and how you commercially exploit that content,” he said.

“For me, it’s about model shift and how you grapple with that model shift, because the future is going to be dangerously different, from not just the past, but also dangerously different from the present.”

Quentin Howard, chief executive of forum sponsor Digital One, said that the control of the content on digital radio was one of the main benefits of his format: “You can display content that’s relevant to the radio station and you can display content that’s relevant to people’s lives – but not necessarily the station they’re listening to – like weather maps.

“You can display advertising, now we can have pack-shots on the radio, we can have visual information – and this takes radio advertising somewhere else. What this does is put visual display advertising in the kitchen, or the bathroom.”

Technology keeps it cheap

He was backed up by Janet Goldsmith, former managing director at Universal Studios Network and now director and co-owner of media consultancy Mediatique.

“Technology enables a lot of cheap entry into the market and digital, whether it’s radio, or whatever, is just another way of getting to market. But how are you going to find the consumers in all this choice? “And it takes you straight back to the consumer proposition, what is your content, how are you connecting with people and how are you using the technology in order to deepen that connection, particularly when there is more and more choice.”

The question is: are there enough consumers out there who are willing to invest in the product, fuelling a radio advertising revolution? Bernard thinks that there is still more work to be done, but there is no doubting that digital radio will be the media of the future for both consumers and advertisers.

“I think the evidence is in the shops now, people are much more aware than they used to be, I think there’s more than 50%awareness of the existence of digital radio as a concept.

People are talking about it much more.

“The sales are going up and the BBC is doing an excellent job, along with commercial radio, in promoting it. So I think the awareness of digital radio is growing all the time.”

Hurman is less convinced that there are not elusive consumers that have to be convinced and that the benefits may not be being promoted to advertisers: “The truth is that most consumers listen through their televisions, I think that more emphasis needs to be on benefits rather than features and certainly the message I get a lot is more about features than benefits, which is a bit of a classic marketing issue really.”

Hurman feels that consumers still need a reason to listen to the new digital stations: “There’s a real imperative for the commercial environment to get the clarity of branding right, to get that proposition right and make sure people understand it, make sure you give people a reason to listen, because otherwise you’re faced with the ‘so what?’ factor and, frommy perspective, there is a big ‘so what?’.”

Blazey thinks that digital radio will have to rely on the oldest form of advertising, word of mouth, to spread the message of its benefits.

Digital delight

The introduction of digital radio into the market has gathered speed over the past few months, much to the delight of Quentin Howard.

“The best-selling radios in this country, including analogue, turn out to be digital radios,” he said. “By the end of September 2004, the official GfK figures had topped 200,000 and, if you take into account the shops that GfK don’t survey, we believe we’ve topped a million,” he says.

An impressive figure, which Goldsmith illustrated with an anecdote involving the purchase of a new car she recently made: “I didn’t realise, I bought a new car recently and it arrived with a digital radio, I didn’t realise it had one in it,” she said.

“When I was doing a regular drive down theM4 to the West Country I suddenly discovered that rather than running out of radio when I hit a bald patch I had this huge choice.”

An example of how digital radio is arriving, literally, on consumer’s doorsteps.

It’s a siesmic change that GWR’s Bernard has noticed through his years in radio: “It was only a few years ago that digital radio was roundly condemned, not only by agencies but our own industry. One of them described the content of digital radio as a turkey and that’s someone who is very heavily involved in digital radio these days,” he said.

“You have to be patient with these things, because we are transferring listening from something that has been around for years – we are changing the habits of a lifetime – and people are much more attached to their radios than their televisions, they expect television to change, they don’t expect radio to change.”

Added value

But what value does digital radio offer to clients whose business – in many ways – funds this revolution? Howard thinks that this may rely on clients who start to take a risk during the genesis of this medium: “Everything is new, it’s all disruptive, it’s all going to change, and I think the conclusion we’ve come to is that we can’t keep on selling radio the way we’ve been selling it,” he said.

“Until we get out there and try some things and find some brave clients, learn from example and put some examples there, you’re never going to move the business on.”

Blazey insists that the media owners in this burgeoning industry need to get closer to the advertisers’ objectives before the clients will deliver them budgets.

“Selling this is about understanding what the clients want going forward and getting much closer to their business issues, and finding solutions, or inventing situations if you like,” she said.

Hurman added that it was important that the industry comes up with a reason why clients should spend.

Justification for outlay

“I’ve no idea what the answer is, but I know we’ve got to try and find out what it is, because this is the future, it will be the dominant model inside the timeframe for my clients and we’ve got to explore what some of the answers are.”

Goldsmith points to the relative cheapness of radio and thinks it is about time advertisers and their agencies took a risk that could lead to results in this new world: “Experiment.

Radio is not an expensive medium. Just put some money on it, have a go and see what works and what sticks.

“Understanding the audience the best way you are going to, is by trying things out and experimenting and bringing them in and asking them questions, and radio isn’t an expensive way to do that,” she said.

Bernard, who, along with Mansfiels is one of the two men who can tie up the Capital/GWR merger, leading to a supergroup that will widely invest in digital radio, sums the feeling up: “We’re in the very, very early stage of a brand-new medium and it needs support and cherishing from everybody who has a passion for radio.”

DAB Factfile

By the end of 2004, more than 1.2 million DAB sets will have been sold in the UK.

The Evoke 1 digital radio is the best-selling radio of all time.

The top reason for people investing in a digital radio is “to receive new digital channels”.


Across the UK, there are 400 DAB stations on-air.

In London there are 50 stations.

Over 150 different types of DAB product are on sale, with prices as low as £49.

Are consumers convinced enough to invest in digital radio?

Ralph Bernard

“There will be a new business model and I’m quite sure the technology will force upon us the opportunity to create a new business model for selling commercials and commercial messages, and that will be to a much, much bigger audience, and that will ultimately lead to a greater revenue share for commercial radio. So it should be a virtuous circle.”

Morag Blazey

“Selling this is about understanding what the clients want going forward and getting much closer to their business issues, and finding solutions, or inventing situations if you like.

“I wonder if there’ll be a tipping point, so much of this will word of mouth, and so it goes on.”

Janet Goldsmith

“Radio is not an expensive medium.

Just put some money on it, have a go and see what works and what sticks.

The best way you are going to do it is by trying things out and experimenting and bringing them in and asking them questions, and radio isn’t an expensive way to do that.”

Quentin Howard

“You can display advertising, now we can have pack shots on the radio, we can have visual information, and this takes radio advertising somewhere else. What this does is it puts visual display advertising in the kitchen, or the bathroom.”

Neil Hurman

“I think it’s a mistake to go forward and worry about channels, there’s only content, there’s only how you get your content to the consumer and how you commercially exploit that content. For me, it’s about model shift and how you grapple with that model shift, because the future is going to be dangerously different, from not just the past, but also dangerously different from the present.”

On the panel were...

Ralph Bernard is executive chairman of GWR Group, which owns national commercial station Classic FM and a series of regional and local stations including Essex FM and Leicester Sound, as well as digital radio stations Planet Rock and The Storm.

Bernard is also chairman of Digital One, of the Digital Radio Development Bureau and a non-executive director of the Commercial Radio Companies’ Association.

Morag Blazey is managing director of PHD Group and a member of the Media Policy Group for radio at the Institute of Practitioners in Advertising. Blazey is also chairman of the Joint Industry Commercial Radio IT Futures Group.

She joined PHD in 1994 as group account director to work on the BBC and Prudential accounts, and was promoted to the board of PHD in the summer of 1995, moving up to managing director in 1999.

Janet Goldsmith is a director and co-owner of Mediatique, which provides bespoke advice and analysis for a range of media companies, including TV and radio broadcasters, publishers and independent producers. The firm also specialises in business planning, fund raising and deal negotiation.

Goldsmith was previously managing director of Universal Studios Networks, the UK channels armof the Hollywood studio.

Quentin Howard is chief executive of Digital One, which operates the sole national commercial DAB digital radio multiplex. Last year he was awarded the Per Erik Selemark Award by the World DAB Forum in recognition of the contribution he has made to the promotion of digital radio on a worldwide basis. Howard created GWR’s Digital Broadcasting Division in January 1998 and formed Digital One, which sponsored the event.

Neil Hurman is managing partner at Manning GottliebOMD.

Before joining MG/OMD to head up The Source, Hurman was national advertising director of Trinity Mirror. While there, he was deputy chair of the NPA Advertising

Executive, amember of the board of the National Readership Survey and a driving force – then founding boardmember – of the Newspaper Marketing Agency.

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