Radio: Radio's onward march

Radio's share of advertisers' spending has increased while the 'big' media decline. Colin Grimshaw explores radio's growing appeal.

For blue-chip advertisers, radio was until recently regarded as a broadcast backwater, littered with cheap ads for local businesses. You know the type - they usually featured the owner barking out exhortations such as 'Come down to Crazy Eddie's, our prices are insane!' accompanied by an equally irritating jingle. In short, it was not an environment for big brands to convey their cleverly crafted branding messages.

Today, the list of radio's top 20 advertisers (table, page 53) is dominated by the big boys - P&G, BT, Ford, Vodafone. All find radio to be a cost-effective medium for getting more out of TV and press campaigns, while driving customers to retail outlets.

Its growing popularity with marketers, faced with budget pressures and the requirement to demonstrate a measurable return on their spend, is illustrated by radio's outperformance of the main media sectors throughout the recent recession.

While TV's share of media spend has fallen over the past four years by nearly 3% and press by nearly 2%, radio's share has grown from 6.9% to 7.1%, according to Nielsen Media Research. In the 12 months to February this year, advertisers spent £56m more on radio than in 2000 - a 10% increase.

Howard Bareham, head of radio at MindShare, says radio's increasing popularity as an advertising medium has come in tandem with the huge growth in choice of stations, each providing programming targeting different audiences.

There are now 267 commercial analogue radio stations and some 300 digital channels. Advertisers seeking national coverage can choose from 28 national stations.

This choice has exposed radio to a new generation of clients and agency staff for whom radio is now a mainstream entertainment medium, according to Bareham. The growth in stations, he says, has increased competition for audiences and advertisers, which has benefited the medium as a whole.

'Radio owners have to be much more flexible now in their advertising offering,' he says. 'Advertisers can benefit from a range of innovative opportunities, from sponsorships and in-programme messaging through to tailored programming.'

Bareham cites the example of Kellogg's sponsorship of all the breakfast shows across the Capital Radio group of stations. 'It's a perfect fit for the Kellogg brand, but the idea of radio stations allowing advertisers to become so embedded in their own brand was unthinkable only a few years ago.'

A big factor in radio's favour is that buying deadlines are usually shorter than for other media, letting advertisers use radio tactically in putting out a more time-sensitive message.

Deadlines have been shortened through the introduction in 2002 of the J-ET electronic web-based advertising trading system. This eliminated paper-based planning and buying procedures, speeding up radio bookings, reducing errors and improving accountability to clients.

Importantly, it also reduced costs for radio sales houses and media agencies.

Before J-ET, radio buying had been a loss-making activity for many agencies, so they hadn't pushed the medium to their clients as much as they might have, preferring to promote the more lucrative medium of TV. Time saved on booking has also freed planner-buyers to spend more time on behalf of their clients, exploring innovative uses of radio.

Although innovation, choice and ease of use are important considerations for advertisers, radio's effectiveness in driving product sales has been key to its growing popularity. According to the Radio Advertising Bureau's (RAB) Radio Sales Multiplier Study, radio advertising can increase sales by 9% on average.

One advertiser that recognises radio's role in stimulating sales is Camelot, the UK's ninth-biggest advertiser on radio. It has been using radio to support its TV advertising in promoting lottery ticket sales during jackpot rollover weeks. Camelot spent £5.5m on radio last year, a 113.5% increase on 2002, and radio now accounts for nearly 26% of its total media budget.

Some of the increase in last year's spend was down to the fact that there were an unusually high number of rollovers in 2003, but Jo Kenrick, Camelot's marketing communications director, says she has switched spend from TV to radio.

This decision followed trials testing the effect on sales of using TV on its own, radio on its own and a combination of the two, with different weightings in the mix. 'We concluded that a mix of TV and radio worked best,' she says.

For Camelot, reaching the greatest number of people in a very short space of time is paramount, and Kenrick says radio has proved to be a cheap way of reinforcing the TV communication as well as extending the population coverage. The lower cost of creating ads also means that radio can be used more economically to deliver different messages, she adds.

Sharper focus

Specsavers is another advertiser to have seen an improvement in sales after switching spend from TV to radio. It increased its radio spend by 274% last year to £3.5m, and saw its sales rise by 8.9% without any increase in its total media budget.

Andrew Molle, marketing director of Specsavers, found that fragmenting TV audiences in a multichannel era were making it more difficult to get efficient coverage on TV. 'The question we faced was whether we should spend more on TV to get the coverage we wanted, or put some money onto radio, where you can get a bigger bang for your buck and you can target geographically more effectively,' he says.

After experimenting with radio, Molle found a mix of radio and TV provided a synergistic benefit, resulting in Specsavers getting more from the same level of spend. 'We may not be reaching that many different people through radio, but we're getting better cut-through, as radio works in reinforcing TV campaigns and improving customers' receptiveness to the message,' he adds.

Furthermore, Molle points out that radio can play a different role in the campaign: 'TV gives more weight to the branding message, whereas radio can be used as a call to action, with advertising linked to local store promotions.'

Specsavers' experience is supported by the RAB's Radio Awareness Study, which found that radio was four times as cost-effective as TV at raising brand awareness.

Oliver Russell, director of markettiers4DC, a specialist broadcast marketing agency, points out that the lower cost of radio promotions allows an advertiser to dominate programming in a way that would be uneconomic through TV.

This is backed, he says, by Millward Brown research showing that when it comes to raising awareness, radio advertising achieved 60% of the effectiveness of TV for one seventh of the budget.

'Advertisers can make smaller budgets on radio work really hard, which is why it is so cost-effective,' adds Russell. He points to the example of getting on-air mentions for the brand through competitions or simple DJ banter. 'Radio listeners trust the station and their favourite DJs and presenters, so if you can get an in-programme mention for your product or service, it adds huge credibility and value to your campaign.'

Value for money

Nevertheless, in a recession marked by the slashing of marketing budgets, it is perhaps unsurprising that advertisers have switched the focus of their spend from more expensive media, such as TV and national press, to radio.

Specsavers' strategy, Molle admits, has been partially influenced by the escalating TV prices caused by ITV's falling audience figures. 'There has been a greater demand to reach a 16- to 34-year-old audience than the supply of programmes available, and that has driven up TV prices,' he says. 'Inevitably advertisers have sought out ways of reaching that audience more cost-effectively.'

But radio's growth is not being fuelled solely by advertisers switching their spend from TV to get more out of stretched marketing budgets. A relatively new UK advertiser, Hutchison 3G, has embraced radio right from the start of its campaign to launch its 3 mobile phone network.

Lisa Tomkies, 3's director of communications, says she has found radio to be incredibly efficient at getting across complex messages - a plus factor, she believes, that is set to challenge the status quo of mobile phone marketing in this country.

'All our media communications have to contribute to the raising of brand awareness, but since radio is a purely audio medium, it is perfect for mobile phones,' says Tomkies. 'It is also a more intimate and informative medium and allows us to deliver a lot more personality.

'We use TV to promote the stature and credibility of the brand. But radio is a very human medium and enables you to communicate your brand in a fun, cheeky and humorous way that you can't do, for instance, in press. One example is the way we have used Anna Friel on radio to complement the current TV campaign.'

Radio has been particularly successful in promoting 3's Pay As You Go offering, says Tomkies, because it is much easier to target young people through specific stations and programming than other media, and it also works effectively in directing listeners to retailers and websites.

'You can turn your level of radio activity up and down much more easily than you can with other media, to deliver timely messages linked to events, promotions and new store openings,' she adds. 'Our retail partners use radio a lot, so we can complement their advertising with ours.'

To get the most out of radio activity, it is vital that brands develop good relations directly with the individual stations, Tomkies advises. 'Getting brand mentions in programming is a great benefit of radio that you can't achieve in other media. We got great results from promoting our football goal flash service within sports programming.'

Given radio's proven ability to drive customers to retail outlets for purchase, it is perhaps surprising to note that so few of the major retail names make it into the top 20 list of radio advertisers. Sainsbury's is the only supermarket chain to appear, but is the third-biggest advertiser on radio, increasing its spend last year by 25% year on year to £10.8m.

In 2002 the chain's radio budget had mushroomed by 223% year on year from £2.7m to £8.6m. It now spends more than a fifth of its total advertising budget on radio.

Lisa Mitchell, Sainsbury's media planning manager, says that radio is the second most effective medium after TV, based on the results of econometric modelling using analysis firm OHAL's model, which tested the effectiveness of Sainsbury's advertising in each medium. Consequently, she has shifted spend out of press and outdoor, and into radio.

Food for thought

Primarily, Sainsbury's uses radio tactically to deliver value-based messages to families. Current campaigns use Gail Porter as the voiceover and afternoon spots are timed to coincide with housewives going to pick up the kids from school before going on to do their daily food shop.

'It's important to hit them at that time when they're planning the evening meal, which you can't do with press,' says Mitchell. 'We still use press in the marketing mix as it gives visual impact, but radio is a more interactive medium and is more effective at establishing relationships with consumers.' Another radio campaign, which isn't value-based, features Jamie Oliver providing recipes for an evening meal (case study, this page) and links into the TV campaign.

Aside from spot advertising, Sainsbury's has experimented with radio promotions around the Nectar loyalty card that involved station DJs giving away prizes to kids. Mitchell says she will look to do more promotions in the future.

By contrast, rivals such as Tesco continue to put more of their budget into press and are light users of radio. Mitchell concedes that her creative executions, using celebrities, might be more suited to an audio medium than her rivals' campaigns.

This brings us to the nub of radio as an advertising medium. More than any other, it stands or falls on the strength of the creative execution.

Unlike TV, if the audio element doesn't work, there are no visuals to help make the message stand out.

Camelot's Kenrick believes that the quality of a lot of radio advertising is still dire and is failing the medium as a whole. Camelot, she says, would spend more on radio advertising if the quality of work were better, and she blames agencies for not giving the medium due importance.

'It's difficult to get good creative,' she says. 'Agencies tend to start with a visual image in mind, then create a TV execution around it, and then add an audio execution for radio. But that doesn't do justice to the medium. The best radio ads are derived from a purely audio experience.

'The most talented agency people get moved onto TV, as it has a higher status within the agency, so you end up with the second team on radio,' she adds. 'But if you get the creative right, radio can be more intimate and evocative in creating a brand imagery in consumers' minds than TV advertising.'

Cinema 1.7%

Radio 7.1%

Outdoor 8.3%

Press 38.4%

Television 44.5%

Source: Share of above-the-line spend 2003, Nielsen Research

CASE STUDY - SAINSBURY'S

Sainsbury's strategy had been to use TV to promote the brand, employing Jamie Oliver as spokesperson, while using radio ads, without Oliver, to communicate value messages.

But last year, the retailer wanted to test whether it could extend the brand communications from TV onto radio to deepen the brand impact and drive customers into stores.

This new radio strategy aimed to remind housewives of the quality of Sainsbury's foods. A series of 60-second radio ads were created, in which Jamie Oliver suggested a recipe for the evening meal using Sainsbury's ingredients. Listeners were directed to the Sainsbury's website and in-store recipe cards.

A different execution was used each week during the 11 weeks of the trial, airing in solus spots at 3pm immediately after the news. Teaser ads promoting the campaign aired earlier in the day.

Millward Brown interviewed 300 housewives who had been exposed to the campaign, eight weeks after it ended. This revealed a high impact, with spontaneous recall of the detail of the ads. Nearly three in four of the listeners recalled the ads, with almost half mentioning Jamie Oliver.

A third recollected the recipes.

Three-quarters of the group said the ads 'strongly' gave the impression that Sainsbury's had an excellent range of food, with 61% saying Sainsbury's was always coming up with new ideas.

This translated into the desired call for action, with 70% saying they thought about trying the recipe, 41% picking up a recipe card and nearly a third buying some of the products mentioned.

FACT FILE

Share of radio listening

Q4 2003 Q4 2002 Q4 2001 Q4 2000

% % % %

All radio 100 100 100 100

All BBC 52.9 52.5 53.4 51.7

All commercial 45.3 45.5 44.6 46

All national commercial 9.6 7.6 7.8 8.0

All local commercial 35.7 37.9 36.8 37.9

Other listening 1.9 2.0 2.1 2.3

Source: Rajar

Radio adspend

Year Spend (pounds)

2003 593,973,499

2002 553,384,370

2001 539,314,834

2000 554,378,478

1999 538,067,617

Source: Nielsen Media Research

Above-the-line spend by medium (%)

Year Radio Cinema Outdoor Press TV

2003 7.09 1.73 8.35 38.37 44.46

2002 6.73 1.94 8.28 38.59 44.46

2001 6.83 1.80 7.08 40.97 43.32

2000 6.66 1.16 5.28 41.08 45.82

1999 6.95 1.24 4.63 39.94 47.24

Source: Nielsen Media Research

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