'News: 2006 Q3 National Advertiser Revenues Of UK Commercial Radio Decline 12% To Lowest Since 1999' by Grant Goddard
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News story about national advertiser revenues of UK commercial radio in 2006 Q3 having fallen 12% year-on-year to their lowest level since 1999, written by Grant Goddard in November 2006 for The Radio Magazine.
![Radio industry revenues in the third quarter of the year fell by 7.3% year-on-
year to £141.4m, their lowest level since 2003, according to new data released
by the Radio Advertising Bureau. More alarmingly, national revenues fell by
11.6% year-on-year to £75.8m, their worst quarter since 1999.
These latest figures have sent shockwaves through the UK commercial radio
industry, which has relied increasingly on national advertisers who now
contribute the majority of its revenues. From the birth of commercial radio to
1994, local advertisers had provided most of the industry’s income. Since then,
the dependence on national advertisers has made the radio industry
particularly vulnerable to competition from internet and mobile advertising
opportunities.
Several radio groups have already issued warnings about the current quarter’s
revenues, offering little optimism that there will be an end-of-year boom to
relieve the gloomy outlook. Radio revenue in last year’s fourth quarter was
5.8% down on the same quarter in 2004, which itself was 1.9% down on the
fourth quarter of 2003. The long-term trend appears to confirm Ofcom’s
statement last week that “the current business model for commercial radio –
particularly for local stations – may not be sustainable” because of “the decline
in its attractiveness to advertisers.”
“Radio is not the place to be if you just want to open the window and let the
revenue pour in,” said Fru Hazlitt, CEO of 'Virgin Radio', in this week’s 'Media
Week'/MSN Webchat. “It is tough, it is difficult, it is challenging. … It’s
changing. It’s a time when you can start to effect that change, and you can
start to think how it can be in the future. What could radio become, and how
will that fit in with the whole digital landscape in the future?”
Asked if the growth of online advertising is impacting radio sales, Hazlitt
replied: “Yes, it’s having an effect on radio advertising. The internet is
fashionable at the moment …. Other media forgot about their own key USPs
[Unique Selling Points] and radio has been one of the worst. Radio has
forgotten how to sell itself. Radio has said: ‘Oh my goodness, we have got to
be more like the internet and sell ourselves as a commodity.’ How dull is that?
What they should be saying is: ‘We’re the kind of medium where you do a
competition, on something like Virgin Radio, and you get 153 celebrities
ringing up that station, from Tony Blair to Rod Stewart.’ Now that’s sexy. That’s
the kind of environment that advertisers should be in. No, I don’t think the
internet has a long-term effect on radio advertising. I think the way of selling
and buying radio advertising needs to change, in the same way that the
internet had to change the way it sold and bought its medium.”
Hazlitt continued: “Frankly, I do think it’s archaic. All this nonsense that goes
on just to book a radio campaign. It’s a joke. It’s got to be so much easier.
That’s what the internet has done, which was a good thing. It’s shone a
spotlight on old, archaic mechanisms that both the buyers and the sellers want
to keep (because it’s lovely smoke and mirrors) but the technology should be
used to sweep that aside in due course.”
News: 2006 Q3 National Advertiser Revenues Of UK Commercial Radio Decline 12% To Lowest Since 1999 page 2
©2006 Grant Goddard](data:image/gif;base64,R0lGODlhAQABAIAAAAAAAP///yH5BAEAAAAALAAAAAABAAEAAAIBRAA7)
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'News: 2006 Q3 National Advertiser Revenues Of UK Commercial Radio Decline 12% To Lowest Since 1999' by Grant Goddard
- 1. NEWS: 2006 Q3 NATIONAL ADVERTISER REVENUES OF UK COMMERCIAL RADIO DECLINE 12% TO LOWEST SINCE 1999 by GRANT GODDARD www.grantgoddard.co.uk November 2006
- 2. Radio industry revenues in the third quarter of the year fell by 7.3% year-on- year to £141.4m, their lowest level since 2003, according to new data released by the Radio Advertising Bureau. More alarmingly, national revenues fell by 11.6% year-on-year to £75.8m, their worst quarter since 1999. These latest figures have sent shockwaves through the UK commercial radio industry, which has relied increasingly on national advertisers who now contribute the majority of its revenues. From the birth of commercial radio to 1994, local advertisers had provided most of the industry’s income. Since then, the dependence on national advertisers has made the radio industry particularly vulnerable to competition from internet and mobile advertising opportunities. Several radio groups have already issued warnings about the current quarter’s revenues, offering little optimism that there will be an end-of-year boom to relieve the gloomy outlook. Radio revenue in last year’s fourth quarter was 5.8% down on the same quarter in 2004, which itself was 1.9% down on the fourth quarter of 2003. The long-term trend appears to confirm Ofcom’s statement last week that “the current business model for commercial radio – particularly for local stations – may not be sustainable” because of “the decline in its attractiveness to advertisers.” “Radio is not the place to be if you just want to open the window and let the revenue pour in,” said Fru Hazlitt, CEO of 'Virgin Radio', in this week’s 'Media Week'/MSN Webchat. “It is tough, it is difficult, it is challenging. … It’s changing. It’s a time when you can start to effect that change, and you can start to think how it can be in the future. What could radio become, and how will that fit in with the whole digital landscape in the future?” Asked if the growth of online advertising is impacting radio sales, Hazlitt replied: “Yes, it’s having an effect on radio advertising. The internet is fashionable at the moment …. Other media forgot about their own key USPs [Unique Selling Points] and radio has been one of the worst. Radio has forgotten how to sell itself. Radio has said: ‘Oh my goodness, we have got to be more like the internet and sell ourselves as a commodity.’ How dull is that? What they should be saying is: ‘We’re the kind of medium where you do a competition, on something like Virgin Radio, and you get 153 celebrities ringing up that station, from Tony Blair to Rod Stewart.’ Now that’s sexy. That’s the kind of environment that advertisers should be in. No, I don’t think the internet has a long-term effect on radio advertising. I think the way of selling and buying radio advertising needs to change, in the same way that the internet had to change the way it sold and bought its medium.” Hazlitt continued: “Frankly, I do think it’s archaic. All this nonsense that goes on just to book a radio campaign. It’s a joke. It’s got to be so much easier. That’s what the internet has done, which was a good thing. It’s shone a spotlight on old, archaic mechanisms that both the buyers and the sellers want to keep (because it’s lovely smoke and mirrors) but the technology should be used to sweep that aside in due course.” News: 2006 Q3 National Advertiser Revenues Of UK Commercial Radio Decline 12% To Lowest Since 1999 page 2 ©2006 Grant Goddard
- 3. News: 2006 Q3 National Advertiser Revenues Of UK Commercial Radio Decline 12% To Lowest Since 1999 page 3 ©2006 Grant Goddard [First published in 'The Radio Magazine' as 'Bleak Outlook A Prelude To Positive Change' [sic], #764, 29 November 2006] Grant Goddard is a media analyst / radio specialist / radio consultant with thirty years of experience in the broadcasting industry, having held senior management and consultancy roles within the commercial media sector in the United Kingdom, Europe and Asia. Details at http://www.grantgoddard.co.uk