RADIO: RADIO'S DIGITAL CHALLENGE

By Alasdair Reid, campaignlive.co.uk, Friday, 14 November 2003 12:00AM

By Christmas 2004, there will be one million digital radio sets in UK homes. Alasdair Reid looks at how digital radio is winning fans and why advertisers should start caring.

Do advertisers care about digital radio? Should they? You could argue that these questions actually started to become meaningful in 2003 - a year in which most marketing professionals tuned in for the first time. Unfortunately, they almost certainly listened to it via their digital television decoders, courtesy of Sky, Freeview, ntl or Telewest.

The recent Rajar figures for the new national networks are encouraging but much of the listening is via TV decoders. The real long-term story, however, should be digital audio broadcast and DAB remains a disappointment.

That's principally down to the failure of UK electronics manufacturers to do anything other than look a gift horse in the mouth. Despite having had a clear run at this for three years, they've succeeded in putting a measly 200,000 portable DAB sets into the market. Bizarrely, some radio industry sources have semi-seriously hailed this as a thumping success.

Meanwhile, new digital-only stations are up and running (especially at the BBC) and they're being backed with substantial marketing investment. Eighty per cent of the country can pick up digital signals. Retail chains are desperate for product and consumers are forming queues. But this year, yet again (as even a new marketing campaign from the Digital Radio Development Bureau admits), demand will vastly outstrip supply.

That's not to say there aren't some success stories out there. Gadget buffs have been particularly enthusiastic about the Roberts Gemini 1 (right) launched recently, which features an instant replay button so you can listen again to a detail you just missed. A killer application? We'll see.

But this is a market inching forward millimetre by agonising millimetre. For instance, the market-leading DAB set (in raw sales figures), the Pure Evoke 1, wouldn't exist at all if it wasn't for a consortium of media owners stumping up £60,000 in development costs. Thank goodness for the Japanese cavalry, led by Sony, which has now promised to ride to the rescue of this market next year. By Christmas 2004, there will be more than one million sets in the UK. But let's not forget that there are well in excess of 150 million analogue radio receivers in UK homes. Digital listening, for the foreseeable future, will remain a very small drop in a very large ocean.

Some sources in the advertising industry are even willing to question whether digital will actually deliver much in the way of benefits when it eventually arrives. After all, it doesn't even offer an interactive advertising option.

In theory, the most exciting thing about digital is that it will put the commercial sector on a level playing field with the BBC. Increased capacity will allow the commercial sector to launch more national stations and drive their existing multi-local brands even harder. Unfortunately, there's a growing realisation that the BBC (with more premium content in its archives) might be better placed to take advantage of digital.

Mark Helm, the head of radio at Starcom MediaVest, comments: "The commercial sector will do better with more national stations but the whole driver of digital is choice and it is important that we actually see the commercial sector deliver that."

There will effectively be four types of radio station in the digital environment: nationals; standalone local stations; national brands delivered on a multi-local basis and stations that continue to target a specific geographical locale (such as Xfm in London) but which will also be made available on digital platforms across the country. Will these "cannibalise" the wrong sorts of audiences from an advertising point of view?

"We need to have an understanding of the difference between someone outside London listening to Xfm compared with a Londoner," Jonathan Gillespie, the director of radio at OMD, says. "The listener outside London doesn't have the same reference points. Does an impact have the same value in both cases? Is there such a thing as a degraded impact? Is the brand the same?"

Branding is the central issue, Linda Grant, the managing director of Capital Radio Group's commercial division, agrees. And media owners, she argues, have learned a lot from observing how the digital TV market has evolved. "Digital will deliver more choice and as in every market, more choice will expand the market as a whole. Within that, the strongest brands will be the most successful. Digital is a huge opportunity for brands like Xfm and Capital Gold," she insists.

But is this premature and can digital be ignored for another year? Gillespie doesn't believe the "tipping point" for digital radio will come next year.

Or in 2005 for that matter. So, when? "I haven't a clue," he admits. "If you ask the strategic planners at the various media groups, it's clear that they don't really know either. There is no business plan. They merely have this dogged sort of attitude that this is something they have to do and they will keep doing it until it works."

FOUR DIGITAL PLAYERS

Rajar figures for the quarterly period to 14 September 2003 included digital stations for the first time. There are now 17 national, quasi-national or multi-local commercial brands while the BBC has added two national stations to its line-up. The most notable Rajar debutants include:

MAGIC - Weekly digital reach 2,845,000

Emap's middle-of-the-road pop station has shown how important the digital opportunity can be. It was previously merely a well-branded portfolio of independent local radio stations but its presence on digital has allowed that disparate presence to cohere into a national brand to rival Virgin.

TOTAL JAZZ NETWORK (UK) - Weekly digital reach 1,467,000

Previously available only on FM in London and Manchester, this Guardian Media Group station is now transmitted via all three digital TV platforms and DAB across the whole country. Branded as the station for free spirits, Jazz Network majors on jazz, as you'd expect, plus blues and soul.

BBC7 - Weekly digital reach 236,000

The BBC's "unadulterated entertainment" network features comedy (new and old), drama (especially crime, thrillers and whodunnits), children's programmes and book serialisations.

ONEWORD RADIO - Weekly digital reach 59,000

While the likes of oneword exist, there's hope for diversity in the commercial sector. It's owned by one of the smallest media owners in the UK, UBC, and specialises in plays, books, comedy and reviews.

This article was first published on campaignlive.co.uk

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