RADIO: A DIAMOND DECADE - Radio has more than doubled its share of adspend over ten years. Ian Darby considers its success and asks if the medium can maintain its momentum

Ten years ago, the commercial radio landscape was unrecognisable. No Classic FM, no Virgin, no Heart, no Galaxy, Magic or Talk - all big and heavily marketed commercial brands that have helped to drive the growth of the sector.

As the radio market went through a phase of consolidation in the early 90s, the commercial radio companies saw the need to back an industry body that could push its cause to the advertising and media community. The Radio Advertising Bureau set up its offices in May 1992 and launched formally later that year.

Justin Sampson, the managing director of the RAB, says: "We had an advertising industry that had made up its mind about commercial radio. This was based on a view of radio in the mid-80s when 45 commercial stations accounted for 30 per cent of UK listening, but there was prejudice against commercial radio - it was seen as only good for targeting kids, and ads were seen as background interference that nobody listened to."

Ten years ago, radio accounted for 2.8 per cent of ad expenditure but now it has a 6.4 per cent share that is still growing. The most recent Rajar figures show signs that listening growth could fuel an increase in advertising share, with weekly reach of commercial radio up one million to 31.9 million listeners a week.

Total listening hours are also up and, importantly, listening has grown among 15- to 24-year-olds. So can radio keep up its momentum, or will the big guns of TV and newspapers hold their share?

Sampson says: "The advertising business is moving towards mixed-media schedules and so momentum is increasing. It's now not just TV and a bit of press. Advertisers are looking for sophisticated advertising packages."

Radio's key selling point to advertisers is its effectiveness. As the BARB fiasco continues and the television broadcasters finally realise that they might have to justify their existence, commercial radio can point to being cost effective and, in some cases, tightly targeted to specific audience groups.

Commercial radio is offering advertisers increasing audiences (up 15 per cent in the past three years) but there are still problems in promoting the medium to some types of advertiser. Phil Riley, the managing director of Chrysalis, says: "In spite of everything the RAB has done, it knows there is a lot more to do. There are huge areas of advertising where radio has failed to make an impact, such as FMCG."

Paul Davies, the operations director at Capital Radio, believes: "There is still momentum. Share of advertising can go further, linked to the fact that we can grow audiences in the future. As digital takes off, services comparable to the BBC's will take off."

Meanwhile, Tim Schoonmaker, the chief executive of Emap Performance, speculates: "Long-term digital radio will kick in and commercial radio will take its share (against the BBC) from 50 per cent to 60 per cent by taking listeners from Radio 1 and Radio 2. Commercial radio will have the ability to combine strong music formats with local content. In the shorter term, our strategy is building breakfast shows through cross-media developments."

The potential consolidation of the radio market, depending on the Government's communications reforms, may drive diversity in the development of programming formats. Currently, most commercial channels focus on attracting 25- to 45-year-old listeners but if groups such as Capital or Chrysalis are able to increase ownership in a market from three to six stations, they can build and market a wider variety of content.

Not surprisingly, the radio companies see this as a major way to grow their own revenues and the commercial radio sector as a whole in the coming years. Riley says: "The existing analogue spectrum is almost burnt out, apart from a couple of licences in the Midlands and Scotland. Even the Radio Authority, in its initial response (to the Government's draft white paper), said it would be healthy to have more head-to-head competition."

Formats will also evolve as consolidation and digital options change to match the needs of listeners. Music station bosses predict that changing music trends will help shape the face of commercial radio. Davies says: "Kiss has done really well in riding the wave of dance music but Xfm now has the capacity to grow as guitar music with a newer edge is popular."

Schoonmaker asserts: "There are interesting things going on with musical taste. There is an enormous growth in the Kerrang! market. We're seeing sales of Kerrang! go through the roof as sales of dance magazines go down.

Dance will reinvent itself and developments in radio will follow. We have applied for the East Midlands licence with 'K' - a mixture of Kerrang! and Kiss."

Capital's view is that digital will enable it to develop more targeted formats for stations. Davies predicts: "The likes of Capital FM will still have a role to play as family stations but people will spend a lot more time finding other types of station. We will see newer formats - for instance, targeted at kids, like the Disney partnership we have developed."

If the radio companies had a single concern going forward, what would it be? Riley recommends: "Get rid of health warnings on financial ads.

Changes are long overdue and the sooner we can convince the Government on this, the better. This is perceived as a sector that can grow massively over the next decade. Radio's ability to talk on a one to one basis is fantastic but this is a frustration."

Meanwhile, Davies hopes that digital radio take-up will increase: "Acceleration of digital is a big issue. If we can take it from 50,000 listeners to ten million then this will establish our ability to grow audiences for commercial radio and grow targeted audiences for advertisers."