MEDIA: FORUM; Has radio’s success really led to complacency?

Troubleshooter or troublemaker? Sir John Harvey-Jones has delivered a ‘room for improvement’ report to the radio industry. This from a man who reckons he knows a thing or two about the ‘wireless’ because he was with the British Forces Network in Germany in 1946. Should we take him seriously?

Troubleshooter or troublemaker? Sir John Harvey-Jones has delivered a

‘room for improvement’ report to the radio industry. This from a man who

reckons he knows a thing or two about the ‘wireless’ because he was with

the British Forces Network in Germany in 1946. Should we take him

seriously?



Sir John Harvey-Jones, the former chairman of ICI and more recently the

star of the Troubleshooter management-consultancy-as-spectator-sport

television series, is revered in many sectors of the business community.

This is a man of both vision and compassion, a hard but fair Mr

Motivator. That’s one view. The other, held especially by those who

watched in horror as he single-handedly tried to destroy the Morgan car

company on Troubleshooter, maintains that Harvey-Jones is, at best, an

old fraud.



He certainly brought his own brand of controversy with him when he

addressed last week’s second Radio Advertising Bureau conference.

‘Audiences have increased by 30 per cent in the past three years and

revenue has doubled,’ he conceded, ‘but there are a number of dangerous

signs, which if read right we still have time to do things about.



‘Business is not a sprint you win once, it is a relay marathon and if

you are in front the way you stay there is by moving faster and faster.

What appears to the radio industry to be a fantastic achievement - a

market share of advertising revenue of 4.2 per cent - seems to me to be

a position of danger.’



Harvey-Jones argued that radio’s revenue growth has not matched audience

growth and the industry now has an infrastructure and cost base where a

reversal in its market share would cause major problems. He said that it

is now vulnerable to assault - in the past radio has escaped attack

because its market share was so small that nobody took much notice.



‘The advertising market has never been more competitive and total

advertising spend is not going to grow indefinitely,’ he continued. ‘Are

you really telling me that the existing market share and a slow drift up

to 6 per cent within five years - as the Henley Centre forecasts - is

all that has been allotted to you by God? Surely, as the next step, you

should be looking for a 10 per cent market share of the available

advertising revenue within five years. I wouldn’t settle until in the

minds of every single businessman in this country, radio advertising was

seen as being as indispensable as TV is seen at the moment.’



Impressive stuff? Though the speech electrified a large proportion of

the audience, many remained distinctly underwhelmed. ‘He could have

given that speech to any industry, just changing a few phrases here and

there,’ one sceptic at the conference said. Can Harvey-Jones be

dismissed as easily as that? Hasn’t he hit on a major issue? Has success

brought complacency to the commercial radio medium? Shouldn’t the

industry broaden its horizons?



Andrew Robertson, the corporate marketing manager of the Bradford and

Bingley Building Society and radio spokesman of the Incorporated Society

of British Advertisers, admits that he found the Harvey-Jones speech

slightly worrying. ‘If the radio industry began pushing for a 10 per

cent share of UK advertising revenue, the implications would be

massive,’ he believes. ‘It would mean doubling its current share while

it just isn’t in any position to double its output. Therefore, any

increase in radio’s share could only come from inflation and inflation

is already a big problem for radio. If it goes any higher, people will

start pulling out and the whole exercise will be self-defeating.’



Understandably, Douglas McArthur, the managing director of the Radio

Advertising Bureau, doesn’t see it that way. ‘I don’t think there’s any

problem in pointing out that radio mustn’t get complacent. There’s an

element of good psychology here. There is no harm in setting a big

target - set it at 10 and you might hit 8 per cent. But I don’t think

that people should be worried about inflation,’ he says.



‘If we were talking about the same output from the same stations that we

have now, then there might be problems. But what came powerfully out of

the conference as a whole is that we must invest for the future so that

we can take on the BBC on its own ground. The commercial sector has to

provide a complete portfolio of high-quality products. Perhaps we should

be more ambitious on all fronts.’



Derek Morris, the joint media director of BMP DDB and radio spokesman

for the Institute of Practitioners in Advertising, agrees that the big

issue is whether radio can stimulate growth on the supply side. ‘If the

industry can’t increase impacts, then I look forward to its

justification for believing that a 10 per cent share figure is possible.

To meet that target, prices would have to increase by a factor of two

and a half. That would make radio as expensive as television. In which

case, I expect to see research proving that a radio impact is as

powerful as a television impact.’



On the other hand, Morris agrees that commercial radio’s best

opportunity for increasing impacts will come from targeting the BBC more

effectively. ‘The radio industry probably should have more of a

collective line on the sort of legislation it would like to see and do

more to change the environment it works within. Perhaps the BBC should

be forced to retreat from certain sectors, allowing commercial radio to

increase its audience. That’s certainly a valid path to go down,’ he

states.



Nigel Reeve, currently the sales director of Classic FM, maintains that

advertisers and agencies are being over-cautious. ‘Sir John is right -

we are in danger of becoming complacent. We’ve had three or four years

of growth in radio and in Britain when you achieve regular success,

everyone wants to knock it,’ he says. ‘We have to fight harder to

maintain that growth. I think that what often gets forgotten is that

digital technology is just around the corner and that will inevitably

lead to a lot more stations coming on air. When that happens we will be

able to target ever better defined niche markets and audience subgroups.

I don’t think agencies should be worried about inflation. They should

look at the experience of other countries in Europe and in the US, where

radio commonly takes between 7 and 10 per cent of adspend. I don’t think

it’s too much to expect us to be able to achieve that.’