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.’
