Feature

The year ahead for ... radio

Jonathan Barrowman anticipates a watershed 12 months for radio as the commercial sector, unrecognisable from a year ago, takes the fight to the BBC.

Change is inevitable. However, the pace of change in commercial radio promises an enthralling year ahead for both audiences and radio companies, as the market responds to the need for fresh business models and the prospect of a veritable feast of digital platforms. There's nothing like an economic downturn to focus the mind and, if radio seizes its moment, there are several reasons to be cheerful.

Structurally, the industry is unrecognisable from a year ago, and the market is expecting fresh thinking from new leadership. GCap Media, Chrysalis Radio, Emap Advertising and Virgin Radio no longer exist, and have been replaced by Global Radio, Bauer Media and Absolute Radio. Importantly, the Square Mile has no control over the consolidated result.

Private ownership should translate into strong market leadership, which in turn will manifest itself in clear and consistent strategies that aren't undermined by the City baying for short-term results. Significantly, Global and Bauer are headed, respectively, by Ashley Tabor and Saskia Bauer, both of whom are younger than Russell Brand and preside over a combined "family" investment of £967 million.

Global's strategy is "national brands, locally delivered", which is an inspired move as the BBC currently dominates the national spectrum, and investment behind the quasi-national brands Galaxy and Heart is designed to compete for Radio 1 and Radio 2 ears. Richard Park's role as the executive director of broadcasting is pivotal as Global rolls out consistent brand positioning and networked programming for consumers.

Park is not a man you tend to argue with, and I think Global's strategy will drive listening and create commercial opportunities. A two-hour drive from Sussex to Suffolk, for example, traverses several different local radio stations with different formats, which makes national services very appealing. In the near future, these stations will all be relaunched under the Heart brand and have similar programming out-put, with advertisers able to develop consistent branded content reaching larger audiences.

In practice, winning the hearts and minds of communities that have a strong, historical connection with a local station is more challenging, especially when the new station has syndicated national content. Power FM on the South Coast recently rebranded as Galaxy and comments such as "This Galaxy is rubbish. I don't want to know what's happening around the country, only local. Bring back Power!" were posted by members of a Power FM Facebook group.

This group unwittingly helped to justify Bauer's locally focused strategy, which has historically been the heartland of commercial radio and where Bauer is experiencing some success in arresting the decline in local heritage stations. Either way, local or national, raising the bar against the BBC's national dominance in programming is a key area for commercial's audience growth, as well as its ability to increase branded content revenues across large networks.

Change in the commercial sector coincides with change in public service broadcasting. The significance of Jenny Abramsky's decision to step down as the director of BBC Audio and Music last year should not be underestimated as she had an extremely successful decade launching new digital services and achieving record listening figures. Lesley Douglas' resignation as the controller of Radio 2 over "Sachsgate", and a now potentially risk-averse BBC, adds yet more fuel to the argument that the tide is finally turning in favour of the commercial sector.

Another battleground is multiplatform distribution, a process that will transform radio companies with listeners into media companies with consumers. Classic FM is held aloft as the example of a radio brand that lives online, on DTV, in a magazine, as an e-newsletter, in music sales and at events. However, the wider industry is still undervaluing the habitual, emotional and interactive relationship it has with its listeners.

More stations need to invest in their websites and market them on-air. The average radio station website has an audience that represents just 3 per cent of its broadcast audience. Global and Absolute Radio - which invest more in digital - reach more than 10 per cent of their broadcast audiences. However, the radio industry has yet to achieve the potential demonstrated by The Guardian, The Sun and Channel 4, which have successfully created large communities online and on mobile.

Growing audiences in digital will mean diversifying revenue streams. Broadcast-linear content will slowly, but inevitably, give way to more personalised, interactive services. Radio gels with its consumers through the "bits between the tracks", which differentiates broadcast radio from online music services such as last.fm - the scale of an organisation such as Global, which is technically an ISP, means it can become a shop front for the music and entertainment industry and also offer third-party sales. Global is also launching an iPhone application, which streams interactive audio content. This move is in recognition of the future of streamed content - as opposed to downloaded content - and is intended to counter similar applications, such as blip.fm on the iPhone and Android Imeem on Google's G1 mobile.

But, ultimately, the issue for radio isn't deciding "which platform", but embracing all platforms, as integrated, multiplatform content will become more important to both media owners and advertisers. DAB will play a role in that future, along with an array of other options. The rebranding of Virgin Radio to Absolute Radio, for example, coincided with it being available on 14 new platforms - from social media to IPTV - and the development of an integrated sales team.

Brand advocacy and brand equity in these spaces is essential, as "friends" increasingly become the filters of content and services, rather than brands. However, radio can hit the sweet spot of a converged world. Branded content partnerships on radio have proven the medium's ability to interact with consumers and blur the boundaries between linear content with microsites, e-newsletters, podcasts, blogs, mobile and events.

Change is the only constant and commercial radio now has the structure, the leadership and the opportunity to build national brands, increase distribution channels, grow audiences, diversify services and create new revenue streams.

- Jonathan Barrowman is the head of radio and mobile at Initiative.