Bernard Defends GCap Results
Following yesterday’s release of GCap Media’s financial results, the company’s chairman, Ralph Bernard, was present at today’s MediaTel Group seminar on the future of radio and gave a robust defence of what some commentators saw as a less than sparkling performance from one of commercial radio’s flagship groups, particularly with regard to Capital Radio.
Of course, much of the blame for GCap’s results (see Capital Radio Continues To Impede GCap Media’s Growth) was placed at the door of Capital, especially its recent policy of playing no more than two ads in a row (see Ad Breaks and Minutage Cut on Flagship Capital Radio from December). However, Bernard said that this was part of a forward-thinking strategy which would be necessary for others to follow, as ad revenue models adapt to the changing media landscape.
Bernard said: “What perhaps we should look at is what future there is for the traditional advertising model. Is it right, for example, that we continue to sell spot advertising in the way that we do? It works, we know it works, and we know that when we’ve got millions and millions of people listening, frequency of ads within compelling content is something which will work for advertisers, but it becomes increasingly difficult in situations where people are less likely to tolerate ads in the old form, with 10 or nine ads in a row.
“At Capital we have charged ourselves with the responsibility of changing the model slightly by reducing the minutage and never playing more than two ads in a row. You can say its bonkers, you can say its chucking money away, but actually it feels right.”
When chair of the seminar, Torin Douglas, suggested that the group’s results suggested that the Capital radio ad strategy had not worked, Bernard offered a robust response, saying: “Our results yesterday were for 100% of the group, Capital represents less than 10% of our turnover. We know that if I wasn’t investing in digital radio, that if I wasn’t investing in the new radio station theJazz, we’d have better results. You’ve got to keep investing, you’ve got to keep moving ahead.
“I know what we’re doing is absolutely right. There’s absolutely no question that what Capital is doing for itself, for its advertisers, and customers is 100% correct.”
Bernard then pointed to digital radio as an example of where GCap had previously taken steps ahead of the rest of the pack and been proved right.
He added: “With the Capital advertising policy that is not something you expect to work instantly overnight. That is a long term arrangement and is something we thought very carefully about. I knew that it was going to hurt us I knew that it was going to take millions of pounds out of Capital and put it into the mouths of the people around us. I knew that and the fact that other companies are benefiting in the short term is something that was completely expected.”
Bernard said there was no denying the company had had a tough time but he was adamant that they would see a definite sign of improvement in the next 12 months, with real growth in the next two to three years.
He added: “I’m going to do what I know is right for the business, and what is right ultimately for the consumers and advertisers and, of course, our shareholders in the long term. If you take the short term view, you’re on a slippery slope.”
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