IPSOS: The future of radio… an industry view

Our latest research piece from Ipsos MediaCT asks a select group of UK radio industry leaders how they see the future of radio in a digital Britain …

Ipsos MediaCT conducted 11 individual interviews (either face-to-face or over the telephone) with a group of UK radio industry opinion leaders from the BBC, Commercial Radio, EMI, PPL, PRS, DRDB and MediaUK.com.

The research concentrated on four topics – radio’s role; radio post recession; technological evolution; and regulation.  Ipsos MediaCT selected 2 or 3 individuals to talk about each topic, but inevitably there was a lot of overlap with a central theme of the future of radio.

Radio’s role

We asked about radio’s role compared to other media; and how this may change as the media landscape changes.  There was a general feeling that despite being in the most competitive broadcast market we have ever been in, where consumers are spoilt for choice, the core radio audience is strong and healthy because radio still delivers a unique offering –

“Radio is a companion”
“You tend to have a very personal relationship with it”

It’s a portable, personal medium where you can absorb the content whilst doing other things, whether in the home or on the go.  It can break news, particularly local news, faster than other media.  It is a leading medium for breaking new music, although there was an acknowledgement that YouTube has a strong offering for this.

When talking specifically about how radio will change as the media landscape changes, some of our opinion leaders thought that the really big changes will come through platforms moving to digital and offering new formats.  But ultimately, radio needs to give people what they want i.e. great content.  Digital has a big part to play but the industry has to keep refreshing the product and invest in content.

“The really big change will be in platforms, it’s how we consume our media”
“…everybody’s interactive – let’s flick the red button and do whatever.  The majority of people don’t want any of that.  They simply want to be entertained.”

Interestingly, there was a view that while interactivity is a growing trend, not everyone in the population will necessarily demand that radio embraces this change – it’s more about emotional involvement than flicking red buttons.

Radio post-recession

For the theme ‘radio post recession’, our questions included those on whether the recession would result in any long term, fundamental changes to the structure and balance of radio; how the industry is responding to the recession; and, what opportunities there are for revenue.

Putting any BBC and Commercial Radio rivalry and sensitivity over revenue and funding to one side, there was a shared view about radio in a post-recession world.  It is a case of ‘only the strong will survive’.  The recession will accelerate a Darwinian process of change.  The word ‘brutal’ was used by more than one individual in this regard and companies will need to conduct root and branch reviews of their businesses.  There will be consolidation in the commercial sector.

“Recession accelerates change”
“It’s a brutal environment, there will be casualties and the strong brands will survive as they can drive digital revenue from numerous sources”

Nevertheless, there was certainly a mood of optimism across both BBC and Commercial Radio in our feedback.  Display ad revenue will pick up although companies will need to go beyond that, for example with internet advertising.  The build up to the Olympic Games is timely as it will provide a boost to advertisers and benefit all commercial media, not least radio.  The future is apparently “radio-shaped”.

When asked specifically about the recession’s effect on advertising revenue, certainly it was felt that the migration to digital will provide the growth opportunities expected by investors.  Above all, however, it is again strong content that will help secure the revenue opportunities and therefore the future of radio.

“Strong content will secure the future of radio”
“Need to sell DAB to the public properly”

There was a recurring theme that radio is in a strong, healthy position with more platforms providing more opportunities for listening.  Although there was caution that DAB needs to be sold to the public properly as we advance to the analogue switch-off.

Technological evolution

Views on the impact of technology in radio were wide-ranging.  Many commentators have seen the launch of the latest gizmo or new online option as yet another contribution to radio’s demise allowing listeners to create personal playlists and resulting in immediate, significant defections.  Equally, as mentioned previously, some saw that technology is delivering the new opportunities that broadcasters need by providing more platforms, the facility to listen again and podcasting.  All of which enhance brand identity and increase listener loyalty, although there are outstanding questions still over monetisation.

No one saw an imminent, ground-breaking technological change that would result in a significant loss of the large established audience, although it was clear that some of the recent and impending alternatives would contribute to a possible longer term, slow, downward trend.

“The demise of radio has been ongoing almost since birth”

We learned that two of the key opportunities for technology, other than DAB, were the impending arrival of digital tuners with touch screens allowing interaction as well as direct links between wi-fi broadband and the internet.  This does raise the question about the take up of these options outside of the home, for example in car or at work.

Digital Britain and DAB

And so, to Digital Britain and the hot topic of DAB.  At this stage it may be useful to recall that although the Government’s report had been published in the preceding weeks to our interviews, DAB technology itself is far from “new” having been around for a number of years.

The proposals were widely welcomed because they are seen to provide the industry with a clear roadmap and direction that many thought had been lacking.  But whilst widely welcomed, there was some dissent.  Digital Britain could move down the pecking order and, like many Government reports, end up in a drawer.

“Digital Britain gave us a great roadmap”
“The entire report is built on sand… another classic example of a Quango”
“…radios in sheds, in old cars, in garages, wind up radios… they’ve all got to be replaced”
“If we believe that switchover is the right thing… we can do it, if we get a move on”

Despite a few reservations, there was a universal commitment to implement the proposals and willingness to the meet the timetable towards 2015.  No one underestimated the scale of the task required for people having to replace their analogue sets and so there is no time to lose.  There is a requirement for the industry to act in a united way to ensure that DAB gets the “marketing muscle” it has not had up to now.

Regulation

On the topic of regulation there were some passionately-felt views, particularly on Ofcom.  A number agreed that an element of regulation was necessary but perhaps that Ofcom had become too bureaucratic with too much freedom for policy making and licence giving, without an apparent understanding of current market issues.  Some felt that Ofcom had to change and, if not, a new regulatory body to be placed in its place.

“What was set up to be a lighter touch body has ended up with an extraordinary heavy touch!”

There was also a feeling that some regulation of the internet was needed, particularly as there were both regulated and non-regulated radio stations in direct competition on the internet.  Illegal file sharing is also a major issue, with some comments that the music industry has not been quick enough to respond to the threats of the digital world.

The future of radio

We took out a number of conclusions from our discussions about the future of radio, some of which are summarised here.

• There is a strong, healthy, dynamic, evolving future for radio.  We have to remember that given the increase in choice of competing media and new technology, 9 in 10 adults still tune into the radio in an average week.
• Radio is changing and the recession is accelerating the pace of change.  It is brutal, but radio will come through and will have to focus on the challenges ahead, such as Digital Britain.
• And to do so, it will have to market DAB properly and start doing it now.  DAB has been around for a while; indeed Ipsos conducted the first market potential study for it around 10 years ago.  A collective impetus is required to increase the digital share of radio listening by 150% in the next four years if it is to meet the Digital Britain timetable.