Don't touch that dial: tuning into the radio industry's big year of change
With networks financing audience surveys independently, broadcasters selling advertising packages across multiple media channels, streaming services selling video ads and national radio striking commercial partnerships, radio has gone gaga recently. Damien Venuto finds out if there’s method in the madness.
Evangelical radio broadcaster Harold Camping has gone down in infamy for having incorrectly predicted the end of the world on numerous occasions leading back to 1994. “I’m like the boy who cried wolf again and again, and the wolf didn’t come,” Camping said to the San Francisco Chronicle in 1995.
Incidentally, the channel Camping used to broadcast his thoughts has also had its share of doomsday prophets, with journalists intermittently predicting that its run was due to expire.
“Radio has been around for a hundred years, and whenever new technology comes along someone makes the comment that this will spell the end of radio,” MediaWorks Radio chief executive Wendy Palmer recently pointed out at the annual Radio Rewired event.
And murmurings and speculations of the end times once again emerged on the pages of many international publications earlier this year when the government of Norway announced that it’s moving toward switching off FM radio transmitters by 2017—or 2019, if prerequisites aren’t met—on account of audiences shifting their consumption to digital broadcasts.
These enquiries into the possible end of radio aren’t without merit. With the rapid growth of digital streaming services, the reduction in the cost of data plans and the increased connectivity of vehicles, traditional radio as we know it is certainly under threat.
But, before reaching across for the tissues in melancholic yearning for Spandau Ballet classics, Bon Jovi rock anthems and Leighton Smith’s climate-change denial, it’s worth noting that radio in New Zealand isn’t in bad shape.
Yes, listenership is going down, but the channel is far from being a barren wasteland.
While this decline isn’t great news—and by Thompson’s estimates is set to continue—radio has remained one of the most stable among the media channels in terms of attracting ad spend.
At a time when newspapers, magazines and television are losing market share, radio has bucked the trend and enjoyed an increase in its cut of the pie, enjoying an increase in ad spend of $13 million between 2013 and 2014 (only the interactive channel was higher, with an increase of $117 million, although TV says adding digital video would add $23 million to its number).
“Radio is still delivering 12 percent of advertising spend and it’s still showing growth ahead of total market,” Palmer says.
But this doesn’t mean that all is well in radioland. As evidenced by the slew of changes over the course of the last year, the industry is clearly looking at how it can adapt to some of the most significant disruption the industry has ever faced.
Factions to allies
The Kiwi radio industry has always been fiercely competitive. And nowhere has this traditionally been more evident than in the partisan press releases that are sent out following the biannual survey results.
This year, the survey was again at the centre of the competitive back-and-forth between NZME and MediaWorks, but for very different reasons. It started with news that 2015’s T1 survey was to be cancelled on account of need to revamp the research methodology used. At first, MediaWorks claimed that it was an agreement across the industry, but then NZME responded by saying that it had always wanted to have the survey.
“Clients have told us they want more data, not less data,” said NZME commercial director Sandra King at the time.
So to give clients and agencies what they supposedly want, NZME financed its own industry-wide survey independently—a move that was quickly denounced by MediaWorks for giving its competitor an unfair advantage. Several articles in the media painted a picture that MediaWorks and NZME were struggling to get along and that they weren’t interested in working together at all. And these sentiments were only further concretised through speculation that The Radio Bureau (TRB) was set to be disbanded.
The rumours surrounding the dissolution of TRB served as something as a turning point for the uneasy relationship between NZME and MediaWorks, and was followed by the pair sending out a joint statement to quash the industry murmurings.
At the time, statements like “both companies are committed to TRB” reeked of PR insincerity, but NZME Radio managing director Dean Buchanan and MediaWorks’ Palmer have maintained this cooperative approach ever since (something evidenced by the fact that neither network celebrated their ratings wins following the release of the NZME-financed survey).
As Buchanan and Palmer took their seats at the Radio Rewired event, it quickly became evident that the platform was going to be used to consolidate the message that the pair were collaborating.
‘As Dean says’, ‘as Wendy says’ and ‘we’re 100 percent committed to this’ were common phrases as the pair shared thoughts on where the industry was going. And while the tradition of competitive feistiness in the radio industry still made these statements sound forced at times, there did seem to be a common understanding that collaboration was necessary to ensure the longevity of radio.
A similar approach has been employed in the magazine industry. Several years ago, off the back of years of competitive in-fighting between the nation’s major publishers, the Magazine Publishers Association recommended that its members work together and, instead of trying to steal revenue from each other, look to gain a cut of the ad spend pie from other channels. The television industry also appears to be putting aside some competitive tension and working together to promote the medium.
In the niche
While most of the column inches in mainstream media are afforded to the major commercial networks, the niche players are starting to play an increasingly important role.
In response to 40 percent growth in Auckland’s Chinese community between 2013 and 2014, NZME expanded its iHeartRadio portfolio with Chinese Hits, a station targeted at the under-30-year-old Chinese community. Earlier in the year, MediaWorks also signed a partnership with Radio Tarana in a bid to tap into the growing Indian market (Tarana also signed with NZME and is available on iHeartRadio).
Letoa Henry Jenkins, chief executive of the Pacific Media Network (PMN), which owns a number of radio brands targeted at the Maori and Pacifica demographics, says that niche brands are intrinsically linked to the communities they target through language and culture.
Using PMN as an example, Jenkins says: “We can connect deeply with our consumers because we communicate in multiple Pacific Island languages. The Radio 531pi brand caters specifically to the ‘mums and dads’ who prefer to hear their content in their language. We have nine Pacific Island language teams delivering content across the country. We are embedded in our communities and understand the psyche of Pacific Island people.”
Jenkins goes on to point out that the age of the Pacific community when combined with its influence on Kiwi culture makes it an attractive demographic for advertisers.
“The Pacific population is the youngest in New Zealand and while it currently accounts for approximately 7.2 percent of the total population, Polynesians influence all facets of New Zealand society from, music, film, sport, politics to fashion.”
As things stand, neither of the major commercial players have signed partnerships with PMN, but Jenkins admits that this is something he’d consider.
“The emphasis is on the word ‘partnership’ and of course we are open to any opportunities that creates a win-win-win outcome.”
Pandora, Spotify and the recently arrived Rdio all occupy a space that is becoming increasingly threatening to traditional radio. And the commercial networks now regularly vie against these online players not only to attract audience numbers but also for a cut of ad revenue.
Faced with the inflating popularity of these international players, NZME and MediaWorks have been trumpeting the influence of their local talent.
“It’s about localism in the global economy,” says Buchanan. “The power of the personality will grow in the years to come. That’s what differentiates our medium from the internet providers.”
But the absence of personalities on Pandora doesn’t concern Melanie Reece, the company’s commercial director in New Zealand.
“We do one thing and we do it really well,” Reece says. “You don’t get to have 300 million users worldwide unless you have something very special.”
Reece describes the internet as a democratic space and that consumers will ultimately determine what they want to listen to. And while this might be true for the thousands of office denizens listening to Pandora while staring at spreadsheets, in-car listening—which accounts for approximately 50 percent of radio listening—has until now existed under the rule of FM (and to a lesser degree AM) transmission.
“Auto is a really important strategic pillar for us,” says Reece. “Our recent New Zealand research shows that 80 percent of Pandora listeners want Pandora in their next car. We are in seven major car brands in New Zealand already and working with others to launch in-dash this year.”
Far from waiting around for the likes of Pandora and Spotify to slice away slivers of radio’s ad spend, MediaWorks and NZME have over the course of the last year made some important moves in terms of modernising their business models.
Both networks are looking beyond radio and finding ways to deliver content across all their available channels. The most extreme example of this would be the multi-channel Paul Henry Show, but it’s also seen with the likes of Mike Hosking presenting a Newstalk ZB radio show, writing for the Herald and appearing in online clips across several NZME websites.
In fact, part of the reason why TRB’s position was brought into question earlier this year was because clients and agencies are increasingly buying multi-platform packages directly from the media owners.
The networks have since confirmed that TRB will continue to function, but its scope has now been limited to providing single-source radio solutions.
“The biggest change was the disestablishment of the branded content and digital teams,” says TRB acting general manager Peter Richardson on the restructure of the industry body. “This has resulted in TRB focusing on its core competency of delivering impartial radio planning solutions.”
What this means is that bigger, integrated campaigns will continue to be sold by the networks directly to clients.
“[Clients can benefit] hugely from promotional work that goes across radio, TV into our websites and social,” says Palmer. “It’s certainly our area of growth, particularly for agency clients and the larger national advertisers.”
In many ways, local radio brands act well beyond the limited online remit occupied by the likes of Pandora and Spotify—and this is an advantage that they’re trying to capitalise on through these bundled deals. However, to sell these packages, the radio industry needs to provide proof that commercial messages delivered across all the channels are reaching their intended targets.
Radio New Zealand goes commercial
The commercial players aren’t alone in terms dabbling in some unchartered spaces. Government-funded Radio New Zealand (RNZ) has also been making some interesting moves in recent months.
Earlier this year, the state-backed radio broadcaster signed an agreement with iHeartRadio to broadcast its shows, and then followed this up with a similar partnership with MSN.
“Unlike [the] iHeart [deal], the MSN contract does have a commercial element— there’ll be some revenue share there,” says RNZ’s Paul Thompson. “They obviously have advertising on their site, and when the audience comes to our content, we’ll have a share of that revenue.”
Thompson also points to the added benefit that MSN will be offering Radio New Zealand contra, enabling the state broadcaster to promote its content on MSN. Radio New Zealand’s government funding has been frozen at under $32 million for the past seven years, and this is particularly limiting at a time when the service needs to evolve to stay relevant to audiences.
Internationally, National Public Radio (NPR) has supported revenue accumulated from government funding, corporate sponsorship and donations by commercialising podcasts. So effective has this approach been that Wired recently reported that the US national broadcaster was on track to break even for the first time in six years.
Asked whether Radio New Zealand was considering a similar move, Thompson admitted to being open to the idea.
“We’re starting to look for opportunities around bespoke podcast content as well, because we see that there’s huge appetite for this kind of content. It’s growing really quickly without us doing much more than making it available on those platforms … [But] because we’re publicly funded, any podcasts that we created, which had a commercial element, that content would have to be freely available on our website as well, which probably makes it a little more difficult to commercialise.”
A major problem faced by the traditional channels is that measuring them is difficult, and this is quite pronounced in the ‘radio vs. online’ streaming context. While Pandora and Spotify can identify exactly who is listening via their platforms and for how long (with such accuracy that they are able to incorporate videos that only play when listeners are looking at their mobiles or desktops), radio has until now relied on an antiquated diary system of measurement that only took two six-week periods into account every year.
To rectify this problem and update the research methodologies, the radio industry appointed radio research consultants Peter Don and Eriks Celmins to look into an alternative. The recommendations were then put to several research agencies (the incumbent TNS lost out to Gfk)
“This process was really about figuring out whether there was a way that the audience measurement system could be improved,” said Don in video played during Radio Rewired.
Don said the researchers looked at various international examples and found the methodology being used in the United Kingdom, which incorporates a mix of paper and e-diaries, as most adaptable to the local market.
“We took that base of interviews that had been happening over the course of two six-week surveys and modelled it to see what we might be able to do over a much longer period,” Don said.
The new system would incorporate 40 weeks of data capture, bring on Radio New Zealand as a partner and extend the footprint of measurement from the current 2.9 million to 3.9 million—thereby providing a more holistic analysis of the radio market (Nielsen’s survey for Radio New Zealand already runs over 40 weeks).
“We [also] had to change the frequency of delivery of results,” said Don. “[And] on the basis of the [proposed] model, we could end up with four results per year for some markets, two results per year for other markets and maybe one result per year on a national basis.”
This is still not quite as appealing as the subscriber-based analysis employed by the likes of Pandora or Spotify, but it is a marked improvement on what has come before.
When viewed alongside all the other recent action, the radio industry seems certifiably manic at the moment, but it’s worth noting that the old cliché defines insanity as doing the same thing over and over again and expecting different results—and this is an accusation that no one could level at the likes of MediaWorks, NZME, Radio New Zealand or any of the independents that populate the always-feisty world of radio broadcasting.
This story originally appeared in the July/August edition of NZ Marketing.