Does radio offer any prospects for start-ups?

Radio appears to be perpetually in trouble of ceasing to exist, and yet the medium remains relatively dynamic in some countries. While opportunities are limited for innovative start-ups in this segment, it could just be that there has not been one great idea to transform the medium for consumers altogether. While business transfer agents are not doing much radio-based business these days, there is still hope the industry add more dynamism going forward.

The growing penetration of Internet-enabled devices, TVs and mobile phones has diminished the importance of traditional radio for consumers. According to the Radio Research Consortium, a non-profit research company, the number of radio listeners in 30 measured markets has decreased by a third.  This negative tendency has a massive impact for radio advertising. 

Insiders believe that there’s no revolution in terrestrial radio because the owners know it’s headed into the dumper. They’re just milking it for all they can before it falls off a cliff. So if you’re waiting for format innovation and fewer commercials…you’ll be waiting forever.

Nonetheless, cassette players in cars were supposed to bump radio off, cars being the place where consumers are most likely to tune in. Now the legitimate threats are all the ways to customize and deliver a playlist: iPods, cell phones, Pandora, Spotify, podcasts, downloads and everything else short of a mariachi band in the back seat.

However, at a global level radio adspend has only declined by around 1% in real terms over the past five years. This is due to a maturing advertising landscape in developing countries, where demand for marketing continues to expand with strong economic growth. Business revenues are being funelled into all advertising mediums, including radio.  In China, radio adspend has surged by 36%, in India by 11% and by 16% in chile since 2009. By contrast, in almost all advanced economies, where consumers have access to a greater array of digital entertainment, radio adspend has plunged. For example, in countries such as Japan, Italy and Spain, the decline the been in double digits since 2009.

Over 2015-2016, radio adspend will actually grow by almost 2%, according to trade sources, making it a far better performer than print adspend, for example. The key for the radio segment will be to evolve with modern technologies. For example, podcasts and in-car satellite radio services, such as Serius in the USA, have demonstrated there is clear demand for audio entertainment. Once Internet-enabled cars become the norm on the roads, radio and its appeal as an advertising platform is likely to have a resurgence as consumers tune in via the web rather than through limited AM/FM frequencies

 

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