Rajar Q4 2019: Industry analysis

While total radio is sitting relatively flat year-on-year, it’s been an unexpectedly challenging quarter for commercial radio. This reverses a trend we’ve seen over recent quarters and years where commercial radio has out-performed the BBC, which has enjoyed an uplift quarter-on-quarter.

Commercial’s tricky quarter seems to stem from a decline in listenership from its biggest brands such as Heart, Capital and Smooth. There is an especially poor showing from Kiss (-5.1%) whose commercial digital powerhouse KISSTORY fell by nearly 14% quarter-on-quarter – a significant blip in their positive growth story.

However, there were bright sparks for commercial in unlikely places. Brexit and election fever drove huge listener spikes for LBC and talkRadio which are both up 6%. The festive season also provided additional boost to listenership to Classic FM and Scala, which both saw a sizeable increase in reach.

The most significant revolution in radio comes from digital listening. Buoyed by the ubiquity of DAB in car, the ongoing adoption of smart speakers and digital only commercial stations, digital’s share of radio now sits at 58.5%, up an impressive 11% year-on-year. Bauer is leading this revolution with 74% of its reach achieved via digital, though Global is showing encouraging early signs to compete with the radio stalwart.

For agencies, the squeezing of hours among commercial’s biggest brands will add to existing high pressure on Global’s FM output, with the salehouses likely looking to ease these by shifting potential brands to their increasingly digital-centric brand extensions.

Clearly, with 87% of the population tuning in each week, radio remains a core part of the UK’s media consumption.

What is particularly interesting about 2019 is the acceleration in digital radio’s share of listening, which has increased to nearly 60%. Will the coming adoption of 5G by the public drive this up even further? As people get used to faster and more reliable connections, one would think that it makes listening to live radio via a smartphone more appealing.

As digital listening accelerates, so do the opportunities for smarter, more measurable and effective media buying. Whilst digital radio presents us with greater options for how we use radio within media plans, it also increases the need for agencies and clients to incorporate robust test and learn programs to achieve the optimal radio mix across stations, formats and buying methods. Clearly, more data and more targeting will not always equate to more effectiveness.

Other things we’ll be looking out for this year are whether the new settled political landscape will reduce the listenership of news-oriented stations like LBC. Given the political weariness of the population, it is not unreasonable to expect a modest swing away from news and talk radio in favour of music and sport.

Additionally, the BBC’s radio output is likely to come under pressure as the review of their funding model continues. Recent commentary suggests that cuts could lead to entire BBC services being scrapped. This will lead to big opportunities in commercial radio, as talent and sports rights are scooped up by commercial radio.

Finally, we expect to see some change in terms of ad loads – a consequence of the podcast explosion in recent years and what that has done to people’s expectations. This could mean more sponsorship or advertising integrated into programming, and fewer traditional ads. News UK’s launch of Times Radio could be the exemplar for this.

With 87% of the population still tuning into radio every year, it’s clear the medium is still thriving. In fact, in the past seven years radio has only lost 2% of listeners. The biggest change we’ve seen is how audiences are listening to radio. 66% of the population are tuning into digital radio every week and 48.1 million are tuning in for three hours per day so the opportunity for brands is huge. It’s clear the medium has held its own in the digital revolution.

This rise of online listening has particularly benefitted commercial radio, which continues to attract a large audience, at 35.1 million weekly listeners. The sector has a higher than average share of total digital listening at 68.1%, a continually effective opportunity for brands.

With more ways to interact with digital radio than ever before, and more streaming services and radio stations offering listeners the chance to self-select into music genres, brands can and should be leveraging the opportunity to be more targeted and more interactive with their listeners.

We know how quickly consumer attention is moving to voice. Given the rate of consumer adoption, the market penetration of household assistants, the satisfaction level of current voice search users and the integration of it into everything from home appliances to vehicles, it should be critical to a brand’s digital strategy.

We’ve seen this happen in recent years with shifts to social and mobile. Now, the next hub for content, commerce, and the rest of our digital behaviours has arrived.

Nearly 62% of the UK listen to commercial digital radio each week, and 58.5% of all listening is now digital. Despite the slight dip in overall reach, the upward swing in digital listening continues to show great promise for radio – so it’s no surprise why radio groups are champing at the bit to launch digital spin-off stations.

This quarter revealed the first set of results for a range of new Global stations including Heart 90s, Capital Xtra Reloaded and Smooth Country following in the footsteps of Bauer’s seven new online stations and the three virgin spin-offs from wireless. With Times Radio set to launch in the spring, this trend shows no signs of slowing down.

However, although the pace at which brands are growing may seem unprecedented, it isn’t anything new. Back in March 2016 Sound Digital’s D2, the second national digital radio multiplex, launched with an array of new stations. The choice this offered listeners has led to a more segmented national market. This is a big positive for advertisers using radio to target more specific audiences, as enhanced targeting with more contextual comms delivers effective campaigns. Targeted stations also tend to require a lower capital investment, so it opens up many opportunities for audio advertisers.