TORONTO – Broadcast radio’s primary sustainable advantages over streaming audio services will continue to be its live and local content for the foreseeable future, according to industry experts who spoke at last week’s Future of Radio & Audio Symposium, held by the North American Broadcasters Association (NABA) at the Glenn Gould Studio in downtown Toronto.
“If we look to the future, how can radio best sustain its competitive advantage — and it still has a huge one — it’s really around ‘local’, and ‘live’, and ‘personal’,” said Jeff Vidler, president of market research firm Audience Insights in Toronto, adding that Canada has a head start over the U.S. because streaming services haven’t yet been adopted as widely here.
During the second week in February, the company conducted an online survey of 1,505 Canadian adults across the country, asking them about their listening habits — for both radio and audio alternatives. “AM/FM radio in Canada continues to dominate. Six in 10 Canadians say on average they listen to broadcast radio at least once a day. That’s way above the penetration of streaming music services…streamed audio programs, satellite radio, and downloaded podcasts,” Vidler said.
In comparison, 11% of survey respondents said they listened to streaming music services at least once a day, while only 7% of those surveyed said they listened daily to either streamed audio programs or satellite radio. Downloaded podcasts were listened to daily by only 5% of survey respondents. “I think the future for local broadcast radio is actually pretty bright,” Vidler said, adding that people who listen to alternative audio sources are still listening to traditional broadcast radio on a regular basis. “This is not a zero sum game at this point.”
While 60% of survey respondents said they listened to AM/FM radio on a daily basis on average, 93% of everyone surveyed said they listen to broadcast radio “at some time or other,” he added.
The survey respondents were then asked, on an open-ended basis, why they continue to listen to AM/FM radio, given the other audio alternatives out there, and five themes emerged in their responses, Vidler said. The five main reasons were: radio is easy and convenient; it’s free; it’s local; it’s live; and it’s personal.
However, he’s not sure radio’s current advantage of being easy and convenient can be sustained long term, as “sooner or later all of these audio alternatives will become as ubiquitous and convenient as radio is today.” Furthermore, advertising-supported streaming services could reduce radio’s advantage as a free service.
“What we need to preserve and make sure (about) goes back to content. It’s local, it’s live and it’s personal. Those three things work together…Local is that one unifying aspect.”
“Live and local is not the fix-all for everything and it’s not the only thing we do right.” – Sean Ross, Edison Research
Sean Ross, vice-president of programming for New Jersey-based Edison Research, said “live and local” very much matters, but it should not be considered a panacea for all of the competitive issues facing the broadcast radio industry. “Live and local is not the fix-all for everything and it’s not the only thing we do right,” Ross said, adding that radio’s ability to create a shared experience and to offer listeners a “sense of place” is also part of its appeal.
Sense of place can be conveyed by a local radio station, whether it’s a Top 40 station in New Orleans playing Mardi Gras-themed songs or it’s a Nova Scotia station broadcasting Great Big Sea songs to car listeners driving the Cabot Trail, he said.
Although revenues continue to remain flat for the radio industry, the local nature of broadcast radio is still drawing in advertisers who see the value in engaging with local audiences, added Erica Farber, CEO of the U.S.-based Radio Advertising Bureau.
According to Farber, a recent study conducted by Nielsen showed that for every dollar spent on radio advertising a consumer packaged goods advertiser achieved $6 in incremental sales. “Using this same methodology, a large big box retailer saw increased shopper retention by as much as 11%, and that was thanks to radio’s ability to drive loyalty,” she said.
Using radio as a reminder medium, a media advertiser was able to experience a 16% conversion rate for promo ads. “There’s no other medium that can say this,” she added.
Speaking about the U.S. market, while overall advertising budgets are not growing, what is increasing is the competition for those budgets. “So in spite of all of the new competitors that are going in here, I think this is an incredible strong story for our medium that we’re not losing, we’re holding on,” Farber said, adding that one area that is increasing is promotional budgets. “And who does promotions better than radio?”
Sounding a cautionary note, Tom Pentefountas, vice-chair of broadcasting for the CRTC, said AM/FM radio could lose its competitive advantage as a local medium.
“The fear on the local front is even the Spotifys of this world can geo-locate where the listener is and potentially down the road plug in news, weather, local information can also be made available, so that’s a concern,” he said.
He said that “content is the key” and compelling radio content, regardless of the platform it’s delivered on, will always draw in listeners.
