Saturday, 16 October 2010

David vs Goliath: commercial radio spends £27 per hour on programmes, BBC Radio 2 spends £4,578

There has been an abundance of fighting talk from the commercial radio sector in the press in recent weeks. Commercial radio seems determined to pick another fight with BBC Radios 1 and 2, two of the three most listened to radio stations in the UK.

Guardian Media Group Radio
announced that “by broadcasting on National DAB, Sky, Freeview and Freesat, Smooth Radio will provide a strong commercial alternative to BBC Radio 2.” Chief executive Stuart Taylor said:

“We are still at war with the BBC and we still compete for listeners tooth and nail, as we always will."

The press headlines affirmed:
· “New national network makes a Smooth attack on Radio 2” (
Telegraph)
· “Forget Radio 2: in five years’ time, we’ll all be going Smooth” (
Independent)
· “Smooth Radio takes on Radio 2 in national rollout” (
Marketing Week)
· “Radio Two faces fight, warns new Smooth news chief” (
Press Gazette)

Then, Global Radio announced that its local FM stations will be re-branded ‘Capital Radio’ in 2011. Chief executive Ashley Tabor
said:

“With the launch of the Capital network, there will now be a big national commercial brand seriously competing with Radio 1.”

The press headlines responded:
· “Capital Radio will go national in bid to challenge Radio 1” (
Evening Standard)
· “Capital Radio set to rival BBC Radio 1 in move to broadcast nationally” (
Daily Mail)
· “Global to take on Radio 1 with Capital Network” (
Marketing Week)
· “Capital Radio to form first national commercial radio station” (
ITN)

Both the GMG and Global Radio statements achieved the intended sabre-rattling headlines in the press though, for me, these sentiments are remarkably hollow. This ongoing phoney war between the BBC and commercial radio is like a war between a one-eyed giant and an over-exuberant mobile phone salesman. The giant will win every time. Commercial radio can huff and puff all it wants, but the BBC knows it is perfectly safe in its house built from Licence Fees. It can afford to chuckle loudly at every challenge like this lobbed at it by commercial radio. Why?

Firstly, you could only ever hope to seriously compete with the existing formats of BBC Network radio stations if you had access to their same abundance of resources. This is something that Channel 4 belatedly realised after having promised for two years that it would invent a new commercial radio station to compete with BBC Radio 4. Then it scrapped its radio plans altogether.


The huge gulf between the funding of commercial radio content and BBC Network Radio content makes direct competition simply pointless. In a recent
report for the BBC Trust, I noted that commercial radio spends an average £27 per hour on its content, while BBC Radio spends an average £1,255 per hour. There is no way that commercial radio can make programmes that will sound like Radio 2 on a budget that is 170th of the latter’s £4,578 per hour.

Secondly, what sort of message do these press headlines send to consumers? To me, they say ‘we realise that Radios 1 and 2 are fantastically successful, so we want a slice of their action’. Or maybe even ‘you really like Radios 1 and 2, don’t you? Try us, because we want to be just like them.’ So where is the Unique Selling Point [USP] for your own product? Don’t you have enough faith in it to tell us why it is so good, rather than comparing it to your much bigger, much more successful rival? Or is this the Dannii Minogue method of marketing?

I had always been taught that the cardinal sin of radio was to mention your competitors to your audience. Every reference to your competitor tells the audience how much you respect them and their success. Ignore them! Pretend your competitor does not even exist! Plough your own furrow and concentrate on making a radio station that is genuinely unique. Then you will create a brand that has a genuine USP, rather than being merely a pale imitation of Radio 1 or 2 without their big budgets. ‘I can’t believe it’s not Radio 2’ is not a tagline to which to aspire.

Thirdly, neither Capital Radio nor Smooth will be genuinely ‘national’ stations, as in capable of being received on an analogue FM/AM radio from one end of the country to the other. So why pretend to consumers and advertisers that they are ‘national’? In the case of Capital, its proposed FM network presently covers 57% of the UK adult population. In the case of Smooth, RAJAR tells us that DAB receiver penetration is presently 35%. Just how little of the UK population can you cover and yet still describe yourself as ‘national’?


Fourthly, don’t keep looking at Radio 1 and 2’s huge audience figures and dreaming of how much money you could make if only you could monetise their listenership. Part of the reason older listeners probably like Radio 2 is because there are no advertisements. Accept the fact that Radios 1 and 2 together account for a quarter of all radio listening in the UK. Compared to those mammoths of radio, both Capital and Smooth are mere termites. Live with that fact and, instead, seek out commercial clients who are not merely frustrated because they cannot advertise on BBC Radio, but who actively want to use your radio station because your audience is intrinsically valuable to them.

Finally, invest the time and money to develop your own on-air talent rather than simply hanging on the coattails of others’ successes. Whatever his next gig might be, Chris Moyles will forever be remembered as ‘the saviour of Radio 1’, just as Chris Evans will always be remembered for his Radio 1 breakfast show, not for his subsequent time at Virgin Radio. Find new people who are good at radio and put your faith in them. Why does Smooth’s schedule have to resemble Frankenstein’s monster, stitched together with a bit here from Radio 1 in the 80s, and a bit there from Radio 2 last month?

What your radio station should be doing is not competing with Radio This or Radio That for listeners, but competing directly for consumers to spend time with you because you are ‘you’. Radio is not like selling soap powder or yoghurt pots, where your business model can be built upon undercutting the price of a competitor’s product, however low-quality your own cheapo version might be. There is no price of admission in radio. Your content needs to be ‘different’ rather than ‘the same’ and it needs to create its own unique place in the market.

You should not think of your market competitors as radio stations, but as each and every opportunity a consumer is presented with to pass their leisure time. A winning station must be able to convince a consumer to listen to it, rather than watch television, read a book or simply sit in silence. Because radio is ‘free’, the competition for radio is everything else that is also free to consumers at the point-of-use.

To offer a practical example, when I worked on the launch of India’s first commercial radio network, Radio City, the advertising agency produced an excellent marketing campaign that extolled the virtues of the station over other radio stations. But the campaign had to be rejected and the agency briefed in more detail. Why? Because we were launching the very first radio station on the FM dial in a city such as Bangalore, so the overriding challenge was to persuade people to use ‘radio’ at all, or to persuade people to buy an FM radio for the first time, or to persuade people to switch off their television and turn to radio instead.

This philosophy seems to be a million miles away from the current UK commercial radio strategy which seems to focus on berating BBC radio for being too successful, whilst wanting to somehow achieve part of that success through osmosis. If only half this war effort was put into developing policies to make the commercial sector’s stations successful on their own account, the BBC would soon cease to matter.

Instead, RadioCentre is now
demanding that commercial radio be allowed to re-broadcast old Proms concerts recorded by BBC Radio 3. But how many of our 300 commercial radio stations play classical music? One. And which Proms concert do you recall that would fit into Classic FM’s playlist of short musical extracts? What next? Will Capital FM be asking the BBC for the rights to re-broadcast some old Zoe Ball Radio 1 breakfast shows?

In September 2010, the government’s Consumer Expert Group
criticised RadioCentre for having proposed a policy for the BBC’s Strategy Review that, it felt, would have “bullied” listeners.

Trying to bully listeners? Trying to bully the BBC? This is the war of the playground, not of a mature media industry that has a strategy of its own making, a plan, a roadmap for its future success. “It’s not fair. Your willy is bigger than mine.” No, it probably isn’t fair, but life deals you a hand, you have to stop whining, get on with it and make the best of what you’ve got.

Just accept this reality: commercial radio’s willy is never going to be as big as the BBC’s. So competing directly on size alone is a complete waste of time when, instead, you should be developing your own individual ‘technique’.

4 comments:

Anonymous said...

Grant

Overall an excellent article.

However Chris Moyles & Chris Evans are originally products of commercial radio.

Moyles worked on various commercial stations (including Capital) before he joined Radio 1 in 1997, where he achieved the national stardom that he couldn't achieve on local commercial radio.

Evans was a trainee (and then full-time DJ) on Piccadilly before a stint on the newly launched Virgin Radio's Big Red Mug Show (1993). All of this happened before his much-publicised and controversial Radio 1 breakfast show (1995-97).

Anonymous said...

Grant

Radio in India is very different. Yes, the whole concept was new and nobody before hardly listened to radio because it was State radio. The major difference between Indian radio and British radio is that that they are proper businesses and compete head to head on more or less the same format.

To take on BBC Radio 2 is a big task and it not so much about money but rather about understanding the Network’s output.

I agree the Smooth launch is about exciting as a wet fart and is heading in one direction. The second biggest failure being that it is not national. Money is not the issue, it is more about the creativity and smooth decided to nail its flag to music led. It so far lacks a music purpose and it appears that GMG adopted the London format which has not been as successful as the Northwest.

On the product so far, the BBC must be laughing, unless GMG can pull something off with a re-launch when Bates arrives. I don’t think GMG can go the course with all of this and will never pull anything back from this soft launch. I predict the end of GMG Radio.

Is it easy to beat the BBC? Evans shows that the old days of studio mangers, tape editors and tech ops are not needed. It is about spontaneity, casting and live response in the new order, in other words creativity not money.

By contrast, I do feel Global can inject a bit more into a national, or semi national, product. Nevertheless the whole commercial sector strategy is way off message, with a full frontal, ill conceived attack on the BBC.

Sadly the opportunity for new entrants to enter the arena with the re-bidding of national services is lost. I would think the BBC is very worried about the lack of competition as their share increases. It does not bode well under the current climate and government. A privatised Radio 2?

Grant Goddard said...

Michael Hedges has written an excellent analysis of this disparity of commercial radio funding, and has placed it in a European context, at Follow The Media: http://followthemedia.com/bigbusiness/reality19102010.htm

Grant.

Jon. said...

In relation to the first comment posted here, I feel I must point out that Moyles is rumoured to be returning to commercial radio when his contract expires with the BBC.

After his appalling rant over the lack of money paid into his bank account live on his breakfast show, Capital are apparently able to offer him significant increases in his salary.

Who knows, could this be the beginning that commercial radio has been looking for?