Radio’s changed landscape – Part 1

The radio landscape has changed significantly over the past five years. And we'll be watching it continue to change dramatically over the next five years. These are some of the shifts that have already taken place.

Shift #1

There’s been a shift in advertiser demand away from traditionally popular stations towards stations that better reflect the changing demographics of our country.

In terms of where the advertising money gets spent, radio has probably been the slowest of all traditional media to reflect the new demographic realities of South Africa.

South Africa offers a basket of African Language Service (ALS) stations which could deliver close to 80% of all radio listeners. Five years ago the language issue was no doubt a barrier for many English-speaking advertisers but we were still surprised by how rarely products with broad appeal requested us to look at the ALS stations. Fast forward three years and our clients were now happy to run multi-station campaigns across a demographically diverse range of stations.

Why the shift? The penny had finally dropped. A number of major research surveys were showing how dramatically South Africa’s middle class had grown. Secondly, marketing managers were asking the correct questions of their media planners and, as a result, radio spending patterns were changing.

This shift is only going to accelerate over the next five years. As income levels grow there is a massive opportunity on the ALS stations, particularly as smartphone and social media penetration explodes.

All promotional radio campaigns these days have a convergence angle, meaning that they engage listeners not just on air but through Facebook and Twitter, for example.

Shift #2

The value of owning a radio station licence has diminished. The South African radio industry could justifiably be described as an oligopoly. An oligopoly is a market structure in which a small number of firms has the large majority of market share.

Cape Town, a city of over four million inhabitants, supports approximately six commercial radio stations broadcasting regionally. Many in the industry believe it is already over-traded.

It’s very difficult for newcomers like Smile FM to make any kind of impact. Yet in Wellington, New Zealand, a city of roughly 250,000 inhabitants, there are over 30 regional commercial radio stations, all viable businesses. In the most developed radio markets in the world commercial radio licences are not the Holy Grail they’ve been made out to be in this country.

The most important priority any commercial radio station in South Africa has is to renew its licence every 10 years. Once that’s achieved they can carry on with business as usual in this rather uncompetitive landscape.

But something is shifting and it’s all down to digital technology. Icasa licenses terrestrial radio stations only – stations that broadcast using a traditional transmitter. Nobody licenses digital radio stations. Nobody licenses podcast content.

In the past the only producers of radio content were radio stations. That’s because they controlled the only means of distributing radio content. These days anybody can produce content because there’s an alternative, unregulated channel to distribute the content. People other than terrestrial stations are producing radio content – and lots of it.

Forward-thinking stations recognised some time ago that their future value would not lie in an Icasa-issued licence but rather on understanding the digital space and how it affects their content offering and distribution. They understand that the nature of their business is going to change fundamentally as they become multimedia content creators and distributors as opposed to simply a radio station.

When they do make this transition and arrive on the other side, these stations are going to find themselves in a much more competitive landscape filled with talented content creators and innovative content distributors and audience builders. The game will have changed fundamentally and the Icasa licence will no longer be the determinant of who succeeds.

Shift #3

The power has shifted from stations to DJs. Radio stations are now hiring with audio, video and public appearances in mind. A DJ needs to be far more multifaceted today. Moreover, radio DJs exploit Twitter and Facebook as well as, if not better than, most celebrities. DJ Fresh has over one million Twitter followers. Gareth Cliff has similar numbers. The top DJs have larger social media followings than their radio stations do. This gives them power.

With clients often requesting social media as part of their radio campaigns, and with the growth in popularity of DJ endorsements, many DJs are now earning more from client work than they are paid by their employers. Again, this shifts the balance of power towards the DJ.

I predict a shift toward DJs managing their own brands and content, or contracting independent management companies to do so. DJs will start to see themselves as content brands in themselves and then employ experts to maximise their brand. Gareth Cliff is probably the first to create a content brand built purely on his name. Expect much more of this in the future.

The big take-out: Great changes have taken place in the radio industry over the past five years. Audience demographics count for more as advertisers shift from traditional stations; radio licences are losing their power as listeners turn to digital platforms to disseminate content; and radio DJs are becoming powerful brands in their own right.

Part 2 of the “Changing radio landscape” will be published tomorrow.