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Radio cynics at media agencies abound, yet, after RadioCentre chief executive Andrew Harrison hailed the start of a new era for radio last week, there is a new sense of optimism in the radio industry that 2007 will mark a turning point for the sector's fortunes.

Prior to the Q4 Rajar figures being announced last Thursday, the data was already being written off as a blip in an otherwise positive year. Some radio groups claimed the Q4 figures were better than expected.

There were some positives - digital listening is up, commercial radio continued to dominate in the capital and hit40uk extended its lead over Radio 1 in the battle of the music chart shows. Yet the loss of commercial share to the BBC in Q4 cannot be glossed over.

Harrison believes radio can win a 7% share of display advertising revenue over the next three years, up from its current 6.1%, pulling total revenue up from just under £600m to more than £700m. But are there any grounds for Harrison's optimism and are his predictions for radio advertising growth realistic, let alone achievable?

Jonathan Barrowman, head of radio at Initiative, says: "There's only so much the RadioCentre, as a marketing body, can do, but it's saying the right things because we have to set ourselves targets. Harrison admits they are tough targets, but I believe they are achievable."

Audience loss

However, Barrowman refers to the "macro issues" that affect radio but are out of its control, such as the loss of audience share across the whole of traditional media.

He adds: "TV is losing audience, so advertisers are finding it more difficult to hit their objectives. Where in the past TV almost guaranteed a good hit and any spare money went into radio, they (media buyers) are having to plan more carefully now, and are going onto digital and online instead because the audience is going there."

Like most traditional media, radio advertising has increasingly been moving into online as audience consumption shifts. Unless radio can win back these listeners, perhaps through new digital services, this trend will surely continue.

Clive Dickens, Absolute Radio programme and operations director, says: "Consumers aren't falling out of love with radio, but advertisers perhaps have.

"Maybe it's because they prefer more effective media, such as pay-per-click. For product owners, that's really attractive."

Dickens says the industry is "obsessed with driving the figures the City needs" and believes radio ownership needs more privatisation.

"I predict more companies will go private and establish new business models where they can invest in output more and maybe re-list in the future. Currently, you can't have a couple of years of low revenue in order to look ahead, because you're answerable to shareholders."

But whether private or public, all stations must face 2007 with fresh eyes and ensure they are in tune with what both consumers and advertisers want.

Key to this is, as always, digital listening, from DAB, digital TV and mobile phones to the options that now go hand-in-hand with radio - podcasts, websites and listener interaction via SMS or e-mail.

Distribution platforms

Heart managing director Barnaby Dawe is convinced his station has got where it has by embracing new distribution platforms and being clear about how people consume radio.

"We've just invested in our websites and are making them into media and entertainment portals, rather than just add-ons to the station, with communities that you can aim certain promotions at," he says.

Another popular theme in the industry is the desperate need to invest in talent. The vicious circle theory dictates that without talent it is harder to attract listeners and without listeners it is harder to attract advertisers.

So is the most fundamental part of radio - the DJ - the one thing that should be getting more attention? "The development of talent is vital," says Paul Chantler of United Radio International Consultants. "The old cliche still applies - content is king. We must continue to spot, nurture and invest in talent."

So, while optimism and positive thinking cannot do the industry any harm, it can only go so far.

The onus is on radio owners to continue with more of the same - building on interaction, promoting the brand and offering the best talent their commercial budgets can stretch to.

Perhaps then, Harrison's dream of 7% advertising share in three years might just become a reality.