Faced with falling ad revenues, radio owners have been keen to talk up digital radio as a panacea, transforming the sector from a passive, invisible medium in decline into multi-platform interactive entertainment for a glorious digital age.
There is substance for this optimism. Improved reception, increased choice of stations and different platforms to listen through should grow the radio audience. Furthermore, digital offers advertisers new ways of using the medium, from the scrolling text bar on digital radio sets to linking with mobile devices and the internet.
So it is perplexing to advertisers that radio owners appear reluctant to invest in this glorious new age. There is a perception that having created digital stations, owners have failed to plough further funds into the content and marketing of these brands. Many of these digital-only stations are little more than automated radio jukeboxes, trundling out a repetitive play list, interspersed with infrequent ads.
Lack of support
Although they can be improved, digital stations have much appeal to listeners poorly served by analogue fare, from oneword radio's book lovers to Virgin Radio Groove's disco dancers. However, a lack of marketing support means most potential listeners to these unpolished gems will be unaware of their existence, unless they have gone out and acquired a digital receiver, and sampled stations by scrolling through the menu bar.
As with the Freeview digital TV platform, marketing of digital radio to the masses has been left largely to the BBC, although sales of digital radio sets, totaling 1.7m, do not compare with the 7m sales of Freeview set-top boxes.
Mobile phones and DVD players have enjoyed faster and greater consumer penetration than digital radio. Even the iPod almost rivals digital radio in terms of unit ownership, according to TGI.
Car makers' reluctance to install digital radios in new cars has been one factor in its slow growth. In April and May this year, only 1% of car radios were digital, and only Vauxhall and Audi offer digital in a wide range of models. Volkswagen still fits cassette players as standard, but digital radios have to be ordered specially, while BMW sees more mileage in promoting the option of iPods in its cars.
Radio owners may gripe about the inertia of car manufacturers, but they seem content to wait for the digital radio market to develop organically before investing more to exploit it.
Phil Riley, chief executive of Chrysalis Radio, believes it will take at least 10 years to reach the same penetration as analogue radio. He adds that it does not make commercial sense for radio owners to put 'real money' behind their digital stations at the moment, although he refutes the charge that owners are under-investing.
'We did take a mean and lean approach in launching these stations, but we are now ramping up our investment. We are increasing the programming budget for Arrow, and launching Galaxy Digital and Heart Digital as stand-alone services on digital platforms,' says Riley. Yet he will not be putting any advertising spend behind these initiatives.
Digital dividends
GCap Media's digital-only station Planet Rock saw its audience rise by a third in the past quarter, according to last week's Rajar figures. Six years after the station launched, it has just hired its first live DJ, Nicky Horne, and plans to go live from breakfast through to drivetime by next January. Executive producer Trevor White says star musicians will be hired as weekend DJs, and adds that the changes will be promoted, but declines to state the level of investment.
Media buyers welcome such moves, but believe that radio owners need to do much more. Derek Manns, non-TV buying director at Starcom Mediavest, says they have become too short-term in their focus. 'They are too caught up in a fight for share of the analogue market, through acquisitions and mergers and bids for new FM licenses, and have ignored digital, which is where long-term growth will come from,' he adds.
Rather than wait for the market to grow, Manns says that radio owners should invest in their digital brands. Once people realise what is on offer, they will buy a digital set, or demand one in their car. This will grow the audiences to a point where they become attractive to advertisers, so advancing the day when radio owners can get a return from digital.
There is pent-up demand from advertisers, according to Catherine Becker, media director at ZenithOptimedia. 'Digital stations allow us to plan powerful executions that get brands more involved with their niche audiences. But we need a critical mass, otherwise the production costs make it uneconomic,' she says.
Radio has been losing advertising market share to other media, and was recently overtaken by online. Until the sector reaches its promised golden age of digital, it faces an uncertain future, predicts Becker. Although a big radio fan, she admits: 'Advertisers tend to concentrate on a couple of media, and, increasingly, radio faces being dropped from schedules.'
DATA FILE - COMMERCIAL DAB STATION AUDIENCES Station Weekly Total Share in reach hours TSA*(%) (000) (000) 1 The Hits 784 2769 0.3 2 Smash Hits Radio 640 2051 0.2 3 Planet Rock 382 1789 0.2 4 Heat 230 620 0.1 5 PrimeTime Radio 164 1856 0.2 6 oneword radio 140 562 0.1 7 Virgin Radio Classic Rock 127 865 0.1 8 Core 89 222 - 9 The Arrow 79 784 0.1 10 The Virgin Radio Groove 74 831 0.1 11 Capital Disney 73 313 - 12 Capital Life 61 372 - 13 Yarr Radio 19 23 - Source: Rajar Q2 2005 *Total survey area