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Third-quarter radio ad revenue figures dealt a new blow to the sector after what seemed like an upturn on the horizon in the previous quarter.

Yet, positive thinking abounds. Radio owners insist a change of fortune is just around the corner, as digital radio grows and the consumer embraces the range of technology on the market.

Another area for hope is local radio. This hope prompted Guardian Media Group to walk away from a mooted sale of its radio assets to Chrysalis, and acquire two Century stations from GCap last month. Half of GMG Radio's turnover is locally driven.

In April 2006, GMG Radio reported a £3.4m rise in turnover, from £24.5m in 2005 to £27.9m, with £2.7m profit, up £1.7m from the previous year.

Dedicated teams

GMG Radio's group sales director, Julian Carter, puts success with local advertisers down to having dedicated direct sales teams.

"Radio is invisible, so it has to be sold more than anything," he says.

"As media becomes more fragmented and agencies get bigger, you sometimes find that agencies don't know the client and don't understand their needs.

"What we do is sit down in front of the clients and bring an idea to life, talking them through all the options, which makes a huge difference."

Smaller local radio group CN Radio gathers 90% of its business from the local marketplace.

For the calendar year 2005, CN Radio reported a turnover of £6.95m and is expecting to report a similar amount for 2006.

Jon Hewson, chief executive, stresses the importance of recognising the shift in the nature of the industry.

He has built up a solid local sales team, who understand the importance of using radio "in the media mix".

"The days of having a radio budget are over," he says. "I spend a lot of time training people to work with local newspapers, for example, and the fact that people keep on spending shows it works. The future of radio is local, because that's the medium's strength and the reason it has got to the position it has today."

For larger groups who own a range of national as well as regional stations, the solution is to move away from reliance on spot advertising and to take advantage of new media.

While airtime is nonetheless down on every front, estimates suggest sponsorship and promotions is racing ahead, with a 13% rise nationally and 6.5% on a local level for Q3 2006.

Simon Daglish, director of national sales and trade marketing at GCap Media, says: "Airtime - or the 30-second spot - is out of fashion, and that's unlikely to change in the short term.

"Stations have to look at everything that's not the 30-second spot - events, direct mail, sponsorship and promotions, and other brand extensions."

Daglish believes that the station brand is key.

"We have to stop acting like radio companies and look at the brand, because brand extensions offer us the opportunity to grow our business," he adds.

Brand extensions

Karen Stacey, broadcast sales director at Emap, is also a believer in brand extensions.

"There's probably more excitement and engagement from the consumer now than there's ever been. It's about getting a message across wherever they are - online, on the mobile, TV, DAB or via the standard radio."

Chrysalis, meanwhile, is focused on knowing its audience. It has a growing database with information on several hundred thousand listeners, which it makes available to advertisers.

Don Thomson, Chrysalis's commercial director, says: "The challenge for companies is making use of the relationship we have with our listeners through every access they have to the station."

Chrysalis, like most of the major groups such as GCap, Emap and Virgin, has recently restructured its sales team in order to integrate spot ads with sponsorship and promotions.

These groups claim it will take a year before the success of these sales team restructures can be measured.

No one is unprepared for the rise in digital radio and the changing face of advertising, but it seems everyone is playing the waiting game.