At first glance, the current pandemic seems to vindicate those who have long seen classic (private) radio as being sidelined. This is because, already in difficult „digital“ times, its advertising revenue melted away like snow in the sun in 2020.
The collapse was dramatic, particularly at local and regional level: depending on the region and broadcaster, revenue losses from local advertising are estimated to have been between 30 and 60 percent.
Although the advertising revenue decline in the national sector proved to be less severe, meaning private radio stations across the country as a whole experienced an estimated revenue drop of „only“ up to 25 percent compared to 2019. Nevertheless, many millions of euros were lost in 2020, and only substantial state aid prevented the lockdown from becoming a knockout blow for many private local radio stations.
So, has the pandemic merely exacerbated the structural problems of the private radio scene and accelerated the decline that many were already predicting?
Is it really only a matter of time before digital media providers completely take over the linear audio business?
Well, that was already predicted in 2017 by some then-well-known players in the radio market. However, the digital audio business is still a long way from overtaking the linear radio business today.
However, it's clear that the traditional medium of radio must continue to compete against ever more powerful digital rivals, such as streaming services, podcasts, and so forth – in both economically good and bad times. It's also clear that private radio publishers in particular face enormous challenges, as unlike public broadcasters, they are reliant on advertising as their sole source of income.
Nevertheless, I am firmly convinced that the traditional medium of radio – which can look back on 100 years of successful history! – can move from the feared siding to the fast lane.
The prerequisite is that radio publishers are prepared to combine and further develop the traditional strengths of their medium, namely high reach, high-quality programmes, great credibility, intensive and long-standing user loyalty, and many others, with modern, digital/electronic methods. For commercial radio broadcasters, this will become a matter of survival. But the chances are good.
Because I am sure: The more confusing, arbitrary and unfortunately also inferior the digital media landscape becomes, the more listeners will be happy to be guided by „their“ (local) radio and, for example, accompanied on their daily commute to work. If the enormous but so far untapped (advertising) potential of radio is then made available – electronically – and tailored, for example, to specific listener groups or even individual listeners (by, for instance, them storing their preferences with their favourite station), then radio need not worry about its economic future.
From a technological perspective, much is already possible. The technology just needs to be deployed, to be awakened from its slumber, so to speak.
So, it is permissible to learn from the „digital“ domain concerning the targeted, efficient, rapid, and cost-effective dissemination of advertising. However, without replicating their mistakes, such as with data protection or an over-reliance on cookies! We are continuously developing our products for this very purpose. And then, in my conviction, the strength of linear, „electronically optimised“ radio will fully come into its own.
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Strategies for a secure and profitable audio future
Radio/audio publishers should
- Speed up! That is, optimise your own efficiency and profitability through integrated and automated advertising and audio content management systems.,
- to enrich and enhance their own advertising inventory with advertising-relevant data and innovative advertising formats in order to achieve higher sales prices,
- offer local and regional advertising inventory directly on electronic, digital marketplaces and retain advertising clients directly,
- connect your advertising inventory with the digital media world and thus reach new target groups,
- ensure faster production at lower costs and better content quality through flexible working, multi-use, decentralisation and networking around the globe.
We will go into detail on the individual points in my next blog posts.
See you soon.
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