Hugh Oram, Media Week, 10 June 2008, 00:00am

Ireland Radio - The future looks bright for radio

Radio advertising revenues are healthy, audiences are solid and more stations are lined up to come on air. But one problem facing the industry in Ireland is the poor quality of radio commercials.

Beat FM: healthy revenues and solid audiences

Irish advertisers and audiences have a voracious appetite for radio, with about 60 stations licensed in the Republic, nearly all of which are commercial.

Advertising revenues are healthy, audiences are solid and yet more stations are lined up to come on air. And regulatory change is on the way with the proposed launch of a new Broadcasting Authority, which will oversee both RTe and the independent radio and TV sector, and will eventually subsume both the Broadcasting Commission of Ireland and the RTe Authority.

About 2.9 million adults over the age of 15 listen to radio every day in Ireland - 84% of the possible audience - with each adult tuning in for an average of four hours a day. Of the top 20 radio shows, 18 are broadcast by RTe. The broadcaster's main radio channels are Radio 1 FM, Radio 2 FM and Lyric FM. It also runs the Irish language station Raidio na Gaeltachta.

Last year, the radio advertising market was up 13%, with the total radio market in the Republic worth EUR140m, or 8% of total ad spend. This year is also looking promising for the radio sector - radio ad spend for January to February 2008 was EUR25.4m, compared to EUR21.4m for the same period in 2007, an increase of 19%. This was the biggest increase for any advertising category, followed by TV, which was up 14%.

"Ad slots are still being booked far in advance, right across the sector," says RTe Radio's Sarah Martin. "Communications, financial, publications, retail, and travel and tourism sectors are all performing well. The advance booking of airtime slots is continuing this year, particularly for companies wanting to build or differentiate their brands. But RTe's radio advertising airtime is still capped at five minutes per hour."

In private sector commercial radio, acquisition has been a big feature. Communicorp, controlled by Irish telecoms billionaire Denis O'Brien, bought the three stations previously owned by Emap - Dublin's FM104, Today FM and Highland Radio in County Donegal, which has the highest audience share of any local commercial station in Ireland.

To comply with regulatory practice, O'Brien sold FM104 to UTV and has also put Highland Radio up for sale. Communicorp now owns the two national commercial stations, Today FM and Newstalk. Today FM recently moved into a new EUR4m studio complex in Dublin. While the original plan was for FM104 to share the space, it now looks likely that Newstalk will relocate to the premises.

New station launches continue apace. Ireland's first full-time, fully licensed Christian station, Life FM, has just been launched in Cork, while 4FM, the new station for the over-40s, is due to launch in October, with an investment of EUR9.1m (£7.2m). The station will broadcast in Dublin, Cork, Limerick, County Clare and Galway, and its mix of music and chat hopes to steal listeners away from RTe's Radio 1 and attract advertisers in this previously underdeveloped part of the radio market.

Local success
Meanwhile, existing stations continue to perform well. Ronan McManamy, managing director of UTV Radio, says that local radio continues to dominate throughout the country. "All our radio stations in the Republic have grown market share and advertising revenues remain strong, with both national and local revenues performing well. Our acquisition of FM104 will significantly enhance our position in the Dublin market."

Tipp FM is a strongly placed local station, based in Clonmel, County Tipperary. Ethel Walsh, chief executive, says: "Our market share is very strong at 49.2%, one of the highest for any local radio station. Our local advertising sales grew well last year and the trend is continuing this year."

The station invested almost EUR2m in its new broadcasting centre, which opened in October 2007, and Walsh claims she knows of no other local station that has invested as heavily in recent years.

National ad sales got off to a weaker start in 2008, but have since picked up. John O'Connor, chief executive of Independent Radio Sales, based in Dublin, says: "Revenues across the stations we represent, including our national packages, were up between 15 and 22% in the first quarter.

"How this year is going to pan out is difficult to predict. The next month or so will be critical. If the multinationals continue to support brands, the year will be between OK and good. But if they cut spending, the whole market could dry up quickly."

Ann Corcoran, managing director of Dublin's Limetree Advertising & Marketing, adds: "Forecast growth of 8% in radio advertising will come under pressure as the market slows down and the economy is constricted. While getting a campaign on radio at short notice has been almost impossible in the past, this year may be a little easier."

However, while Corcoran believes radio works well as a support medium, she considers it too costly as a lead medium. Corcoran also feels that the smart money this year will go on rethinking formats. "The current formats are tired. The shock decline in the under-35 listener market is a red flag to an industry that needs to radically innovate."

Brilliant future
She adds that new players in the industry are taking longer to gain traction in a market in decline. However, Corcoran believes that if radio is completely rethought - everything from format to content and pricing - then the sector will have a brilliant future.

Gary Power, director, OMD Ireland, comments: "Increased competition between stations means that advertisers will need to use combined stations, rather than single stations, which in the past could deliver the required audience numbers."

Power adds that the arrival of niche stations has made it easier for advertisers to target young audiences, thanks to city stations such as Spin in Dublin and Red FM in Cork. Regional stations have also helped, for example, Beat FM in the South East and Spin South West. Further youth stations are to launch this year.

One ongoing problem for the radio industry is the poor quality of radio commercials. At the annual radio industry awards in March, organised by Independent Radio Sales, judge Ian Murray, creative director of McConnells Advertising, remarked that there are "an awful lot of radio ads - and most of them are completely uninspiring".

At the same awards, Alan Cox, chief executive of Publicis Groupe Media in Ireland, went further, saying that the general standard of Irish radio advertising is "garbage". He believes the industry needs to take proactive measures to improve creativity, and that high production and airtime costs are militating against better creative standards in radio commercials.

In Northern Ireland, where the weekly reach for radio is even higher at 90%, the lead commercial stations are Downtown and Cool FM. Margaret Dunn, sales director for the two stations, says that the stations reach 485,000 adults every week between them, or one in three NI adult listeners. "We've just had our best commercial year ever," she says. "Categories performing well include airlines and retail."

Competition comes from other stations, such as the award-winning Citybeat in Belfast, which recently extended its coverage to Bangor, County Down, and from new local stations such as Five FM in Newry. UTV reports that its Belfast station, U105, continues to perform well, with its weekly reach increasing to 90,000

DIGITAL RADIO Debates in the Republic, but Northern Ireland is committed to DAB

Digital radio trials have been underway in the Republic for 18 months - 10 years behind Great Britain and Northern Ireland.

The trials in the Republic began in the greater Dublin area and in the north east of the country, using two digital multiplexes, one broadcasting RTe programming and the other transmitting commercial stations.

RTe has also launched seven new digital services - four music channels, one children's service and two speech services. RTe extended this DAB trial to Cork and Limerick earlier this year.

Through its existing DAB services, RTe gives digital radio access to 44% of the population. RTe hopes to get a full licence for national DAB from communications regulator ComReg later this year, and plans a full roll-out of digital radio on a phased basis within the next three years.

However, John O'Connor, chief executive of Independent Radio Sales, warns that there will not be enough spectrum for national, regional and local multiplexes for digital radio until completion of the digital TV roll-out in 2012.

And the Broadcasting Commission of Ireland will not turn its attention to digital radio issues until later this year. The Commission says that DAB is not necessarily the format that will be used in Ireland and there is debate as to whether DAB audio quality is actually any better than FM.

Gary Power, director of OMD Ireland, is also sceptical, claiming it is difficult to see whether any individual station investment in DAB will bring large returns, given that iPod and online radio listening have done little to dent traditional radio audience behaviour. Currently, just over 8% of Irish adults own a digital radio.

Other commercial radio heads see DAB as "old" digital technology and believe Ireland should concentrate on newer digital technology instead.

Willie O'Reilly, chief executive of Today FM, points out that neither Japan nor the US have adopted DAB. He adds that FM reception in Ireland is "brilliant" - better than in the UK - and that FM will remain the main means of listening to radio in Ireland for the next 15 years. However, O'Reilly is keen on exploring alternative digital options, including internet radio.

In Northern Ireland, where digital radio is far more established, the digital multiplex is province-wide, with stations such as Belfast's Citybeat and UTV's U105 claiming small but growing audiences on DAB and online.

Margaret Dunn, sales director for Downtown and Cool FM, says: "Digital radio is the future and it's here to stay. We are fully committed to it."