For many, their perception of radio doesn’t match reality, especially as it’s illustrated in this powerful chart from Deloitte regarding employment, education and income.
As the director of research for the technology, media, and telecommunications (TMT) industry with Deloitte, Duncan Stewart has a very interesting perspective on the global media landscape.
His perspective on the Revenue, Reach and Resilience of Radio in 2019 should be required reading for everyone in radio and strategically shared with our advertisers.
What’s driving the misconception about radio? According to Mr. Stewart, “there is a narrative that new media kills old media, so nobody bothers to look at evidence that doesn’t fit the narrative.”
As part of the ongoing series Radio Rally Point, Andrew Curran with DMR/Interactive had a chance recently to catch up with Mr. Stewart.
Deloitte’s Technology, Media, and Telecommunications is a global practice that has been publishing its annual Predictions report since 2001. For 2019, the report features important insights on rapid growth industries such as machine learning, 5G as well as insight on the impact of legalized sports gambling on TV consumption. Throughout this project, what did you discover (or perhaps rediscover) about radio?
Stewart: Our annual Predictions report covers 10-12 different topics every year. As I was working on the topic list for 2019, I noticed that we had not written about radio since 2009! After 10 years, and an industry that is going to be over $40 billion in size, the topic seemed well overdue. The deeper I dug into radio numbers, and as I analyzed the results of the exclusive survey Deloitte conducted, the more I realized that radio was being unjustifiably overlooked. It deserved its own Prediction, and the story was much better than most media analysts seemed to believe.
In the article, you state that “American 18–34-year-olds will likely spend more time listening to radio than watching traditional TV by 2025!” That’s a bold prediction that demonstrates both the challenges facing TV as well as the power of radio. Yet, some might believe the decline of radio has already happened. From your perspective, what creates the perception that “nobody listens to radio anymore?”
Stewart: That prediction actually isn’t very bold at all. If you look at the Nielsen numbers for radio and TV daily listening/viewing for that age group, it is really obvious the lines are going to cross at some point in the next decade. Based on data from November (when the Prediction was going through final edits) that looked to happen by 2025, but based on more recent data, it could be even sooner. Sometimes making Predictions is hard, but this was just simple extrapolation: A chimp with a ruler and a steady hand could have done it!
Plus, I cheated and looked outside North America. I found a trove of radio data for the Nordic countries, and discovered that radio listening minutes for younger demographics was already higher than linear TV viewing minutes in Sweden and Finland, and was going to crossover in Denmark in 2019. The media market in the Nordics and North America are hardly identical, but there are some similarities.
Why do people think that nobody listens to radio anymore? Because they don’t look at the numbers. The data is clear, publicly available and easy to interpret. But it doesn’t fit the narrative that new media kills old media, so nobody bothers to look at the evidence.
In addition to employment driving overall listening, your research reveals that with higher education and income levels, the more likely someone is to listen to the radio. Education, employment and income sound like the audience equivalent of an advertising holy grail. Are these fundamentals driving the resilience of radio?
Stewart: They don’t hurt! Add in the fact that radio weekly reach for young people is now better than TV, and you have four strong demographic reasons for advertisers to think about radio. But as always, I want to put that into context. Radio is not “better than” TV or digital … it is different, and is yet another possible channel to think about. Our argument is not that radio should take over, merely that it should not be ignored.
You prescribe “an aggressive campaign of mythbusting– always backed up by hard evidence — will likely need to be a key strategy for broadcasters and their industry associations worldwide.” Can you share more on the necessity of this prescription?
Stewart: I think the biggest trend in media over the next few years is going to be a shift towards “evidence-based advertising.” This is just like evidence-based medicine: Who cares what everybody is doing in terms of treating knee injuries? Let’s look at the data and see what actually works. As part of that, media analysts and ad buyers are going to need more data on radio, TV, print, OOH and digital. All using truly comparable metrics. I have seen some excellent work from Ebiquity on radio, and I wrote the Prediction in hopes of striking a roughly similar tone and robust use of data.
That said, both Ebiquity and I have a problem. When we are at a conference (this is a real story!), and we come on stage to talk about radio … half the room leaves for a smoke or to get a coffee, and the other half pick up their phones and check their e-mails. We can’t pretend: In the media landscape of 2019, radio just isn’t seen as sexy.
And some of that is partially justified. Global radio revenues (ads, subscriptions and government grants) will be about $40B in 2019, which is about the same size as the video game and movie industries – pretty good! But globally, the magazine industry is twice the size of radio in terms of dollars, newspaper revenues are nearly four times bigger (yes, still), and TV is 10X radio at over $400 billion annually. Size matters…
You mentioned the move to evidence-based advertising. Can you share some additional context in that regard?
Stewart: Looking at the history of advertising over the last 50-75 years, you can see a pendulum as it relates to spending by industry. In the early years of TV (1950s), there was an under-investment in the new platform compared to more established media. By the 1980s, audience fragmentation was happening and ad execs believed an over-investment was taking place in TV as the pendulum started swinging the other way and a pullback happened.
Fast forward to today and advertisers are already starting to realign their investment in digital. This should be a great opportunity for radio and other traditional platforms as decisions become more evidence based. The digital companies flooded the market with audience data, which helped show advertisers what’s possible. Now radio and other mediums are stepping up their game and have an opportunity to tell a very compelling story.
The speed of the pendulum, not just with advertising, but with technology overall continues to accelerate. How much faster can it move?
Stewart: It sure feels that way, from roughly 2000-2013 innovation and disruption occurred at a frantic pace. However, as you can see in this chart, consumer spending on hardware (smartphones, computers, TV and everything else too) peaked in 2013 and has been on a slow but steady decline. Obviously, smart speaker sales have picked up, which is great news for radio, but overall, it’s a $7 billion category in a $890 billion consumer spending universe.
When people aren’t spending their discretionary income on buying new hardware, it leaves room in the budget for subscriptions. Netflix, Amazon Prime, Sirius XM, etc. In fact, we’re not in an era of cord cutting as much as an era of cord stacking. We predict that by the end of this year the average U.S. household will have five different digital subscriptions.
Innovation and disruption are nothing new, but the rate of change in hardware and devices has slowed for now, which creates a great opportunity for radio to leverage its audience data and tell its story.
That’s a great perspective that steps back and provides helpful context to the current media and technology landscape. Keeping in mind this big picture, if you were delivering a keynote to a conference of North American radio broadcasters, what takeaway would you emphasize?
Stewart: Radio’s not dead, it’s not dying, it doesn’t even have the sniffles. The industry is growing globally, is surprisingly popular with Millennials, and most people don’t know that! You know how radio is great for finding that new band before most of your friends know about it?
I picture Millennial ad execs in 2039 sitting around, still eating avocado toast, and bragging to their peers: “I liked radio before it was popular.”
– Andrew Curran, President and COO