Radio - finally running out of road?

Forecasting the death of radio has a long history. Whether it was the launch of the Walkman, the iPod or Spotify, radio’s days were said to be numbered, but on every occasion it has lived to fight another day. However, has radio finally come to the end of the road?

Obviously, in the short-term, radio has a future – it has a loyal core audience but that audience is ageing and there is nothing to suggest that younger generations will adopt the habits of their elders. The death of radio may be nearer than we think.

Millennials and Gen Z just don’t listen to radio like their parents did. They are welded to their phones which deliver radio, if they want it, but more importantly provide all the music and podcasts they could wish for, curated for their precise tastes by streamers, with or without ads. And, at home, they are more likely to use smart speakers to deliver the same material, so radio set ownership for these demographics are at an all-time low. Then factor in the time-thief that is social media (especially Tik Tok) and radio is having to compete harder for their attention than it did for their parents’ and their grandparents’.  

But what of that other perfect place for radio listening – the car? Well Millennials and Gen Z’s in-car listening has also reduced.  If they do own a car one day, it is likely that the car will already have an in-car smart device. And the car owner or passenger won’t be controlling that dial – it is more likely to be a big tech firm gatekeeping the content, delivering a global service offering rather than a local listening focus, with absolutely no dials in sight.

With so much of radio listening done when people drive, the transformation we are about to see in car audio systems could be very disruptive for radio. Yes, it will take time to implement – cars tend to have a longer lifespan than we imagine, and the process of designing in-car features happens years in advance of production. However, when it does come, the effect could be cataclysmic for radio, with these changes in technology creating a very fragmented world in which broadcast is separated from IP and multiple different IP services co-exist in a bid to maintain reach.

More concerning is that radio may suffer a reverse cohort effect, with older generations’ media consumption and listening behaviour increasingly mirroring that of younger generations. We have already seen something similar in TV and, as connected radio becomes more pervasive, these changes in behaviour may be hastened. And, like TV, this shift to on-demand services could very well break what once made radio so special - the community and feeling of belonging it created amongst its audiences.

To reach Gen Z, radio must evolve

This is not the first crisis for radio. Previously, we saw pirate radio stations afloat in the North Sea, serving a new and dangerous music mix to an underserved teenage audience. But on this occasion, it wasn’t long before the legacy radio of its day mimicked the content those stations offered. Once again, radio networks must look to co-opt disrupting forces to reach and monetise younger audiences. Our work in this area suggests success lies in shifting away from the radio and evolving into multimedia entities, but that is a task more easily said than done.

With interest in podcasting continuing to grow and its similarity with talk radio, this neighbouring vertical is a natural area into which radio should diversify. Some larger players are already dipping a toe into this market with varying degrees of success. As well as growing advertising revenues and increasing the reach of a network, podcasts can offer opportunities to exploit IP through merchandise, live shows and social media.

There may also be an opportunity for radio networks to look to acquire several smaller podcast studios to turn them into something that is much greater than the sum of its parts. These efforts should look to include those studios popular with younger audiences to ensure radio retains touchpoints with these generations, which it then could use to promote older legacy services.

As with podcasts, radio stations already have the studio assets required for the creation of high-end audio educational material. Although AI has potentially reduced the size of this market, targeted activities could prove successful. 

But radio is not just talk, it is also about music. Post-lockdown live music events continue to prove overwhelmingly popular. Putting on such events can allow for radio networks to both further monetise their existing listener base, but also reach younger audiences with their brand. In-person is the preference for many and can command a high ticket price, and with additional spin-offs around TV, AR and VR.

Finally, as radio migrates further into a digital multimedia business, it must look at investing into its own ad tech to ensure it can control its own destiny. For some channels this may be a step too far, so identifying the correct partner and negotiating for fair terms based on market realities is a must.

To prevent TikTok killing the Radio Star, radio needs to move now - the window of opportunity is closing.

How we can help

• Using in-depth understanding of the market across infrastructure, advertising, and consumer behaviour to provide qualitative and quantitative scenario planning

• Identifying partners and acquisition targets that will deliver the maximum returns

• Determine the impact of commercial red-lines on consumer engagement and ROI

• Assisting in the negotiation strategies with partners by identifying market dynamics within your favour

Reach out to Andrew Ladbrook at andrew.ladbrook@oando.co.uk if you would like to know more.