What are the challenges radio sales agencies face in a tough economy and what are the solutions for overcoming them?
The year ahead for radio sales agencies seems, by all accounts, to be anything but boring. The challenges posed by the global economic downturn and a dire forecast for GDP growth brings with it exciting opportunities for agencies as they try to increase their share of the market and remain relevant in an ever changing industry.
“One of the key challenges we face is that our clients are seeking better ROI due to weak economic conditions. They are looking for better results from tighter budgets,” says Cindy Diamond, group sales director at Mediamark, which represents regional stations such as East Coast Radio, Gagasi FM, Heart 104.9FM, Jacaranda FM, Kaya FM and Smile 90.4fm.
“Market share is the end result of everything we do as we aggregate audience and provide platforms where our advertisers can drive customer engagement and sales,” adds Diamond. Considering the obstacles (and opportunities) that lie ahead, she believes her agency needs to reshape and improve their sales house strategies.
“We need to be innovative, offer fresh thinking and exploit opportunities for collaboration as we propose solutions to clients. We need to access and absorb relevant data and fit for purpose technology to propose competitive solutions to clients. And we need to have talented staff, and an aggressive remuneration structure.”
A tough economy, Diamond explains, impacts advertising adversely, and the GDP growth forecasts indicate a tough two years ahead. At the same time, uncertainty unleashes opportunity and requires deeper improved collaboration between clients, agencies and media owners.
“I will be keen to see how data and analytics are used by agencies to develop solutions, an increase in completion and greater collaboration between agencies, as well as transition toward digital across traditional and new media channels. The transition of advertising investment from bought media to a combination of bought-owned earned media has brought increased complexity to the advertising landscape,” says Diamond.
Community radio market share
With 25% of the national radio market share, community radio’s unique sense of the familiar and relevance puts it head and shoulders above the rest of the platforms in the areas where they operate. But, says The Media Connection’s director, Nkopane Maphiri, many advertising practitioners have limited or no reference points for a community station.
“This trend is shifting though; we are seeing more practitioners take a keen interest in the medium, largely thanks to the work done by our agency over the past seventeen years to constantly educate and promote community radio in the agencies.” These efforts, he says, are yielding benefits.
“Admittedly, a lot still needs to be done from our end to continue engagements with the industry to illuminate the value and the great impact the sector has in the market they serve,” he adds.
In the year ahead, he believes an opportunity exists for the industry to have very frank discussions followed by concrete action to imagine and model an industry that will truly serve the interest of all players and “help to nudge us over the imaginary barriers we have created for ourselves”.
The long talked about transformation charter and the BEE codes provide a unique opportunity for all players to engage openly on what needs to be done, in order to rebuild the glory of the industry and to compete favourably with other industries for new talent, believes Maphiri.
“The developments around the audience measurement instruments are quite encouraging. We would continue to contribute, as a business, to the best of our abilities in shaping and modelling a more representative and fairer instrument that is anchored on the new media consumption patterns prevalent today,” affirms Maphiri.
The regulatory environment
The South African regulatory and legislative frameworks place a heavy burden on SABC Radio’s ability to contest on an equal footing with its competitors, says general manager of radio sales at the SABC, Eugene Zwane.
“These impediments are difficult to mitigate against in the short term. We have come to accept that the playing field is not even. Some of our stations have to carry above average pieces of regulated content that are not commercially appealing,” says Zwane. However, he is confident about the corporation’s position for the future.
“The SABC is in the process of investing significantly in its portfolio of digital assets. Given the scale of [our] digital portfolio and the scope of work involved, it has taken a little longer, but we will be supremely competitive in that space in the near future.”
Asked what he would change about the industry, he points to the industry’s weak appetite for vernacular advertising. “Broadening the appeal of and increasing the appetite for advertising in the vernacular is key for the growth of SABC Radio’s revenue share. Vernacular creative is still a challenge for most advertisers because of the language barrier, the fear of the unknown and challenges associated with approving copy and executions in languages one does not understand.”
Zwane explains that only 25% of South Africans speak English at home, which for him, is clear evidence that South African advertisers are over-investing in English ads.
“We’re seeing more and more advertisers embracing language advertising and working closely with the SABC ALS stations (including RSG) and RAP and Creative to make vernacular advertising easier to create and easier to understand. SABC Radio Sales will continue to resource RAP and Creative to make their services accessible to as many clients as possible.”
The DTT dispensation, he says, will rearrange South African television viewing patterns. Audience fragmentation will be significant, and so will revenue fragmentation in the television space. Advertisers are going to struggle to deal with the extent of the fragmentation and will rely largely on radio for stable audience delivery.
Wanele Mngomezulu, managing director of MSG Group Sales, says there has been a general decline in terms of expected service from media owners and this can be attributed to various facets, such as changing economic times and reduced budgets, which clash head-on with increased deliverables. The increase in competition translates into a demand for faster response times.
“There are lots of interesting changes in the local market but my interest is the potential shareholder changes on some of SA’s media assets. New shareholders breathe new energy and expectation resulting in further increased competitive space.
“We have to be partners across the entire value chain or ecosystem and in this way it becomes a win-win for everyone. It’s a tough market but there are salient opportunities worth capitalising on.”
Mngomezulu says the notion of global agency alignment will remain a challenge. “Two big pieces of local business went out to pitch in March and April, and the key determination was the presence of global agencies. When are we going to support our local agencies?”
Malani van Huyssteen, head of sales at Primedia Broadcasting, says radio’s share of all media spend is very healthy in South Africa and much higher than the UK or the USA. However, the current economic climate has resulted in many clients consolidating spend, picking one above-the-line media type, rather than a combination.
“Radio as a category is perceived to be expensive at the moment so we need to work harder to show value and prove ROI – which the Primedia stations have a good track record of doing.
“The proliferation of new media platforms in both our market and others, plus the ever increasing investment from clients into digital, creates an environment where we need to do more, be more and produce more engaging content which resonates with our listeners and where our clients can get the best return,” she says.
Van Huyssteen says the industry is increasingly revolving around data and technology, and she is very interested to see what impact the new research managed by TNS will offer the market, after the last RAMS diary went out earlier this year. She also misses the role played by the RAB SA in promoting radio as a media category.
“There has been a lot of talk around programmatic buying and the effects it will have on the industry. We know that digital is being bought in that format but have yet to see it roll out on other platforms. Will the influence of global agencies and global buying patterns in broadcast media be affected this year?” asks Van Huyssteen.
“Media freedom underpins what we do, so the protection of state information bills and other potential threats to the media are always a concern, but we remain independent, and optimistic about the strength of our democracy. A number of global brands are in a conservative phase due to the global slump; this forces us to come up with creative solutions for clients who face these constraints,” she says.
Breaking the hegemony of a long established order
Rivak Bunce, managing director of United Stations, who represent OFM, Algoa FM, Hot 91.9fm, Magic 82.8FM, Vuma FM and Rise FM, explains the challenge for his agency for the year ahead.
“Five of our stations are in their start-up phase and need to create a space for themselves in the consideration set of advertisers. Advertisers tend towards doing what they have always done in the past and focus on the established, first and second rated stations in a market. We know that we have to maintain unwavering faith and that we can and will prevail in the end, regardless of the difficulties that are involved in breaking the hegemony of a long established order.”
United Stations is competing for market share against stations that are considered “banker stations”, he says.
“For now, our stations require a harder, more proactive sales approach and specific and unique expertise and strategies. Our approach is to feed off of the amazing passion that is energising our stations, mix that with a lot of sales discipline and a fair measure of entrepreneurship to create the momentum we need.”
What would Bunce change about the industry? He would like to keep the industry leaders committed to building a powerful strategy for radio, built around a clear value proposition for their customers. He also believes that sales forces need to be empowered to respond to customers’ needs better than any other medium.
He concludes, “Too many of our most talented leaders are focused on corporate issues. They need to recommit to making the radio environment more challenging, satisfying and fun. We need to hold onto our most talented people, and find more.”