Tuning In

Despite numerous challenges, the radio industry is still making waves

By Ton C. Reyes

Radio is probably still the most pervasive and far-reaching among media outlets in the Philippines. In an archipelago of 7,000 islands, the fastest way to disseminate information is still through the oldest and most reliable medium. Considering radio’s portability, it is an efficient way to reach one’s captive market.

Despite its acknowledged advantages as an advertising vehicle, radio continues to be dwarfed by television in terms of advertising revenue. TV enjoys the lion’s share of advertising budgets, leaving a smaller morsel for print and radio. This is obviously due to the fact that advertisers—and consumers—prefer a more visual medium for their products. With nontraditional media (billboards, events, the Web) emerging in popularity, fewer and fewer advertisers seem to recognize the efficiencies that radio advertising affords. In fact, print advertising overtook radio advertising more than a decade ago.

Ownership Blues

“FM radio stations are being challenged,” notes Francis Lumen, president and chief executive officer of Nation Broadcasting Corporation which operates Joey 92.3, an FM station that targets the business crowd. “Most FM owners are in denial, but their enterprise value is lower now than in the ’80s and ’90s,” Lumen continues. AM stations face the same reality. Few AM stations are commercial successes, with most serving as mere propaganda machines come election time.

In fact, prospective radio station owners face enormous challenges, assuming they are able to get a permit to operate in the first place. The radio industry, in essence, remains regulated. Although the National Telecommunications Commission, the Department of Transportation and Communication, and the Kapisanan ng mga Brodkaster ng Pilipinas have agreed to a principle of “self-regulation,” the KBP reserves the right to screen applicants for a radio station.

Those who opt to buy existing stations would probably have to invest around P50 million—a far cry from the going rate of about P130 million 10 years ago—to buy the station. This excludes capital expenditures for a transmitter and tower (easily P15 million) and operating costs. A payback period of 5 years is not guaranteed.

Lumen notes how the bias against radio starts at the ad agency level. Because agencies earn on commission basis, it is but understandable that they would go for big-ticket projects. TV, of course, is the most expensive medium. A no-frills 30-second TV spot would easily cost P2 million to produce. Placements start at P30,000 for a 30-second TV spot. In contrast, a radio spot could be produced for as low as P5,000, with radio spots ranging anywhere from P2,000 to P4,000. Print comes in between the two, with a full-page, full-color ad in the most popular broadsheets going for over P250,000.

Potent Medium

Luis Mari Barreiro, president of Audiovisual Communicators which operates the FM station RX 93.1, believes that, in general, “radio is underutilized as an advertising medium.” Of course, some radio stations have a larger advertising load than others, but no one is immune from the steady challenge emanating from other media. There is also the economy to consider. Noting that advertising is the first thing most companies slash in times of economic uncertainty, he is not surprised by the decline in radio advertising in the past two years.

A key point affecting the radio industry is that it is very fragmented, with each station catering to a niche market. The latest survey showed stations with almost equivalent shares of the market, with the biggest cornering 7%. Thus, advertisers who want to go for efficiency and reach believe that their options are limited. It doesn’t help that there is not much data available on the profile of the listeners of the various radio stations.

For some, though, the segmentation helps. Joey 92.3, for instance, has gained tremendously from serving the business crowd, which has a higher purchasing power and is a market advertisers love to tap. Even the lack of data is not an issue, with Lumen saying that “mere common sense” guides media planners on who the station’s listeners are. Joey 92.3’s promos, for instance, do not include the usual phone-in and text promos that stations catering to younger crowds like to do. “We elevate the playing field by asking our listeners to respond to our promos by email or by fax,” he says, reasoning that it is the office crowd that will most likely have access to email or the fax machine.

Stiff Competition

Others, though, have to contend with cutthroat competition, which advertising practitioners blame on the stations themselves. “Ten years ago, we told them they were an industry in decline, that they had to do something about it,” comments advertising veteran Resty Reyes, chief executive officer of Media Exchange, a media independent. Unfortunately, no action was taken.

Lumen himself acknowledges how many pop stations got into a bidding war, which only served to diminish their bargaining power as an industry. Up to now, the effects of this continue to be felt by most radio stations, who recently banded together to make their views known against a legislative move to reduce the gap between frequencies from the current 8Mhz to 4MHz. The bill, since shelved, would have doubled the number of radio stations in the country—a move that could lead to the eventual demise of the industry. Not many know that the country has more than 600 radio stations, 60% of which are FM stations. There are, nevertheless, just a handful known ones.

Today, competition remains the biggest concern of radio station owners. Realizing this, a group of FM stations, among them Jam 88.3, Wave 89.1, Magic 89.9 TM, Joey 92.3, Monster Radio RX 93.1, 99.5 RT, 105.1 CrossOver, and NU 107, have banded together to “excite advertisers” about the possibilities that radio offers. “We believe there is strength in numbers, and we want to show that even competing stations can work together. We want to create noise,” explains Barreiro. The alliance is called Radio Works.
In all this, of course, “execution is key,” he says. Each radio station has a way of handling an advertiser’s need, by way of creative executions and presentations. Chico and Delamar, the very popular DJs of RX 93.1, for instance, ran a survey on the “top 10 things you would do if you had magic” when Harry Potter opened in Metro Manila theatres.
Radio station owners are hopeful that this way, advertisers will stop ignoring the potentials of what is still a most potent advertising medium. Ten years ago, 10.3 million out of 12.7 million Filipino households (81%) owned a radio. Radio also posted the highest proportion of exposure among the different forms of mass media covered by the survey (television, video tape, comics, magazine, newspaper, and books).

Sounds of Surveys

A survey conducted in July 2005 showed that 79% of households in the Philippines own a radio against 95% who own a television set. However, the gap between radio listening and TV viewing narrows down with the former recording 87% against the latter’s 94%. The survey was conducted on 16 million households nationwide by the Asia Research Organization, a member of research group Gallup International.

Despite the preponderance of various media, radio remains superior to print, billboard, and cinema as a mass medium, according to survey after survey taken of radio listeners, regardless of age, gender, and economic class. A 2004 radio involvement study showed that radio had a wider reach and outranked the rest in terms of time spent, enjoyment and satisfaction with the medium, and quality and quantity of attention paid to advertisements.
So, what are advertisers waiting for?

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