Radio Advertising - Economically Sound

RADIO ADVERTISING. RADIO ADVERTISING. ECONOMICALLY SOUND ECONOMICALLY SOUND

August 2009

ContentContent

• Overview• Common Marketing Mistakes in Challenging Economic Times• Case Study: Myer • A Time of Opportunity• According to the Experts• Key Strategies for this time• The Innovation Engine• A time for Opportunity on Commercial Radio• Commercial Radio Reach & Frequency – A dominant media

choice• Unique Strengths of Radio• Radio in Combination with other Media

OVERVIEW

Radio Advertising. Economically SoundRadio Advertising. Economically Sound

OverviewOverview

Radio is a resilient advertising medium.

It has consistently performed well in challenging and uncertain economic times.

The innovative and flexible nature of the radio industry leads the way in the development of new opportunities for attracting advertising revenue.

Commercial radio has performed well in what has been a competitive and challenging 12 months for all Australian media.

OverviewOverview

One of the strengths of radio is its ability to be ubiquitous - radio provides information, entertainment and community without interrupting people’s lives.

Each week 76% of Australians tune in to commercial radio, listening on average for 2hrs 26mins each day

Source: Nielsen Radio Ratings, Average of Five Capital Cities, Survey 1-8, 2008. All people 10yrs+, Monday-Sunday 5.30am-12mn.

OverviewOverview

Commercial radio provides more opportunities for a message to be delivered and to impact the consumer than any other medium.

Across all day parts, an average 1.16million people listen to commercial radio at any one time.


Common Marketing Mistakes in Challenging

Economic Times


Common Marketing Mistakes in Challenging Common Marketing Mistakes in Challenging Economic Times Economic Times

1. Cutting the Marketing/Communications budget:• Senior executives may be unsure of the value in advertising

because it is often difficult to determine return on investment• Senior executives may be advised that it is prudent to reduce the

marketing budget due to a general perception that a reduction in marketing and advertising will not hurt the company in the short term.

2. Not knowing your customer:• In practice advertisers that have a deep knowledge of the customer

base and understand lifestyle, demographics and psychographics tend to develop better communication strategies.

• Developing advertising that appeals to the key customer is crucial to business success


3. Buying the wrong media• This exists as a results of poor media planning.• Highly effective media, is media that targets the core customer.• Marketing efficiency increases when media is used which

commands a high concentration of key customer groups in the audience

• The media environment chosen will enhance a brand – customers gravitate to media channels that carry content that is relevant to their lifestyle


4. Forgetting the customers’ needs• Many companies use their advertising to list the attributes of

their business. • Characteristics like great service are simply expected by

customers, therefore may not necessarily enhance the brand image.

• Good advertising focuses on the potential customer and how a brand benefits them


5. No unique selling proposition (USP)• Customers need a reason to choose one business over

another and a USP will help them differentiate.

Case Study: Myer


Case Study: Myer Case Study: Myer

Myer Defies the Gloom and Boosts its Marketing Budget • Myer has doubled its marketing budget from February 09, for 3 months in to

defy the economic gloom and drive traffic to stores.

The Strategy• The Myer chain negotiated reduced ad rates and bought advertising

packages with media companies Seven, Ten, News Limited, Fairfax Media, ACP and Austereo that will carry Myer’s marketing campaign efforts

• Myer sourced much of the budget funds from 165 suppliers who have agreed to underwrite half the cost of the campaign.

• In return, Myer has agreed to buy tens of millions of dollars of extra stock from the suppliers.

Source: Simon Canning | February 02, 2009 - Article from: The Australian

http://www.theaustralian.news.com.au/


The Goal• the retailer plans to maintain its advertising expenditure following the end of

the post-Christmas sales season, luring a series of partners to help underwrite a range of marketing initiatives in the weeks following the launch.

Myer’s marketing program will not be price-driven, as they believed that would undermine sales held later in the year.

Promotion and value are instead the focus of the campaign, which will grow in the three month campaign period.

The Myer Chain CEO, Bernie Brooks, believes this is a more innovative approach that will keep consumers reaching for their wallets.




The Purpose Bernie Brooks CEO said they know their business in the next 6 months is

going to drop and in implementing this marketing push, Myer believe it will stop them from dropping further in sales.

Myer believe the Marketing push has a risk to it, but also believe there is a bigger risk in not doing it.



http://home.informatik.tu-muenchen.de/~wasner/Galleries/Australien/melbourne-myer-shopping-centre.JPG

A Time of Opportunity


A time of OpportunityA time of Opportunity

• Companies that view tougher economic times as an opportunity enable themselves to get a leg up on a weakened competitor.

• Their brand building efforts will see significant gains over time and into the future.

• One strategy is to approach clients with certainty in a time of uncertainty.


• In the light of lower interest rates and lower petrol prices coupled with the Government plans to stimulate the economy, consumers may have more money to spend than in recent times.

• *Global consumer/end user spending is projected to increase from $1.3 trillion in 2007 to $1.9 trillion in 2012, growing by 6.8% compounded annually.

*Source: PriceWaterhouse Coopers: Outlook, Australian Entertainment and Media 2008-2012


According to the ABS:• Australia experienced significant real income growth during the

past decade. • Between 1997-98 and 2007-08, real net national disposable

income per person grew by 2.8% a year on average.

Source: Australian Bureau of Statistics, www.abs.gov.au.


PWC projections in Advertising – 2009-2013

•Global consumer/end user spending is expected to grow from $974 billion in 2008 to $1.3 trillion in 2013 increasing on average by 5.3% per annum

•Global advertising is expected to increase slightly from $516 billion in 2008 to $517 billion in 2013.

•Radio is seen as a medium that is able to embrace and integrate new technology such as the internet and podcasting and now with the launch of digital radio

Source: PriceWaterhouse Coopers: Outlook, Australian Entertainment and Media 2009-2013

Consumers look to brands for reassurance

• Despite financial uncertainty in 2008, most Australian consumers claim to have spent the same amount or more across the festive season than they did the previous year, according to new research, by the Australian Centre of Retail Studies (ACRS).

• ACRS revealed there is optimism among Australians for the year ahead, with more than two thirds of respondents expecting their household’s financial situation to either remain the same or improve this year.

Source: B&T Today, marketing, advertising, media, PR. January 13 2009 http://www.bandt.com.au/dirplus/images/bttoday/newsletter/13_01_2009.pdf Australian Centre of Retail Studies - http://www.buseco.monash.edu.au/centres/acrs/


According to the Australian Retailers Association (ARA) there was a 2% increase on the 2007 Christmas period ($36.5 billion).

ARA research among key sector retailers shows Christmas sales for 2008 were as follows: 2008 National Christmas retail sales: $36.95 billion (projected $37.2

billion) National category breakdown:

Food $14.78 billion, Department stores $2.96 billion, Apparel $2.59 billion, Household $6.28 billion, Hospitality $4.8 billion and Other $5.42 billion.

Source: Australian Retailers Association, 2009.



According to the ABS Retail Trade Trends report: The seasonally adjusted estimate decreased by 1.4% in June 2009. This

follows an increase of 1.0% in May 2009 and a revised increase of 1.0% in April 2009.

Chains and other large retailers increased by 9.2%, while the estimate for 'smaller' retailers increased by 5.7%.

Source: Australian Bureau of Statistics, Retail Trade Trend Report, June 2009, 8501.0, www.abs.gov.au.


Consumers look to brands for reassurance• People will continue to spend in challenging economic

circumstances, but they want to be sure that they are spending wisely.

• Advertising that demonstrates the benefit and value of a brand will continue to be effective as consumers look to justify their purchases.

Advertising effects Economic growth• Advertising is the engine for economic growth. It stimulates

innovation and provokes competition; both are contributing factors to economic growth

According to the Experts


According to the ExpertsAccording to the Experts

Despite all the doom and gloom, many experts are saying Australia is doing much better than the rest of the world.

Australia is reliable trading partner with a healthy banking systemLimited exposure to the subprime mortgage market.Australia has a stable system of government and A good welfare safety net that stops the kind of poverty seen in America.

Source: International affairs and social commentator, Keith Suter, as seen on Ch7 Sunrise Monday 4th May 2009.


According to Harold Mitchell, chairman of Mitchell & Partners, who has been through four downturns in his 40-plus years in business and says he has learned two things.

1. they start2. they finish

According to Mitchell, the worst of the fall is over and we are on the way up again. Of course, there will be bumps along the way out of this and, like every downturn, there are still plenty of bruises that have to work their way out of the system.

Source: Excerpt from ‘The Age’ April 30th 2009, Harold Mitchell


According to CommSec Chief Economist, Craig James: Australia may get lucky and avoid a recession in 2009 Australian banks were in a better financial position than the

US and Europe, and had a higher exposure to the domestic market.

No other country has received the same economic boost from all three factors - Government spending, lower interest rates and a cheaper Aussie dollar

The Reserve Bank has cut interest rates by 400 basis points since September, taking the cash rate to a 45 year low of 3.25 per cent.

Article, Australia could avoid a recession say economists, AAP, Daily Telegraph, February 23 rd 2009.


According to the Reserve Bank: The Australian economy had been "more resilient than other

industrial economies'' in response to the global financial crisis. The substantial measures taken, like the Government Stimulus

packages would help to cushion the economy from the contractionary forces coming from abroad and, over time, work to establish conditions conducive to stronger demand later in the year.

The flow through to lending rates from previous rate cuts had been "much more effective in Australia'' compared with many countries.

Reserve Bank of Australia minutes, news.com.au, Article by Jordan Chong, Feb 2009, February 17 th 2009

Key Strategies for this Time


1. Aggressive advertising• Maintain your planned level of advertising while your

competitors are cutting back.• Maintain continuity to sustain awareness; advertising works

cumulatively. People forget rapidly without frequent reminding.• Concentrate to dominate. Dominance is the product of impact

and frequency. It can be achieved most efficiently by concentrating advertising by medium, by market, by target audience

• Consumers are looking for strength and stability and brands need to inspire this belief in consumers.

Key Strategies for this TimeKey Strategies for this Time

Source: The Cahner’s Advertising Research report (#2000.5), The Role of Advertising in Uncertain Times,

2. Strong brand management (brand success)• Development of corporate management policies to cope with

the uncertain environment• Product innovation• Control over distribution channels• Management of price-value relationship and justification of the

premium brand


Source: ‘Through The Loop’, www.throughtheloop.com/brand


3. Strategy and positive results:• Focus on core brand values• Accentuate the positive• Maintain or increase share of voice/advertising presence• Innovative use of media / increase media efficiencies• Relationship marketing• Building corporate brands


4. Commitment to brand advertising:• Three reasons to maintain, or increase, advertising spend

1. less clutter in traditional media means more chance to stand out;

2. brand advertising makes a product/service stand out. While everyone else is cutting back, there must be a good reason why you’re still going strong. Success breeds success;

3. brand advertising supports direct response. Brand advertising increases awareness, name recognition and the effectiveness of direct marketing efforts

The Innovation Engine


The Innovation Engine The Innovation Engine

What do Microsoft, MTV, and the iPod have in common? These great brands were born during recessions - FedEx: 1973; People

Magazine:1974; Microsoft: 1974; CNN:1980; MTV: 1981; iPod: 2001, Wikipedia:2001

And therein lays the point everyone seems to be forgetting in the midst of the current economic slowdown.

A downturn can be a good thing for businesses and brands. It provides a time for opportunity - and the funds - to innovate and get a

substantial leg up on the competition.

Source: BusinessWeek The Innovation Engine: The Upside of Recession by G. Michael Maddock and Raphael Louis Vitón , 2008

The Innovation EngineThe Innovation Engine

Cutting funds back across a company or business can demoralize its employees and instill a sense of instability.

Brands will not gain a competitive edge doing the same thing as everyone else

It is well documented that brands that increase advertising during a recession, when competitors are cutting back, can improve market share, and return on investment at lower cost than during good economic times.

Great companies and great executives don't abandon their growth strategies in light of temporary setbacks. They attack aggressively, while everyone else is pulling back.

Source: BusinessWeek The Innovation Engine: The Upside of Recession by G. Michael Maddock and Raphael Louis Vitón , 2008

A time for Opportunity on

Commercial Radio


A Time for Opportunity on Commercial A Time for Opportunity on Commercial RadioRadio

• Radio remains the ‘most personal’ of media; it is interactive, live, local, human and omnipresent. It provides genuine entertainment, an opportunity to hear new music and access instant information


• The radio industry is embracing emerging technologies to continue to foster its close relationship with listeners and to complement existing radio technology.

Radio’s place as part of people’s everyday lives means Commercial Radio continues to thrive. Radio is embracing and using technology to cement its relevance.


• Radio can greatly extend coverage and frequency among key groups

• Across 2008 Commercial radio attracted an average cumulative audience of 8.79 million (76%) of all people in metropolitan areas each week during 2008. This figure was a 55,000 increase over 2007,when 8.74 million people tuned in on average each week.

• On average, Australians spent 17 hrs 02mins per week listening to commercial radio during 2007, or 2hrs 26mins per day.

• 65% of radio listeners only listen to commercial radio

Source: Nielsen Radio Ratings, Average of Five Capital Cities, Survey 1-8, 2008. All people 10yrs+, Monday-Sunday 5.30am-12mn


• The frequency of radio ads can jog the memory to reinforce the message.

• Radio allows advertisers to extend the frequency of the message to achieve specific objectives.


The 2008 midnight to dawn survey also shows that radio has increased its relevance among young people despite the presence of other media platforms such as the Internet, iPods and interactive television.

Source: Midnight to Dawn Source: Nielsen Radio Advisor, Survey 6, 2008, Mon-Sun 12MN-5.30am, All people 10yrs+ unless otherwise stated.


Source: Nielsen Panorama, Survey 2 Fused Metro 12mthly database (Apr 2008 – Mar 2009) and Nielsen Radio Ratings, Survey 1-8 2008, Monday to Sunday 5:30am-12midnight, all people 10years+, unless otherwise stated..

Commercial Radio listeners Food shopping habitsAcross 2008, in an average week Commercial radio reached 76% of

Grocery Buyers. That is 8.79million different grocery buyers each week tuning into Commercial Radio

Of commercial radio listeners• 45% avoid processed food wherever they can • 50% like to try new food products• 50% buy wholegrain food whenever they can• 50% buy high-fiber food whenever they can• 60% enjoy food from all over the world• 35% say that the most important food consideration is “all

natural” foods• 54% enjoying cooking



Commercial radio listeners Grocery Shopping Habits: Of commercial radio listeners 62% have visited a supermarket in the past month 59% have an average weekly spend of $20-$199 per week 32% visit a supermarket once a week

Commercial radio listeners Clothes shopping habits:Of commercial radio listeners 35% try to look stylish at all times 57% take care in their appearance at all times 76% have visited a department store in the past month



Commercial Radio Listeners and Cafe habitsOf commercial Radio Listeners 43% visit a café on a weekday 80% of commercial radio listeners aged 18-54yrs have breakfast

at a café on a weekday 35% visit a café on a weekday between 9AM and 5PM

57% of commercial radio listeners 25-39yrs visit a café during these hours

And 53% among those 40-54yrs

Commercial Radio – a dominant choice


Commercial Radio Reach & Frequency – a Commercial Radio Reach & Frequency – a dominant media choicedominant media choice

Radio can greatly extend coverage and frequency among key groups• Across 2008 Commercial Radio attracted an average cumulative

audience of 8.79 million (76%) of all people each week during 2008.

• This figure was a 55,000 increase over 2007, when 8.74 million people tuned in on average each week.

Commercial Radio Reach & Frequency a Commercial Radio Reach & Frequency a dominant media choicedominant media choice

• Breakfast is the most listened to session. Almost 6.7 million people tuned into commercial radio during breakfast in 2008 during which time commercial radio’s average reach is 61% of all Australians.

• The frequency of radio ads can jog the memory to reinforce the message.



Place of Listening• Commercial radio travels with audiences.• A highly portable and flexible medium, commercial radio acts as

a companion to listeners, delivering timely and relevant messages.

Source: Nielsen Radio Ratings, Average of Five Capital Cities, Place of Listening, Monday to Sunday 5.30am-12mn, Survey 1-8, 2008


Radio allows advertisers to extend the frequency of the message to achieve specific objectives.

Source: Nielsen Radio Ratings, Average of Five Capital Cities, Place of Listening, Monday to Sunday 5.30am - 12mn, Survey 1-8, 2008

Unique Strengths of RadioUnique Strengths of Radio

Radio reaches virtually everyone in many environments Radio cuts through An anywhere, anytime medium Targeting Pulse of the community. Consistent all year round Influential Cost Effective Flexibility Strong call-to-action A competitive medium

Radio in Combination with

Other Media


Radio in Combination with Other MediaRadio in Combination with Other Media

Radio Complements Internet • Radio and the Internet can be consumed simultaneously. • Radio is the best medium to direct people to web sites for more

detailed information• Radio adds a strong emotional profile to an Internet message.

Radio and Online Research• In 2007 Commercial Radio Australia commissioned TNS to study

the effectiveness of radio advertising in combination with the internet to understand how Radio and Online work together as a powerful media duo


Radio and Online Research cont.• Headline findings:

• Over 80% of people who hear a relevant radio commercial referring to a website have visited a website as a result.


Radio and Online Research cont.• Headline findings:

• Visits to a consumer website nationally increased by 25% following the campaign

• Commercial radio generated 11% more visits to a study partner’s webpage following the campaign period

• A finance brand generated a 145% increase in page impressions during the campaign

• For one finance client, completed online applications increased 94% during the campaign


Radio / On Line Fast Facts• Of commercial radio listeners:

• 91% access the Internet daily • 96% access the Internet at home • 63% search for information on

products online• 51% access the internet weekday

mornings, 54% afternoons• 23% listen to the radio• 56% access news/ current affairs

online • 43% search for travel information

onlineSource: Nielsen Media Research Panorama Fused Metro Survey 9 2008, (Nov 07 – Oct 08), All people 14yrs+ unless otherwise stated. Panorama utilises a 100% Online Methodology

Radio Complements Television• Radio and television are logical partners with radio’s strength

across the day, when stores are open, complementing the branding qualities of a television campaign in the evening.

• Radio reaches mobile people where television cannot and radio listeners are station loyal as well as program loyal.


Radio Research – Radio’s Advantage – Advertising Effectiveness Study •Released in 2006, a Millward Brown radio advertising effectiveness study showed that radio, used in combination with television, produces better results than using television alone.•It involved reallocating 20% of a television advertising budget to radio and measuring the increase in brand awareness and sales.


• Radio and television are logical partners with radio’s strength across the day, when stores are open, complementing the branding qualities of a television campaign in the evening.


Radio Research – Radio’s Advantage – Advertising Effectiveness Study •Headline Findings

• Reallocating 20% of a television budget to commercial radio has been proven to increase brand awareness by 22%.

• Even among well-known brands, reallocating 20% of a television budget to commercial radio has been proven to increase brand awareness by 6%.

• Even among well-known brands, reallocating 20% of a television budget to commercial radio has been proven to increase sales by up to 15%.

• Radio increases purchase intention by 13%; consumers exposed to the radio creative showed an increase in intention to purchase by 13% compared to those exposed to television only.


Radio Research – Radio’s Advantage – Advertising Effectiveness Study cont.•Headline Findings cont.

• The iconic, well known food brand used strongly tested, branded creative concepts for their radio implementation to extend the branding concept developed in the television campaign.

• Results showed that the radio execution improved consumer response to TV execution.

• Radio creative drove up overall enjoyment of the TV advertising by 14%.


For more information on any of the topics covered in this presentation, visit www.commercialradio.com.au

Or contact Batoul Alamein [email protected], 02 9281 6577

http://www.commercialradio.com.au/

mailto:[email protected]

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Radio Advertising - Economically Sound