21 July 2010 – ADVERTISING IN THE DIGITAL AGENDA
Commercially-funded radio can only broadcast programmes free of charge to millions of European citizens, thanks to the revenues it collects by means of advertising – The only viable business model for radio nowadays and for a foreseeable future is analogue FM broadcasting of free-to-air programmes. Advertising is the prerequisite to produce useful and attractive content, and to ensure radio is the most intimate medium. Radio listeners can thereby access for free entertaining and informative content. In that sense, radio plays a fundamental role in today’s society: it is entrusted with many public interest obligations, and it is an essential actor of cultural diversity, media pluralism, access to creativity, and social inclusion.
Radio advertising investments are decreasing – This is mainly due to two factors: the recent economic downturn and a shift of advertising investments from “old media” towards “new media”. This has led to losses up to 30% in certain European countries of radios’ revenues in 2009 compared to 2008. As for the shift from “old media” to “new media”, this leads radio to multiply its presence on platforms.
Radio cannot cope with advertising bans and restrictions – Any kind of advertising restriction has a negative financial impact on commercially-funded media. As private radios in Europe are still funded almost exclusively on advertising, any additional legal constraint would severely endanger radios’ ability to pursue a viable economic activity. This would threaten media pluralism to the detriment of radio listeners across Europe. This is especially true for radical measures such as advertising bans. At least with regard to radio, the latter is more and more understood by policy makers. But radios increasingly face calls to impose restrictions – or the introduction of compulsory information – on advertising. This does not only hinder commercially-funded radios’ ability to produce content, it is also bound to miss its aim – informing the consumer.
Additional information in radio advertising is bound to miss its aim: listeners tend to “tune out” – Imposing information requirements in radio advertising does not appear as an effective way to achieving the laudable political objective of informing the consumer. Empirical data showed that warning messages were considered as “oppressive”, and lead listeners to “tune out” metaphorically, if not literally, in the worst case scenario.
Radio is a non-visual medium: information requirements in advertising are particularly burdensome – When considering information requirements in advertising and their likely effects, the specificities of each medium need to be properly taken into account. Radio is a non-visual linear medium, which concretely means that, when detailed messages are to be communicated in an advertisement, these are to be broadcast in an added time-space to the latter. This increases the amount of time, hence the price, of the considered commercial message. In addition, needless to say, it lessens the commercial impact of the advertisement (a usual ad lasts for 15-40 seconds). These combined effects impact broadcast media, and radio in particular, and constitute factors that can deter advertisers away from using radio.
Information is perceived to be much more useful at a later stage than when advertising: through websites, in information brochures or at the point of sale – Information is more useful when the decision is taken to perform the purchase. ________________________________________________
Advertising is already regulated by strict rules set at EU and national level, usefully complemented by self-regulation. Commercially-funded radio depends almost 100% on advertising: adding advertising restrictions equates to fewer and poorer free-to-air programmes. Introducing information messages in radio advertising is not the appropriate tool to enable improved consumer information, in order to allow well-informed purchase decisions.
Created in 1992, the Association of European Radios (AER) is a trade-association representing the interests of over 4500 private and commercial radio broadcasters across Europe to the EU institutions. It is the only organization representing only radio to the EU Institutions.
Vincent Sneed, AER Association Coordinator / EU Policy Advisor
vincent.sneed @ aereurope.org