JACQUIE GOLDING-DUFFY reports on Radio Highveld’s new advert rates
SOME advertisers are outraged by the astronomical hikes in advertising rates by Radio Highveld, the radio station that was bought from the SABC for a whopping R320- million. The days when radio was a cheap medium have long gone, but with the recent increases introduced by Radio Highveld and other regional stations, advertisers are arguing that the industry cannot cope, especially since advertisers’ budgets are not expanding at the same rate and marketers are buckling under the strained trading and economic conditions.
TBWA Hunt Lascaris group media director, Lyndall Campher, says Radio Highveld’s advertising increases provide no advertising alternatives for media planners in Gauteng, as the station’s co-owner, Primedia, also owns Radio 702, the only other radio station in the region that offers the listeners most advertisers are vying for. “The high charge for advertising spots places advertisers in a predicament. We can only vote with our feet because the prices stipulated by Radio Highveld and Radio 702 are far too high for the market and Primedia has a stranglehold on the industry,” says Campher.
Media Shop group managing director Dick Reed agrees. He says the industry can take a stance and possibly boycott those radio stations that they feel have outrageous advertising rates but this would be an exception rather than the rule. “It would not be the normal ethic to have a united front by the industry as free market principles would normally prevail where individual advertising agencies make individual decisions.”
However, concern within the industry is intensifying and Reed argues that the demand -driven rate card offered by Radio Highveld allows for manipulation by the radio station.
The rate card system is when advertisers are given a maximum rate to pay and, depending on how early they book an advert, the rate is reduced accordingly, Reed says.
The glitch is that only Highveld’s sales representatives and management are privy to how much the rate will be reduced, leaving advertisers out in the cold.
Since buying Radio Highveld from the SABC, the station has increased is advertising rates by more than 50% in some cases and in others by more than 100% in a bid to recoup the R320-million – the most paid by any one consortium for an SABC regional radio station.
As one advertiser pointed out, it will take the owners of the radio station “a bloody lot of 30- second spots if it wants to recover the millions it spent on acquiring Highveld in the first place”.
The rate increases by Highveld, say some advertisers, are excessive and the station has been charged with “lack of transparency” as the rates charged to advertisers fluctuate, depending upon when and how far in advance the advertisement booking is made and how much is committed. In some instances, says Campher, single advertising spots on Radio Highveld have increased by more than 50%.
In October 1996, the cost of entry was R2 100. This year, July 1997, the cost of entry is R3 150, she says, adding that media planners have to revisit radio advertising or go to a rival radio station that offers more affordable advertising rates. However, Gauteng does not offer any viable alternatives, say advertisers, other than those in the Primedia stable.
The demand that media planners and retailers book in advance is going against the trend in the market, says Campher. She argues that short-term advertising campaigns are the order of the day where last-minute decisions by media planners are often unavoidable.
Primedia Broadcasting chief executive Stan Katz argues that agencies simply have to plan their budgets better, adding that the rate card system introduced by Radio Highveld is not unusual as it is a system commonly used abroad and depends on supply and demand.
As demand increases, so do the rates, says Katz, adding that Campher’s calculation that the rates have increased by 50% to R3 150 is “bullshit”. It could be as low as R2 200, which is a R100 increase, says Katz. Campher, he says, has a “hidden agenda” because she is an SABC board member. “The demand for advertising time is extremely high and we are sold out on Radio Highveld, which indicates that there is not much dissatisfaction in the industry over our rates.” He argues that the rates are “sensitive enough” to market demand and it would be “naive” not to take into account the industry’s reaction to the hikes.
“When there is an increase in demand for advertising, a radio station cannot increase its airtime like a newspaper can increase its pages, because if we did that we would kill the radio station. We can only manoeuvre our rates, which we have done in relation to the demand by clients. There are pockets of high and low demand and when demand is low, rates come down and are flexible. The rates were not increased willy nilly and at a whim. They are carefully considered and sensitive to the market,” says Katz.
Radio Highveld’s sales director Terry Volkwyn says the system is new to South African advertising agencies, hence the caution, but she argues that most clients and some agencies have welcomed the rate system as it informs them of the premium rates the station offers when it is sold out.
Also, she says that the rates are up because Radio Highveld has cut down advertising time from 22 minutes, held by the SABC, to nine minutes, by the new owners.
On having a stranglehold, Katz disagrees. He says there are several other radio stations such as Jacaranda and Metro, not to mention community radio stations, that offer different audiences and cater for different markets.
Hence the argument that Primedia enjoys a stranglehold on the market holds no water as there is not one single market, says Katz. “Clients are paying the rates they think are worthwhile for the audiences we deliver.”