Radio is the only medium in South Africa boasting the ability to communicate with more than 90 percent of the population. Its tentacles reach into every corner of the country – rural and urban, cities and villages, dorpies and townships. It speaks to people in their own language, it is unarguably the easiest way to reach illiterate audiences and it enjoys immediate dialogue with its listeners.
But it also has limited advertising space, and is becoming an increasingly expensive medium.
“Radio has had the highest inflation,” says John Barham, director at the MediaShop. “The cost of advertising on radio varies across the different target markets. You might find for LSM 9 and 10, relative to television, it is expensive.
“But the advantage of radio is that you can speak to people in their own language. Certainly, to reach both the black and Afrikaans markets in their own language, radio is very, very valuable. It also offers a regional opportunity, which TV currently doesn’t,” he adds.
Radio adspend has more than quadrupled in the past decade. Revenue has swollen from about R570-million between January and December 1995 to around R2-4billion last year, according to figures provided by radio sales house RadMark.
An annual survey by the international media strategy and planning company Initiative Media Worldwide, showed that the cost per thousand (CPT) for radio in South Africa increased by nine percent between 2004 and 2005 and another nine percent rise is projected for this year.
But Barham says media planners and advertisers had been spoilt by the low rates offered by the South African Broadcasting Corporation (SABC) before it sold six of its regional radio stations, including the now highly profitable Highveld Stereo, to private enterprises in 1996. This came after a recommendation by the Independent Broadcasting Authority aimed at ending the SABC’s historic monopoly.
“It was very, very cheap to advertise when the SABC owned the stations. There was no incentive for them to have higher rates because it wasn’t really a profit-making organisation. The new owners came in and paid a lot of money for those stations and they needed a return on money,” says Barham.
“Plus, we’ve been through a boom period so there’s also been a high demand. There’s a whole range of factors but we were used to it being too cheap to advertise on radio.”
Today there are no fewer than 33 commercial radio stations and more than 90 community radio stations. The national average time spent listening to radio every day is more than four-and-a-half hours. According to the latest RAMS listenership figures, numbers have remained relatively stable with significant audience growth in the LSM 1 group.
“The higher the LSMs, the more expensive the advertising. For the government, the bulk of voters fall in the lower LSM groups, making radio a very, very cost-effective advertising medium,” says Suretha le Grange, media strategy director at Mercury Media.
“The LSM 1-3 market is a market I can’t find anywhere else than on radio. At this stage, radio is never going to be too expensive to reach them because it is the only medium to reach them,” she adds.
SABC’s African language radio stations offer the opportunity to educate people on crucial issues such as Aids, children’s rights, social welfare and social grants, says Le Grange.
However, she believes that advertisers’ interests remain best served on commercial radio, even though the community radio sector is experiencing massive growth, with Western Cape community stations enjoying more than 33 percent penetration.
“To me, it becomes a waste of money to spend on community radio because you just do not reach enough people. They can’t justify the costs.”
Sue Walker, managing director of RadMark, which sells advertising for Jacaranda 94.2, East Coast Radio, Kaya FM 95.9, iGagasi 99.5, and Heart 104.9, says it is only fair for commercial radio stations to up their rates if an annual trend shows that audience figures have increased significantly.
“I don’t believe that any radio station should alter their rates according to three months’ worth of RAMS data. But I think it is fair to adjust rates when audience figures increase,” says Walker.
“When you are advertising, you are paying for an audience and many media types set their rates according to the number of audiences they have.”
The counter argument should be that rates drop if audience numbers drop, she says, but that does not happen often in practice.
Ryan Till, group general manager at Primedia Broadcasting, says the rise in advertising costs on radio should be seen within context.
“Radio has become more expensive than it was,” Till acknowledges. “In the case of our radio stations we believe we can justify that because of the results that we get and the research we’ve done.
“I think if people feel radio has become an expensive medium to advertise in, this is because after the deregulation of the airwaves in 1996, our rates went up and a lot of stations followed. We have always sold ourselves on response, that is feedback, not just on our listenership.”