Getting the Ads Right and Getting the Show Right

How radio uses adverts is key to its future (9 minute read)

There’s a change at the Virgin Radio breakfast show. No, Mr Evans is still there. It’s a change around the commercial messaging. Up until now the show had an exclusive sponsor - Sky. This meant no spot ads - the 30 second commercials radio is well known for - and instead they had sponsor credits and also integrated plugs for Sky’s programmes and services into the content.

This was very sensible as when Chris started he had moved from Radio 2 to the digital-only Virgin Radio. Not having ads removed one of the friction points of listeners from moving over. I think it was also pretty good for Sky, they had a decent-sized environment (1 million listeners) who would be exposed to their messaging without ‘clutter’ - other ads and branded content. With half of Chris’ audience already satellite TV users, that’s not a bad mix of selling in and selling up.

However, we’ve just passed the three year point of Evans starting and the exclusive deal has come to an end. Sky remains the sponsor, but the station’s also introducing limited ad breaks into the show. My guess would be the cost of renewing exclusively exceeded what Sky would want to pay.

For Virgin Radio, I think this is probably a good thing. It must have been a nightmare to sell a station that’s all built around Chris Evans without giving advertisers access to it. News UK is the smallest of the big operators. This means they’ll always be battling to get on schedules whilst Global and Bauer take the bulk of an ad budget. Having spots in Evans’ breakfast show, or perhaps other promotional opportunities, would no doubt give the sales team another tool in their belt.

I would also imagine that the Sky sponsorship, even before, was unlikely to cover the entire cost of the Breakfast show. It’s an expensive show after all. But what Evans joining did mean was that it transformed the station in the non-breakfast hours too, hours that could be monetised through spot ads. Pre-Evans, outside of the Breakfast and Weekend Breakfast timeslots, the station had 1.3m hours. Now the non-Evans/Norton slots generate 5m hours. Breakfast itself went from 370k hours to 4.5m.

Originally the first ad break was due to drop in yesterday’s breakfast show at 7.10am. It didn’t, which surprised Chris, as he remarked upon later in the show. I’m sure it’ll appear soon.

What it did give me the opportunity to do though was listen to the show, which I hadn’t done since the first few months. Chris has always been one of my all time favourite presenters. Super-talented, quick-witted, a hybrid presenter-producer. This has usually worked pretty well for him.

I remember talking to one of his old Radio 2 drive-time team members who said when he came in asking what was on the show and challenging the staff’s ideas, his on the spot ones tended to be much stronger.

I was interested to tune in.

In commercial radio there’s always lots of rules that DJs have to follow. The thinking behind the rules is often solid, but they can often be enforced by useless twonks who don’t understand why they are there. Also, you can generally treat presenters who have been at the top of their game, like Evans, a little differently.

BUT, jeez, the opener was a difficult listen.

I don’t think I’ve ever heard as much fader wanking since going to cheesy nightclubs, and that, combined with speaking all over loads of lyrics made me feel like I was in a tumble dryer.

I’ve heard Chris Evans talk about his old Radio 1 shows being ephemeral, that part of the magic was that it was generally only relevant for that day. There was some of that yesterday morning, picking up on topical things like the Neighbours cancellation and getting the news person to chase more info up. Indeed they delivered a nice build from a listener who was on the mailing list of one of the cast. But apart from that it was mainly what the team and the listeners had been up to over the weekend.

In one link, of around six minutes, they covered (deep breath)… Liam Gallagher's new song, a plug to him being on later, the Brits, Listeners texts, African Cup of Nations, another Liam plug mentioning his shows, more listener texts prompting a chat about Netflix's Afterlife, a chat about deodorants and recyclability with some facts, EVs being accused of being the new diesel, a solicit for texts, Vassos going to And Juliet, a team member going to Ikea (no meatballs) and a super-fast run through of what else the team did, and then another solicit for listeners to text in what they’ve been doing.

Chris is excellent at giving pace to the show, he’s funny and quick, and the team sound like they’re having fun, but much of it was quite a tough listen.

In the second half of the show were all the guests - Liam Gallagher and Rose Matafeo. That’s cool - great prepped content. But looking at the RAJAR for an average Monday, half the audience are around before 8am and half afterwards. There’s big chunks of the listeners who would never have heard those guests - they just got a lot of chat without saying much.

If I was Chris I would be disappointed that his figures have hovered around the million mark for three years. There’s lots of things that I’m sure could be blamed - distribution, marketing, music etc - but from a single listen this morning there’s loads of things you could do to make it easier to listen to and more compelling.

I imagine (and from 25 years of stories) Chris is somewhat unproduceable. I’m sure the team and station put their effort into the things he wants - guests, background research etc. What he really needs to do though is find someone he trusts implicitly to help really build the structure of the show, create some storylines that look outward and can engage with new listeners and to develop benchmarks that are appointments to listen.

Today is a very noisy media environment, with loads of shows that are all pretty good. To grow, you really have to bring your A game, whoever you are. You also need experts to help you, whether that’s the production team, research, music. More than ever, with fractured audiences, echo-chambers and listeners more promiscuous than ever, any one person who thinks they know all the answers to a successful show is deluded. It’s never been more than a team game.

Perhaps one of the reasons that there were no ads on this morning’s show is that ad breaks started appearing down the corridor at Times Radio too.

Times Radio’s commercial model started as a combination of subscriber-churn-reducing-brand-re-enforcement alongside some third-party show sponsorship.

Its first RAJAR figures were a solid 637k reach, seemingly above what they have promised advertisers and whilst its second was a lower 502k, it still remained above the magic half million mark. I imagine that it gave confidence to the team for the station to be opened up to spot ads.

I reached out to News UK about the addition, and they said:

Introducing spot ads on Times Radio is the next phase of our commercial strategy for the station. The ads will be limited in number, allowing premium brands to reach our AB audience, which is the highest of any commercial radio station.

Keeping the ad load relatively tight on Times/Evans is a sensible thing to do. Firstly it will take a while to get the stations onto the schedules and if you limit it, perhaps there’s an opportunity to get a better CPT (cost per thousand) than the general national average.

Now the battle over the CPT price is at the root of much of commercial radio’s problems. Over the years the competition between Bauer and Global has seen a reducing CPT as they offer deals to ad agencies to lock in guaranteed ad-spend. Their scale means it can still be quite lucrative, but it sets a base that’s difficult for anyone to beat. A decent chunk of national inventory is being sold at £1.10. Fifteen years ago it was £1.50 (and that’s about £2.30 with inflation now).

I’m unsure whether News UK have managed to premium price their ad breaks - if they’ve managed it that will be quite a win. However, with the power of the agencies I imagine that will be difficult to maintain.

This lack of price elasticity is why sponsorship and integrations are so important to radio stations. It means you can charge more and escape the tyranny of the spot ad CPT rate.

Other types of audio spot ads, meanwhile, are doing pretty well. Non-demographically targeted in-stream radio ads go for around a CPM (cost per mille, but the same as CPT) of £10 and podcast ads can hit a £20 CPM or more.

Now, radio has many many more impacts delivered through broadcast than streams or podcasts, but there isn’t really any particular reason that the pricing is so very different. A pair of ears is a pair of ears after all.

It does though highlight the challenge radio groups face when thinking about their products. Should they pile into stream-based listening because the yields are good? Or is that just a short-term situation? CPMs for video ads used to be pretty high, but have dropped precipitously as supply has increased. Will streamed audio, or podcasts, follow the same trajectory as they get more popular?

I’m generally pretty bullish about Bauer’s system that lets listeners subscribe to stations and remove the ads. Lots of consumers now live in predominantly ad-free media environments. There’s always been solus BBC radio listeners of course, but with Netflix/Disney+ type services taking more and more of viewers’ media time, the interruptive nature of spot advertising is perhaps on a stickier wicket than it used to be. Providing the option to opt out of that in radio, for a low monthly cost, would seem a sensible thing to offer ad-rejectors.

But this CPT vs CPM vs Subscription issue is another example of the struggle radio has with what has worked in the past, and how it needs to look to evolve its model. As the arrival of Times Radio, the Evans poaching and developing different commercial model experimentation shows, it’s perfectly capable of meeting the challenge. The difficulty is that its comfort zone is so profitable it can be hard to think about what linear radio stations should look like next.

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