RADIO ADVERTISING. ECONOMICALLY SOUND

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RADIO ADVERTISING. ECONOMICALLY SOUND
June 2009
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Content

• 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

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Radio Advertising. Economically Sound

• OVERVIEW

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Overview

• 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.

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Overview

• One of the strengths of radio is its ability to
  be ubiquitous - radio provides information,
  entertainment and community without interrupting
  peoples 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.
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Overview

• 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.

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

• Common Marketing Mistakes in Challenging Economic
  Times

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Common Marketing Mistakes in Challenging
Economic Times

• 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.
• 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

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Common Marketing Mistakes in Challenging
Economic Times

• 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

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Common Marketing Mistakes in Challenging
Economic Times

• 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

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Common Marketing Mistakes in Challenging
Economic Times

• No unique selling proposition (USP)
• Customers need a reason to choose one business
  over another and a USP will help them
  differentiate.

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Radio Advertising. Economically Sound

• Case Study Myer

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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 Myers 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
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Case Study Myer

• 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.
• Myers 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.

Source Simon Canning February 02, 2009 -
Article from  The Australian
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Case Study Myer

• 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.
• Source Simon Canning February 02, 2009 -
  Article from  The Australian

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Radio Advertising. Economically Sound

• A Time of Opportunity

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A 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.

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A time of Opportunity

• 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
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A time of Opportunity

• According to the ABS
• Australia experienced significant real income
  growth during the past decade.
• Between 1996-97 and 2006-07, real net national
  disposable income per person grew by 2.9 a year
  on average.

Source Australian Bureau of Statistics,
www.abs.gov.au.
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A time of Opportunity

• PWC projections in Advertising 2008-2012
• Global advertising is projected to increase by 6
  compounded annual rate during 2008-2012 period,
  rising to 760 billion in 2012, from 567 billion
  in 2007.
• Radio advertising is forecast to grow 3 in 2009
  and 3.2 in 2010 respectively and in the full
  forecast period to 2012, a CAGR of 3.
• The market will be characterized by spikes
  occurring during the even-numbered years related
  to advertising associated with the Commonwealth
  Games (in 2010) and to advertising associated
  with the FIFA World Cup.
• Source PriceWaterhouse Coopers Outlook,
  Australian Entertainment and Media 2008-2012

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A time of Opportunity

• 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 households financial
  situation to either remain the same or improve
  this year.
•  
• Source BT 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/

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A time of Opportunity

• 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.

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A time of Opportunity

• According to the ABS Retail Trade Trends report
• The seasonally adjusted estimate Retail Trade
  increased by 0.3 in April 2009.
• In seasonally adjusted terms, industries that had
  an increase in April 2009 were - Clothing and
  soft good retailing (0.8), Household good
  retailing (3.9) and Other retailing (0.1).

Source Australian Bureau of Statistics, Retail
Trade Trend Report, April 2009, 8501.0,
www.abs.gov.au.
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A time of Opportunity

• 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

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Radio Advertising. Economically Sound

• According to the Experts

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According 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 system
• Limited 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.

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According to the Experts

• 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 start
• 2. 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
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According to the Experts

• 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 23rd
2009.
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According to the Experts

• 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 17th
2009
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Radio Advertising. Economically Sound

• Key Strategies for this Time

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Key Strategies for this Time

• 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.

Source The Cahners Advertising Research report
(2000.5), The Role of Advertising in Uncertain
Times,
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Key Strategies for this Time

• 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
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Key Strategies for this Time

• 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

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Key Strategies for this Time

• Commitment to brand advertising
• Three reasons to maintain, or increase,
  advertising spend
• less clutter in traditional media means more
  chance to stand out
• brand advertising makes a product/service stand
  out. While everyone else is cutting back, there
  must be a good reason why youre still going
  strong. Success breeds success
• brand advertising supports direct response. Brand
  advertising increases awareness, name recognition
  and the effectiveness of direct marketing efforts

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Radio Advertising. Economically Sound

• The Innovation Engine

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The Innovation Engine

• What do Microsoft, MTV, and the iPod have in
  common?
• These great brands were born during recessions -
  FedEx 1973 People Magazine1974 Microsoft
  1974 CNN1980 MTV 1981 iPod 2001,
  Wikipedia2001
• 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

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The 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

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Radio Advertising. Economically Sound

• A time for Opportunity on Commercial Radio

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A Time for Opportunity on Commercial Radio

• 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

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A Time for Opportunity on Commercial Radio

• The radio industry is embracing emerging
  technologies to continue to foster its close
  relationship with listeners and to complement
  existing radio technology.
• Radios place as part of peoples everyday lives
  means Commercial Radio continues to thrive. Radio
  is embracing and using technology to cement its
  relevance.

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A Time for Opportunity on Commercial Radio

• 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

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A Time for Opportunity on Commercial Radio

• 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.

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A Time for Opportunity on Commercial Radio

• 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.
44
A Time for Opportunity on Commercial Radio

• Commercial Radio listeners Food shopping habits
• Across 2008, in an average week Commercial radio
  reached 76 of Grocery Buyers. That is
  8.79million different grocery buyers each week
  tuning into Commercial RadioOf 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

Source Nielsen Panorama, Survey 2 Fused Metro
12mthly database (Apr 2008 Mar 2009) and
Nielsen Radio Ratings, Survey 1-8 2008, Monday to
Sunday 530am-12midnight, all people 10years,
unless otherwise stated. .
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A Time for Opportunity on Commercial Radio

• 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

Source Nielsen Panorama, Survey 2 Fused Metro
12mthly database (Apr 2008 Mar 2009) and
Nielsen Radio Ratings, Survey 1-8 2008, Monday to
Sunday 530am-12midnight, all people 10years,
unless otherwise stated. .
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A Time for Opportunity on Commercial Radio

• Commercial Radio Listeners and Cafe habits
• Of 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
•  

Source Nielsen Panorama, Survey 2 Fused Metro
12mthly database (Apr 2008 Mar 2009) and
Nielsen Radio Ratings, Survey 1-8 2008, Monday to
Sunday 530am-12midnight, all people 10years,
unless otherwise stated. .
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Radio Advertising. Economically Sound

• Commercial Radio a dominant choice

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Commercial Radio Reach Frequency a dominant
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.

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Commercial Radio Reach Frequency a dominant
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 radios average reach is 61 of all
  Australians.
• The frequency of radio ads can jog the memory to
  reinforce the message.

Source Nielsen Radio Ratings, Average of Five
Capital Cities, Survey 1-8, 2008. All people
10yrs, Monday-Sunday 5.30am-12mn.
50
Commercial Radio Reach Frequency a dominant
media choice

• 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
51
Commercial Radio Reach Frequency a dominant
media choice

• 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
52
Unique 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

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Radio Advertising. Economically Sound

• Radio in Combination with Other Media

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Radio 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

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Radio in Combination with Other Media

• 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.

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Radio in Combination with Other Media

• 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 partners 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

57
Radio in Combination with Other Media

• 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 online

Source Nielsen Media Research Panorama Fused
Metro Survey 9 2008, (Nov 07 Oct 08), All
people 14yrs unless otherwise stated.  Panorama u
tilises a 100 Online Methodology
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Radio in Combination with Other Media

• Radio Complements Television
• Radio and television are logical partners with
  radios 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.

59
Radio in Combination with Other Media

• Radio Research Radios 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.

60
Radio in Combination with Other Media

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

61
Radio in Combination with Other Media

• Radio Research Radios 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.

62
Radio in Combination with Other Media

• Radio Research Radios 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.

63

• For more information on any of the topics covered
  in this presentation, visit www.commercialradio.co
  m.au
• Or contact Batoul Alamein batoul.alamein_at_commercia
  lradio.com.au, 02 9281 6577