The headline in The Australian screamed “Dirty little secret: what the radio industry doesn’t want you to know.” The article beneath it called into question the veracity of revenue figures provided by CRA for metro stations for the month of March. Asked by radioinfo whether the headline was a little over the top, the story’s author, Lara Sinclair, distanced herself from it, placing blame on a nameless and un-contactable sub-editor. Pressing on, we asked why she would think that the commercial radio industry would fudge revenue figures. She replied, “I was careful not to speculate as to reasons. Rather the article focused on the discrepancy between the figures.”
What figures? Well, there’s two sets. The one that has for years been supplied each month by radio stations to their peak body Commercial Radio Australia (CRA) and the other, from a relatively new outfit called SMI, formed two years ago by former media editor, Jane Schulze. The SMI figures, we are told, are supplied by the advertising agencies and media buyers who book ads.
The discrepancy lies, according to the Lara Sinclair article, in the fact that CRA has reported a 0.3 per cent increase in revenue, year on year, for March 2011, while SMI reckons that there’s been a 16.29 per cent decline.
This would be big news if there was any close correlation between the CRA numbers which reports total station revenue and SMI’s which reports some, but not all, agency bookings. Ms Sinclair herself admits, “The limitations on SMI’s data are well known in the advertising industry.”
Limitations? Firstly, SMI only reports figures from larger agencies and buying shops leaving out many boutiques. Moreover they have no way of measuring direct advertising, which makes a significant contribution to a metro station’s revenue base. It is also unclear whether SMI includes the full amount of revenue derived from cross-platform campaigns that include an online and/or promotional component. Taking all those disclaimers into account, Ms Sinclair nonetheless insists, “They did not seem sufficient to explain a gap of 16 percentage points.”
Who to believe?
For a clearer picture, radioinfo has sought the aid of a “third umpire” in the form of our founding sponsor AirCheck who monitors all advertising on all commercial stations in all five metro markets. The results are illuminating, if not conclusive.
According to AirCheck, in March 2010, they recorded a total of 466,962 advertising instances, including sponsorship credits.
In March 2011, they recorded 465,042.
Taking out the sponsorship credits, the figures change slightly…
For March 2010 – 446,942 advertising instances
For March 2011 – 459,540 advertising instances.
You can do the math to work out the percentages. Either way, there’s a bee’s Richard in it. Which tends to support CRA’s 0.3 margin over last year’s revenue.
The AirCheck people are careful to qualify their findings with their own disclaimers, “Instances can be any length and live reads are not included. Still, one would assume a similar mix 12 months on,” says CEO, Keith Williams.
Also, AirCheck has no way to tell what was paid for each ad.
For SMI, which has grand designs on becoming a world-wide authority and major supplier of advertising revenues and buying trends, the ‘Dirty Little Secret’ headline and the story in The Oz is great publicity. For the Radio Industry, not so much.
On very flimsy evidence drawn from a very long bow that compares apples with hoola hoops, it accuses the industry of cheating by keeping secret a massive fall from favour with paying adverisers. That’s a big call.
No one is disputing SMI’s figures. It could well be that advertising bookings from those agencies that it surveys have, indeed, dropped by a whopping 16.29 per cent compared to March 2010. But just because they are telling their ‘truth,’ it doesn’t automatically follow that CRA is lying by telling theirs. Especially since it is so obvious that they are reading different data.
In fact, Ms Sinclair wrote, “(SMI )publisher Jane Schulze said there was no clear explanation for the discrepancy in the numbers.” If that quote is accurate and Ms Schulze did not say words to the effect that there can be no explanation other than CRA is telling lies, then how can Ms Sinclair take it upon herself to make such a monstrous accusation?
Maybe it is because she caught CRA CEO Joan Warner telling a fib. She reportedly told Ms Sinclair that the CRA figures are audited by Deloitte. “Ms Warner insisted that her industry figures were audited when clearly they weren’t,” Ms Sinclair told us last Friday.
By strict definition, they are not. Deloitte does not go to each station and cross check every order with every log as would be required for a full audit. It merely collects, collates and crunches the figures supplied to it by stations and then hands the summary to CRA.
Okay, if the worst is true, that Ms Warner deliberately lied about the figures being audited rather than simply choosing her words carelessly, it is hardly in the Gillard category of “No carbon tax.”
Since the revenue reported by individual stations is not published, it hardly seems feasible that they would take it upon themselves to fudge. And although Deloitte does not audit the numbers at station level, they are witness to the overall figures they provide. They would not allow their name to be used by CRA in official documents and media releases if they knew that the numbers quoted were different to those that they had supplied.
To further make her case that radio revenue is in steep decline Ms Sinclair quotes UM chief executive Mat Baxter, who says “Radio would be the natural victim of growth (in digital free-to-air TV multi-channel revenue).”
While he is entitled to his opinion, others may prefer that of media doyen, Harold Mitchell, who in the Fairfax press wrote, “Radio is the great survivor. In the wake of the internet, radio has continued to grow since 2000. There were 222 radio stations across the country then. Now there are 730. And radio is the only major traditional medium to maintain its share in the advertising market.”
And that’s the point: The only share that really counts is Radio’s share of audience. That is what media buyers buy. And that, according to Nielsen and many other reputable surveys is holding up much better for Radio than for any of its main media competitors.
As fair right of reply, Ms Sinclair has promised that a letter from Joan Warner refuting the assumptions in the article will be published in Monday’s edition of the paper.
So what do you think? Are true revenue figures Radio’s Dirty Little Secret? Or is it more to do with deflecting interest in the steep decline in newspaper revenue – which is no secret?