• by Erik Sass  @eriksass1, March 16, 2006

Terrestrial digital radio will bring a much-needed revolution in radio interactivity and advertising--but it will face stiff competition in an ever more engaging media environment, according to media planners on a panel at the Radio Advertising Bureau's (RAB) industry summit on Wednesday.

Radio execs have pinned their hopes for a revival on terrestrial digital radio, which was introduced with much fanfare by a consortium of major radio players called the HD Digital Radio Alliance in January. "We're at the beginning of a revolution in radio not seen since the 60s, when FM technology came into its own and changed radio forever," predicted Dennis McGuire, vice president and regional spot director for Carat USA. Peter Ferrara, president of the HD Digital Radio Alliance, agreed: "I have never seen the radio industry as singularly focused and committed to one thing as they are with HD radio."

But for all this optimism, John Kelley, senior vice president of marketing for Monster.com, sounded a note of caution early in the discussion. "From a client perspective, we are very intrigued by the revolution that's going on in radio," Kelley conceded. "But I think one of our challenges is--there's a revolution going on in so many different media right now... The question we are faced with is sifting through all the available technologies--all the things that are out there to build our business."

"If you think about the changing media landscape, it's hard to just look at radio on its own," agreed Bob Stohrer, vice president of brand and communications for Virgin Mobile USA. "As a client I look at how I can best engage a youth audience... and it's not necessarily enough to say our ads ran and were heard by this many people... It's not enough to have sampling bands; it's not enough to be situated in commercial pods where you have ten advertisers."

Responding to these points, Ferrara admitted: "The cell phone, the computer, Wi-Max--all those things are going to be part of the field in which we all compete to try and reach the consumer." But Ferrara was still confident, reminding the audience of radio's basic dominance in local advertising: "I think the power for HD radio is that it's still local--it's still about that relationship with the community, with the local marketplace."

And here, Ferrara received no argument from the other panelists. Indeed, Kelley described Monster.com's current success with traditional analog radio advertising: "We are trying to better position Monster.com as the leading provider of jobs and candidates in your local community, and that's where radio has really been able to help us. For example, we were able to engage with many of the DJs, who have that strong affinity with the local marketplace."

And HD radio technology does offer some solutions to the challenge of new media. For one thing, Ferrara predicted that multi-casting will significantly reduce ad "clutter": "While certainly some broadcast companies will look to traditional spot advertising, as they look to get additional space for premium inventory they won't do it at the same levels that they're currently doing it. In other words, there will be a net gain of inventory on the air, but inventory by individual frequency will go down." This should make radio more palatable to young listeners who expect more content and fewer ads.

Meanwhile, multi-casting will allow a greater degree of personal choice, according to McGuire, who predicted that "niche programming will pull people in." And looking ahead, Ferrara pointed to interactive features like fast forward, pause, rewind, and record, as well as "buy" or "more info" buttons, which will be featured on most HD sets by 2008-9 and could yield more precise ratings, as well as easily tracked ROI: "If I put on an advertiser's hat... and someone tells me... you can put a 'buy now' button and actually talk to the consumer who has interest--how much would you pay for a qualified lead like that? I assume more than a regular ad now."