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Monday, August 20, 2007

HD Radio: Why Marketing Matters

I was impressed with the British Invasion in the 1960's. "Those Brits are real good", I thought to myself as the whole string of music successes starting with the Beatles came across the 'pond' to invade America.

Now, they're showing up America once again, but this time it's in the area of HD radio - or "Digital Radio" as they package it.

In a survey just released by Britain's ratings service RAJAR, more than 25% of the British population listen to digital radio, defined as Digital Audio Broadcasting, Digital Television and the Internet.

At first glance, this is rather impressive. However, when combining those three digital radio sources in the U.S., the percentage of the American populous that listens to some form of digital radio is closer to 50%:
  • Internet radio - 60 million
  • HD Radio - 500,000
  • Digital TV - 90 million homes
What is intriguing is the marketing of digital radios (comparable to the U.S. HD concept).

Unlike the U.S. where broadcasters must market HD radio by themselves and with the help of the National Association of Broadcasters, the United Kingdom has a dedicated body: the Digital Radio Development Bureau.

It has become clear in our studies at Bridge Ratings that there is considerable consumer confusion in the U.S. about HD radio and its benefits. Three quarters of the U.S. population has heard of "HD Radio". Less than 5% really want it.

So, the Brits and their Digital Radio Development Bureau are taking the U.S. broadcasters to school about digital radio. Here are some of the ways Digital Radio is marketed in the UK:

  • More Choice - "Because of the way it transmits a signal, DAB Digital Radio can double the number of radio stations you can get on FM. Many cities will pick up around 40 stations, and in London you can receive more than 50!

There are national, local and regional stations on DAB Digital Radio, and more than 85% of the population is covered by the DAB signal.

It's not just more of the same... there are new, unique stations on DAB with programmes designed for different segments of the population. So, rather than trying to be all things to all people, DAB means you can have stations dedicated entirely to dance, hip-hop, garage, rock, jazz, big band, country, pop, soul and disco. Or your can get stations specifically for young children, the mature listener, ethnic communities, news junkies, sports fans, lovers of the spoken word, world music and environmentalists, gays, classical buffs, other words, something for everyone."
  • No Interference - "DAB Digital Radio means interference free listening in digital quality sound. There's no hiss, crackle, or pop, no fading, no overlap, just great radio all the time. We've surveyed thousands of DAB owners and nearly 90% reckon DAB sounds great."
  • Ease of Use - "Quick, what's the frequency of your favourite FM radio station? You'd be surprised how many people know the name, and kind of, sort of where it is on the dial, but waste time searching around for it. Some people are even afraid to change stations because they worry they'll never get back to their favourite. Others mark the dial with a pen, or sticky tape so they'll always be able to find their way home... a bit like a trail of breadcrumbs.

    With a DAB Digital Radio there are no frequencies. Just choose the station you want by name from the text display screen. It's easy every time and you don't need to worry about getting lost."
  • Control Time - "With some DAB Digital Radios let you pause and rewind live radio. And with some of the latest models, you can record radio to a memory card. For the first time this puts you in control of when you listen to the radio. You can stop time, go back in time, or set a timer to record a future programme."
  • No Re-tuning - "National DAB Digital Radio stations, both commercial and BBC, are broadcast on the same frequency across the country, so you never need to retune when you're on the move."
Does all this sound vaguely familiar to you? It should because it is almost exactly the Satellite Radio model. In the UK, though, the contemporary evolution of radio is focused on Digital Audio Broadcasting (DAB) services, such as HD Radio rather than satellite radio.

Much has been said of American radio's indecisiveness when it came to moving into the 21st century with HD/Digital Radio. It took so long, Satellite Radio took the position right away from U.S. Broadcasters. And now the fight to insert HD radio into the lives of Americans has become an offer of another product where there already is one.

Yet, marketing may solve this problem - but it also may be too late.

In our society we thrive on choice - too much choice - and the successful products that have identical competitors are the ones that market and position themselves most skillfully. Has anyone read Ries & Trout's The 22 Immutable Laws of Marketing"?

Oh, and one more thing. Digital radios in the UK start at about $58 (29 pounds).

So, while the UK has managed to effectively launch Digital Radio, U.S. Broadcasters - who should know better - are fighting a positioning battle which, frankly, is over.

HD Radio in the U.S. is a niche market out sized by Internet Radio and Digital TV music services. And portable digital radio will be real with the arrival in the near future of wide-area-wireless Internet or Wi-Max.

This lesson has been difficult to learn - but it is time to face the facts.


Day of the Jackal said...

The UK has been dishonest about claims of success with DAB digital radio:

"2004/13 – DIFFUSION online"

"The DAB market has been very slow to catch on. The technology is 10-15 years old, and though it can be said that DAB is perhaps the most talked about technology, it can also be said that DAB has perhaps put itself into a corner."

"President of WorldDMB was dishonest about DAB+ on BBC TV"

"There seems to be some confusion over the cumulative DAB sales in the UK so far, with Quentin Howard suggesting that there's been 4.5m receivers sold in the UK but the BBC saying that 3.5m have been sold... that there are around 120m FM radio receivers of one kind or another in the UK, then 4m only represents 3.3% of all the radio receivers in the market."

Just as with all the hype about HD Radio HD/IBOC in the US, consumer interest is about ZERO after a two-year $500 million ad campaign:

Perhaps, consumers are not falling for the "digital radio" hype ?

nickpiggott said...

I'm afraid "Day of the Jackal" is selectively quoting, or quoting from resources which are far from impartial.

DAB was "launched" in the UK in 1995, by the BBC, who simulcast 5 of their existing radio services. However it is generally accepted that two events mark the effective launch of DAB to the public in the UK:
* The nationwide launch of DigitalOne in 1999, offering brand new digital only services (followed by relentless rollout of digital radio to local and regional radio services over the next 3 years)
* The launch of the PURE Evoke One receiver into retail at UKP99 (USD199) - prior receivers were HiFi only units retailing at USD600 or more.

The sales of DAB Digital Radio receivers in the UK are accepted to be in the region of 5m. As in any measurement, it is not exact, and does indeed change day by day as more receivers are sold.

RAJAR (the audience measurement body) figures have just shown that 12m people (of a population of about 60m) listen to radio digitally - a compound of DAB, Online and via Digital TV. But DAB forms the majority of this listening - online accounts for only 1.5% of listening in the UK.

There are a small number of disgruntled people in the UK. When DAB was originally marketed, it was done on the basis of "CD Quality Audio" and "High Quality Audio". This was utterly ineffectual, as the number of audiophiles who would be motivated by sound quality alone to buy a new radio was vanishingly small (despite being a very noisy and somewhat narrow-minded bunch). When broadcasters greatly increased service variety, the proposition became far more attractive and receiver sales took off. Despite some reduction in bitrate per service to accommodate the new services, 94% of listeners surveyed by OFCOM (the UK equivalent of the FCC) rated the sound quality of DAB as good or very good.

If the UK made a mistake in marketing DAB, it was to start with a proposition (high quality audio) that appealed only to a tiny, obsessive, sector of the market. Only a dramatic change in 1999-2000 to focus on a mass market benefit of "variety" did the situation start to turn around.