The UK Audio Market

It was quite the wait, but on 28^th October, after 18 long months, the radio industry finally got its latest Rajar results.

Finally!

To maintain an understanding of the radio markets movements during the Rajar hiatus, we scoured the market for the very best research from IPA Touchpoints, Mediatel Connected, Government’s Digital Radio and Audio Review, OFCOM Media Nations, Radiocentre and the Internet Advertising Bureau. In this time period, millions upon millions have tuned into hear their favourite presenters, artists and celebrities and provide welcome companionship, comfort, news, and entertainment. Millions have also turned to streaming services for company and podcasts for entertainment and learning. But the release of the new Rajar data has provided some much welcome clarity and perspective. It also provides us with an obvious point at which to take a step back and look at not just the radio market, but also the wider audio market.

In this paper we will explore these new numbers to provide clarity on where, when, and how the UK consumes not only its radio, but all its audio. We will also look at how these new listening habits have changed compared to the past – across radio, streaming and podcast listening – as well as their practical and creative implications, and what we can expect the world of audio to offer us in the future.

Contents

• Section 1 – The Audio Market
  • Radio
  • Streaming
  • Podcasts
• Section 2 – Audio Types and Markets
  • Audio types and traits
  • Creative

• Section 3 – A view to the future
  • How people will listen
  • Voice activated speakers
  • Share and spend projections

1 – The Audio Market

UK audio market overview

Over the last decade, radio has gone from strength to strength. It has evolved to embrace new digital opportunities and maintain its universal appeal to audiences. It has innovated to remain current, vibrant, and vital.

The value of live radio has never been more apparent than during the COVID-19 pandemic, when a third of commercial radio listeners have reported listening to more radio than previously. At one stage the Radiocentre reported that 37% of listeners were tuning in for an additional 1 hour and 45 minutes per day.

DAB digital radio has given listeners a greater choice of services – with national stations opening to provide new content, and small-scale DAB opening new opportunities for smaller commercial and community radio services. But the landscape over the past 10 years has become more complex. IP delivered services – via smart speaker – have grown rapidly in recent year and will form a big part of radio’s future.

Alongside a booming radio market, new online audio formats, including on-demand music streaming and podcasts from both existing broadcasters and new entrants, have emerged and grown rapidly, bringing increased choice and new habits to the UK’s audio sector. With additional choice and ease of access, listener behaviour is also changing, and these changes appear to have gathered further pace during the pandemic.

Within the world of audio, there is now more choice than ever, and from a marketer’s perspective, there is equally as much to understand. Audiences lie across multiple platforms and the different platforms offer different audiences. In this paper we will also uncover the ‘sweet spots’ for various groups of listeners.

Before we move on, and to build some context into what follows, it is important to understand the current mix of the UK’s audio consumption. Radio accounts for over two-thirds of all audio consumed in the UK. Music streaming services such as Spotify and Apple Music make up 15%, podcasts account for 4%, catch up radio 2% and then a collection of CD, cassette and vinyl listening, owned music and audiobooks make up the remaining 9%. Whilst much has been made of the growth of streaming and podcasts in particular, it is still radio that the UK turns to en-masse for the bulk of its audio needs.

So, let’s dive into the numbers!

radio

So, what did we learn from Rajar Q3 2021? We learned that radio in the UK, and in particular commercial radio, is in a very strong state.

The headline stats are:

• Radio in the UK is now reaching 49.5m people per week – this is 89% of the population
• People are tuning in for 20.4 hours of radio per week
  • In total the UK listens to over a billion hours of radio each week
• Commercial radio reaches 36.8m per week – a record and 500,000 up on the last Rajar
• Commercial radio reaches 2.2m more than the BBC
• 41 million adults or almost three quarters of the population aged 15+ are now tuning in to radio via a digitally enabled platform (DAB, DTV, Online or App) each week.
• 48% of people claim to listen to radio via their smart speaker each week
  • 18% say they use one every day

Radio has provided company and entertainment for the population over the last 18 months and has been rewarded with some amazing listening statistics. Through a vast array of choice, engaging content, and star talent, the commercial radio industry has scaled new heights, able to reach all audiences at scale. However, perhaps more interestingly, Rajar gave us a fresh perspective on how people are consuming radio within the UK – with a notable shift away from FM/AM towards digital listening. Before March 2020, 42% of all listening was via AM/FM but that has now reduced to 34% – with DAB listening growing to 43% and online up to 18%.

Radio Listening by Platform (2)

It is not surprising to see digital grow, digital listening has seen continued growth over the last decade. But with more time spent at home and the proliferation of voice activated speakers, digital share grew by over 7pp since Q1 2020. Digital share now sits at a record 65.7%. If we look at two of the new stations, Times Radio (launched June 2020) and Boom Radio (launched February 2021), listening hours for Times are two-thirds DAB, and one-third internet, whilst Boom’s hours split is 50/50 DAB and Internet.

Whilst the growth of digital is impressive, it should be noted that the bulk of digital listening sits on DAB. The addition of multiple new national DAB stations over the past few years such as Virgin, talkSPORT2, Capital XTRA and Heart 80’s are providing choice for the consumer and many new options for brands. DAB now accounts for 65.4% of all digital listening, with online at 27.8% and DTV 6.8%. Although DAB is still the dominant force, online listening has seen substantial growth – with listening hours growing nearly 33% from 138m to 183m. DAB hours have also seen strong growth, up 10% in the same period.

In 2021, 50% of adults claimed to have a smart speaker in their home. For those aged 55 and over, take-up of smart speakers was slightly lower than among younger age groups, at 45%. The most popular activity by those who used smart speakers in 2021 was listening to music via a streaming service (66%), followed by listening to live radio (60%). With audio becoming a more central aspect of the household, it is unsurprising to see such strong online listening growth. We should also expect this to growth to continue, likely at the expense of AM and FM.

As expected, there was also a notable move towards listening at home whist the amount of listening taking place in the car and at work has decreased.

 Digital Share of Radio Listening (5)

And when we look at the times people are tuning in, we see that whilst the breakfast peak remains, but listening remains more consistent through the day. People are therefore tuning in more consistently through the day. Radio is becoming even more of a companion than it has ever been.

So, is it all good news? Mostly, but there is an area of concern, namely youth listening. Over the last few years there has been steady, albeit slow decline in youth listening, lost mainly to music streaming services. This is affecting both reach and hours. In the case of Rajar Q321 this loss appears to have come largely from BBC Radio 1. However, it is also being seen on Kiss with a drop in reach and hours, and Capital with a drop in hours. However, when we split 15-24s into 15-19s (teenagers) and 20-24s, the reach of 20-24’s is actually up 7%. The problem is therefore with the teenage listening – a 30% drop.

The UK’s youth stations service a broad audience. The listening of Kiss, Capital and Radio 1 sits firmly in the 20-44 range, so there is a risk of youth audiences not growing with radio. It should be noted that radio in the UK is still reaching more 15-24’s than Spotify for example, but radio is not owed teenage listening, and teenagers have the world at their fingertips, so some work is clearly needed to protect radio’s future in this area.

Despite the slight problem with ‘the kids’, radio can reach audiences of all types in all places. Through national brands, regional and local stations, and digital audio targeting via Global’s DAX and Wireless/Bauer’s Octave, there are options available from the broadest of brushstrokes to the finest detail, from mainshoppers through to c-suite executives. Radio is listened to by the masses, but the advent of digital targeting allows us to reach bespoke and niche audiences, making radio a viable option for any brand.

The Rajar results show radio, and commercial radio, to be in in rude health. With more listening at home, more listening via digital platforms, and more consistent listening through the day, listening patterns have certainly changed. But, critically, more people are tuning into commercial radio every week than ever before. This gives us a vast range of options when planning campaigns. There is a station for every age range and demographic.

More than ever, radio is a mass reach medium, able to speak to multiple age ranges and demographics at scale.

music streaming

By the end of 2020, streaming was accounting for 80% of all music consumed in the UK. It is now simply how we consume most of our music. In the UK, 45% of adults listened to online music streaming services in 2021, increasing to 82% of 15–24-year-olds. There was a dip in reach during the first national lockdown, particularly driven by the 35-44 age group. This is likely to be due to the reduced commuting time, however as normality slowly returns, so will listening to streaming services.

Whilst YouTube is the largest streaming platform, the largest ‘audio first’ platform is Spotify, and as it is commercially accessible, this is where our attention will stay. Where radio has seen a slow but gradual decline in younger audiences, these audiences are abundant on Spotify. 24% of UK Spotify users are 16-24’s and 23% are 25-34’s. Just 10% are 55+. So, whilst radio still reaches more 15-24’s than Spotify, the two are nearing parity. Spotify is a valuable tool in reaching youth audiences, teenagers especially. Conversely, reach for older audiences is abundant on radio and small on Spotify.

Spotify’s headline stats are:

• 26M monthly active users in the UK, up 27% YoY, with a 50/50 split between Ad-Supported and Premium
• 70M+ songs, 4B+ playlists, 3.2M+ podcasts, 178 markets
• Average Time Spent Listening: 2.6 hours a day
• 46% of listening is via mobile and 21% via a voice-activated speaker
• Q3 2021 was Spotify’s largest advertising sales quarter, both globally and in the UK

Like radio, Spotify has shown recent growth, but both complement each other. Spotify provides an average of 22% weekly incremental reach on top of the major radio stations in the UK. This makes Spotify able to provide both its own audiences at scale and incremental targeted audiences on top of the mass reach or radio. 13m are using the Spotify Free service in the UK, that is 3m more than the biggest radio network, Heart.

Much of Spotify’s recent business strategy has centred around acquisition, particularly in the podcast sector. This has seen spends of hundreds of millions of dollars in production houses and ad-tech companies, as well as the production of original series featuring names such as The Obamas, Bruce Springsteen, and Joe Rogan. The aims here are twofold, firstly to become the world’s largest audio platform (Spotify is now the largest platform in the UK for podcast listening), and secondly to create the greatest understanding of listeners interests. The more people listen, the more we know about a user, and this in turns allows us to target users accurately.

The acquisitions have also resulted in a vast range of targeting capabilities, meaning that on Spotify we can now speak to a huge range of audiences based on ages, locations, and interests; from 30–40-year-old female fitness enthusiasts across podcast titles nationally, to 20–25-year-old male tech enthusiasts in Manchester, or even specific postcode. Further data partnerships mean we can create bespoke audiences for any campaign.

1 in 5 minutes spent on Spotify platforms is spent looking at the screen, and given the average time spent with Spotify is 2.6 hours a day, it can now be considered a multi-media platform – with video a large part of the commercial offering. Multi-platform campaigns on Spotify have shown an 80% increase in recall and a 90% increase in awareness. The use of video alongside audio can therefore provide a strong companion to any visual campaigns.

The Spotify offering is now extremely robust. It must be remembered that the bulk of the scale sits with youth audiences, but with substantial reach, millions of songs and podcasts, and a plethora of targeting options, the range of options open to brands on the platform are both large and exciting.

Podcasts

The podcast has very much been the growth story of the past few years, and with more time at home recently, podcasts, just like radio and streaming, have seen some solid growth. 2020 was the catalyst for a significant jump in listening, and although that growth looks set to slow, it is predicted that growth will continue.

When we look at where the growth has come from, we can see that it has been the 15-44 group – with 15-34’s accounting for most of that growth. 44+ audiences appear to have decreased a little over the last couple of years. Broadly the podcast market is attracting a younger, up-market audience with a slight male skew.

This audience is extremely useful commercially; 66% have a premium Spotify account and 42% use an ad-blocker. 87% are also light or non-commercial radio listeners. This is therefore a valuable group of consumers, providing incremental reach to commercial radio, but also providing an audience that are less likely to listen to other forms of audio. Of these:

• 39% more likely to have a Bachelor’s degree      
• 39% more likely to be in senior management
• 38% more likely to be in full-time employment
• 76% have acted on a brand message within a podcast
• 41% more likely to be business decision maker
• 134% more likely to be an early adopter

Podcasts also provide a unique opportunity by offering niche audiences that the more mass-reach nature of radio, particularly for higher-end audiences, that have in the past proven harder to target via audio.

Even though nearly half (47%) of podcast listening takes place within the home, 73% of it is via smartphone and 92% listened to alone. With such a personal listen, a brand can benefit from a far less cluttered and intimate ad experience.

Whilst the podcast market has attracted plenty of attention due to the rate at which it has grown, and the sheer number of titles now available (Spotify currently host 3.2m), it is important to remember that the scale of the market sits with a smaller number of large podcasts – that drive substantial reach on their own.

Online listening and creative

The Rajar result proved that commercial radio has escaped the pandemic unscathed; more people are listening

The Rajar results proved the strength of commercial radio – as more people are listening than ever. This, allied to the growth of streaming consumption and podcast listening, means we also have more ways of targeting more audiences with audio than ever before. Whilst this is all good news for the audio industry, brands must be mindful of when and why consumers consume different forms of audio, and how these feed into creative, particularly across various forms of online listening.

A recent study by the Internet Advertising Bureau (IAB) showed that online listening peaks far later in the day than radio. And this is true of all online audio types. With in-car listening largely driven by DAB and analogue, radio still has a morning peak, but the traditional breakfast peak is nowhere to be seen in online listening. Music and radio streaming peaks in the afternoon and podcast listening peaks late evening.

Online audio is a perfect accompaniment to everyday life – people can take it anywhere. Audio also plays a functional role; people choose audio content that will have a particular impact on their mood. Different forms of audio play roles in complementing and creating mood states. Streaming services offer the opportunity for personally curated content that can be consumed both individually and as part of a social setting. Podcasts, very much a personal and intimate listen, are consumed during ‘downtime’, and radio is excellent at providing company through the day, allowing an individual to focus on their day.

Defining traits of online audio types

As well as showing how different types of online audio fulfil different need states, the IAB research also showed that across audio types there was a recognised value exchange between free content and advertising – 60% recognise advertising as fair exchange for free content and only 12% disagree. However, owing to the more personal and curated nature of online audio, relevant creative has become increasingly important. 42% of listeners remember audio ads more when they fit in with the moment or social setting they are in, and 45% are more likely to consider buying a product after encountering an audio ad that connects with them in the right way. Recent research by Spotify looked at the Value of Personalisation and found thatchoice drives engagement across all media types, with an 18% increase in engagement with the platform when you can choose your own content.75% of Spotify Free listeners say they remember ads more when the ads recognise their moment or setting.

Online audio ads do need to work hard, but brands are rewarded with high engagement and enjoyment.  So what are the options?

Data Driven Creative

As audio listening develops, audio creative executions have developed too. With listeners often hearing tailored music playlists or podcast content, often while on the move, the need for messages to engage the exact listener at the exact moment in time they are heard has increased. Data driven creative allows us to do this. It combines all the data points known about the user, their environment, and the campaign, to influence the creative they hear. The more we know, the more personalised versions we create, making for a more intimate experience. By investing upfront in data driven creative, an advertiser can personalise their audio messaging at scale through thousands of possible creatives – and save both time and budget over the course of a year.

Binaural Audio

‘Binaural audio’ is simply a fancy way of describing how human beings naturally hear sounds – ‘bi’ meaning two, and ‘aural’ referring to your ears. Soundwaves hit each ear at different times, at different volumes, and with that information your brain can calculate the origin of the noise. That is how you can tell, if you were to close your eyes, how close or far away a particular sound might be.

Although this is how we hear normally, it is not how we listen to music. When we put on our headphones the audio is positioned directly in the middle of our heads. Binaural recordings are optimised for headphones, using stereo panning techniques to recreate the perception of space. Creating a far more immersive experience, Binaural, or 3D audio, offers digital audio listeners the perfect listening experience. It transports them into a fully immersive audio environment with SFX panning left to right, giving them a sense that what they are hearing is happening all around them. For a more personal listen, such as a podcast, this can prove to be an extremely engaging creative format. With radio’s increasingly digital footprint, this technique will provide great value in the future.

The Importance of the Audio Brand

With all these changes to the audio marketplace, and substantial additional choice for the consumer, especially in the face of the proliferation of ad free subscription-based services, it is harder to grab attention. Advertisers therefore need a consistent audio brand more than ever. An audio brand can work in many places beyond radio and digital audio. It can be present in TV creative, on a company website, on podcasts, at point of sale, in a business-to-business presentation, on-hold on the phone, or on a smart speaker. As Radiocentre research shows, consistent creative across all touchpoints is the most effective means of stimulating listeners. Having a clear audio brand that reflects a brand identity is crucial as we embrace digital audio’s evolution.

a view to the future

Radio’s share is expected to still account for the majority of listening by the end of the decade, although that share is predicted to decline, largely due to the increase in music streaming. Although podcast listening is predicted to continue to grow, its overall share is predicted to remain relatively small by the end of the decade.

Radio is still set to be the dominant force in the audio world for the time to come. A more immediate concern for radio is how it tempts back younger audiences from music streaming services which look set to eat into radio’s share.

How Will People Listen

The Q3 2021 Rajar results demonstrate a clear migration away from analogue listening to digital, largely driven by DAB, and the digital switchover is slowly coming into view. The recent DCMS Digital Radio and Audio Review considers in some detail the overall radio and audio markets in the UK. It suggests that we will continue to need FM radio until at least 2030 but “…that the UK radio industry should begin preparing the ground for a possible switch-off of analogue services at some point after 2030.” More immediately, AM radio is reaching the end of the line. The BBC has already begun closing some local AM services.

As we have already discovered, the use of smart speakers is helping to drive digital listening within radio, but these devices are also a driving force behind music streaming and podcast listening. For a time in 2019, Spotify were even giving Google Home devices away with subscriptions. The number of smart speakers sold in the UK has grown consistently over the last few years and shows no sign of slowing down. All this has the effect of placing audio at the centre of the household.

These devices now account for 6% of all audio consumption – with 64% of all audio consumed via a smart speaker being radio. UK radio groups have secure carriage on voice-activated speakers and have developed skills to ensure a better experience for listeners. Several groups have also invested in direct relationships with the platforms to try and secure a better presence on connected devices. However, radio broadcasters and audio publishers have no ability to maintain a level of control over how their content reaches their listeners. The DCMS review therefore recommended the following:

Creative Opportunities on Voice Activated Speakers

Whilst few brands have explored this relatively new territory, some tested the possibilities of voice. Bayer Consumer Health’s Berocca ran a new ad format for Amazon Alexa designed to drive sales conversions for its Berocca Boost vitamin tablets. Audio ads were dynamically inserted during radio listening through Amazon Alexa devices. Each ad ended with a call to action to activate an Alexa skill. When consumers started the Alexa skill it offered information about the product and enabled them to make a purchase by voice, using their existing Amazon shopping account details.

Cosmetics brand NARS launched a voice-activated ad campaign targeting Spotify listening through a smart speaker. It enabled the voice-activated delivery of blush, lipstick or mascara samples to listeners’ houses by encouraging listeners to say to their device: “Ask Send Me a Sample for NARS”. Product samples were then delivered to the listener’s home, thus engaging with beauty enthusiasts in a way they found useful during the lockdown period.

The IAB paper, ‘Find Your Voice’, offers some sound advice on how to make the most of the voice opportunity:

• Meaningful interaction: Consider where else within the customer journey you could establish a meaningful interaction. Is customer service or ease of purchase an opportunity to build your voice services?

• Availability and access: Within voice, brands should be readily available and easily accessible throughout parts of the customer journey. Also, brands need to think carefully about where the greatest need for voice is – hands free situations, like driving a car, cooking, or doing household chores. Brand sound should be considered here.

• Maintain engagement: Post-purchase communication and reassurance could leverage all the emotional power of voice to establish and consolidate a relationship with consumers.

Radio Ad Spend and Share

The ultimate test, however, is in the commercial strength of the market. According to the July 2021 latest release from AA/WARC, radio (which by its definition encompasses spend across spots, sponsorship and online listening) currently makes up 2.5% of the total UK adspend share, at £577 million in 2020. The pandemic created a dramatic decline in 2020, down 17.9% on the previous year’s figures, but the market is predicted to end 18.6% up this year, and then up 4.1% in 2022.

To put it another way, 2021 is set to be a record year for revenues within commercial radio, and 2022 is set to be even bigger.

summary

So, what is the state of the audio market?

Some of the listening changes brought around by the pandemic will stick and others may be temporary. It is likely to take a couple more quarters of information before we can know if these changes are trends, but the wait on Rajar was well worth it. The radio industry was rewarded handsomely.

Investment in content on radio, streaming and podcasts, and the development of technology, has ensured that the world of audio is providing content on-demand for the listener, wherever they are, This was  proven through the pandemic. The result was record commercial radio listening standing alongside growing music streaming and podcast listening.

New stations and new targeting opportunities are providing brands with more opportunities to engage with audiences within audio than ever before. Meanwhile new creative techniques allow us to speak to people in relevant, personal, and engaging ways.

There may be some changes in the shape of our audio consumption but overall, the future looks very bright.

About Radio Experts

At Radio Experts, we channel our love for all things audio into delivering the campaigns that do business for our clients. We combine market intel with trading agility, and audience analysis with creative thinking, to deliver effective, impactful audio campaigns across radio, streaming services, and podcasts.

The breadth of our experience, the depth of our capabilities and the flexibility of our approach allow us to find audiences for clients from all sectors. We are here to advise you on your audio advertising journey, from inception to delivery and verification.

We are the agencies’ agency.

To find out more, or if you have any questions, please contact office@radioexperts.co.uk

Sources

1. Rajar q3 2021
2. Midas Spring 2020
3. Ofcom Media Nations 2021 https://www.ofcom.org.uk/__data/assets/pdf_file/0023/222890/media-nations-report-2021.pdf
4. DCMS Digital Radio and Audio Review https://www.gov.uk/government/publications/digital-radio-and-audio-review/digital-radio-and-audio-review
5. Mediatel – How Well Do You Know the Podcast Market https://mediatel.co.uk/news/2021/06/22/how-well-do-you-really-know-the-uk-podcast-market/

• Spotify – Earnings Report Q3 2021
• Spotify Sonic Science 2021
• Acast Audience Intelligence
• IAB – Real Living 2021 https://www.iabuk.com/RealLiving
• IAB – Find Your Voice

Charts

• 1, 8, 9, and 14  – DCMS Digital Radio and Audio Review
• 2, 3, 4, 5, 6 & 7 – Rajar
• 8, 9 & 11 – Ofcom Media Nations 2021
• 10 – emarketer https://www.emarketer.com/content/how-pandemic-affected-uk-digital-audio-listener-forecast
• 12 – IAB Real Living 2021