Radio's advertising SOS

Profits at Gcap - the UKs largest commercial radio operation - have slumped by a gruesome 35% in the last year to stand at £14.4m, a collapse caused largely by a drop in income from advertising. Revenues at the group, which owns Capital Radio and Classic FM as well as numerous other local stations, were down 9% to just over £200m.

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Last Updated: 31 Aug 2010

You don't have to be Einstein - or even Larry Page or Sergey Brin - to realise that in this case, as with that of ITV and many regional and national newspapers before it, the main benefactors from Gcap's pain are online advertising platforms. Advertisers are increasingly looking to spend their money online, or at least on media that can offer a respectable online component.

In the UK this revenue shift to online is more advanced than in any other market, driven by the increasing ubiquity of the web as media of choice from the end user perspective, and by the beguiling promise of transparency from the advertisers' point off view. That is to say, web advertising generates a huge amount of data about who's clicking on what, when and where.

Advertisers weaned on Lord Lever's old adage that ‘Half the money I spend on advertising is wasted, I just don't know which half' find all this data immensely reassuring - and who can blame them? Being able to quantify the returns from ad spend has always been the industry's holy grail, from the client perspective anyway.

But in their eagerness to nail their advertising's ROI, companies should be very careful to make sure they understand exactly what the mass of online data is actually telling them. The vagaries of human nature still dictate a huge number of purchasing decisions, and human nature remains fundamentally unpredictable and resistant to any amount of quantitative analysis - and that remains true whether you''re advertising in print, radio, online or even on sandwich boards outside the bus station.

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