Commercial radio ad revenue stable but down on pre-pandemic levels

The commercial radio industry’s advertising revenue remained stable in the 2022/23 financial year but experts say economic challenges are ahead.

KIIS FM breakfast host Kyle Sandilands.

The radio industry’s adaptation to the rapidly changing habits of listeners has been vital for sustaining advertising revenue but it remains 15 per cent down on pre-pandemic levels.

Latest figures from industry body Commercial Radio & Audio show in the 2022-23 financial year the metropolitan commercial radio stations recorded $685.96m in ad revenue – only slightly down on the previous financial year at $685.99m. However, it is well below pre-pandemic levels: the industry recorded $807.7m in ad revenue in 2018-19.

CRA chief executive Ford Ennals conceded that while revenue held steady in the past financial year, growth is vital, including in the popular digital audio market which continues to surge.

“Revenue was up 5 per cent in the first half year (2022-23) and down 4 per cent in the second half of the year, it was more challenging,” he said.

“We have seen very strong growth on our digital audio including podcasts and streaming – it grew by over 24 per cent – and that’s going to continue to grow and make up a bigger part of our overall revenue.”

Data from radio ratings firm GfK released this month shows commercial radio weekly audiences at record highs with 12.21 million listeners across the five major cities – Melbourne, Sydney, Brisbane, Adelaide and Perth – an increase of 221,000 listeners in the past year.

It also revealed nearly 27 per cent of commercial radio listeners – the equivalent of 3.29 million people – stream radio for an average of four hours a week.

The new radio measurement ratings system, Radio 360, launched in June, now incorporates audience metrics that show AM/FM/DAB+, as well as streaming audiences.

Mr Ennals said the new metrics were advantageous for the industry because they show the importance of streaming and that it would generate more revenue.

Ben Willee, general manager and media director at Spinach Advertising, said media buyers were moving with the times and adapting to consumers listening through means other than linear radio.

“In the pandemic we stopped listening to breakfast radio in the car on the way in and started listening to podcasts and streaming,” he said. “The radio industry has been really clever in the way they have repositioned the medium to advertisers.”

Mr Willee remains optimistic about the year ahead despite annual inflation slowly moving downwards and sitting at 6 per cent in the June quarter, while interest rate rises continue to hit households and businesses with 12 rate increases since May last year. “I think as a medium the future looks pretty good and the ad market is surprisingly resilient,” he said.

However, Mr Ennals said the economic headwinds had led to uncertainty in the market.

“That makes clients nervous and slow to commit but nevertheless we see better times coming,” he said.

Advertising firm M & C Saatchi’s chief creative officer in Australia and New Zealand, Cam Blackley, said the “cost of living crisis is biting all businesses” but that radio remained an appealing medium for advertisers.

“It’s such a great channel for any brand to amplify themselves and get people in either breakfast or drive time, especially for supermarkets because you can prompt people to shop,” he said.

“You have a captive market, you have got people sitting in cars and they are listening to the radio.

“It also levels the playing field for brands because if you don’t have a lot of money radio is a really good option because it’s relatively inexpensive to create compared to film.”

Mr Blackley also said streaming was a growing area for brands to advertise on; for example, businesses inserting ads on platforms including on digital music service Spotify and targeting people depending on playlists and interests.