Radio advertising revenue will be hit harder than other media channels following the U.K. government’s decision to slash ad budgets, reports Marketing Week. However, commercial radio chiefs are confident that the medium will be able to maintain its share of what the Central Office of Information (COI) does spend.
Government spend on advertising is set to drop by 50% in the current financial year with an immediate freeze on “non-essential” spending put in place by the coalition administration last month. Cuts of this kind could hit radio hard, according to analysts, because of the amount of revenue generated by public sector money.
According to Nielsen Media Research, commercial radio derived almost a quarter (24.96%) of its revenue from the COI in the year up to 2/10. The COI’S use of radio is also on the rise, focusing 25.97% of its spend on radio in the year to March, up from 21.89% 12 months earlier, according to Nielsen.
Commercial radio’s biggest players, Global Radio and Bauer Media will also expect to see a dent in their ad revenues. According to Billetts Media Monitoring, the COI spent 7% of its 2009 outlay at Global stations including Heart and Capital, while Bauer Media, which also includes magazines, saw 5% of the COI’s money.
Commercial radio chiefs will be hoping the sector’s recent recovery is not reversed by the anticipated drop in revenue from the COI. A recent WARC/AA study found that radio grew its share of the total display ad market from 5.8% to 5.9% in 2009, while revenue increased by 6.3% in Q4 2009.
Simon Redican, managing director of the U.K Radio Advertising Bureau, says although radio will not be immune from the cuts, it is “well placed” to “fight its corner” and be included in the campaigns that do escape the axe.
“If the Government takes a line by line approach to reviewing advertising spending then radio is in a good position,” he says. “In audience terms, radio continues to attract hard to reach audiences and allows national government to speak at a local level. What’s more, in investment terms, radio is easily the most cost efficient medium for tax payers’ money. As such, we are optimistic that radio’s strengths will be recognized as COI budgets come under ever greater scrutiny.”
RBR-TVBR observation: Barring what the U.K. government decides to cut, you see radio’s numbers are up in the U.K.—both in the ad pie share and listening numbers. This dovetails with our recent story of excellent May numbers in Australia—even with all of the new media competition. So that wave should hopefully keep rolling to our shores as well.