The 14 per cent medium

Radio's low cost and flexibility have made it one of South Africa's more important media

Brian Sturgess

Radio, a Cinderella medium in many overregulated developed markets, is offering many exciting opportunities to advertisers and investors in the emerging markets. The reasons are almost obvious. Radio is cheap both to transmit and to receive compared with television. This allows full geographic coverage to be achieved at a much lower programming and distribution cost per potential listener. The medium is flexible enough to cater at the same time for large mainly rural regions with diverse language groups and to the varied tastes in news and music of the urban elite. In countries where literacy levels are low the medium has an added advantage over print.

Radio's evolution in the emerging markets is a function more of its regulation than the economics of the medium. While the level of disposable income obviously has an impact on the size of the radio advertising cake and therefore upon the number of commercial stations that are viable, the low average cost of running stations means that this constraint is not as critical as in television. The Philippines, for example, has over 380 commercial stations producing a service ratio of 176,000 persons per station. With a commercial radio market totalling US$50m in 1995 and accounting for 11 per cent of all advertising spending, the average revenue per commercial station is little more than US$130,000. In contrast, in Malaysia where per capita income is nearly four times greater than in the Philippines, but where there are more restrictions on all forms of media, the country boasts only seven commercial radio stations but 2.87m persons per station. The total radio market is worth only US$16m, or two per cent of all media advertising expenditure.