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Radio ads worth £4.6bn to advertisers

News, 02 June 2016

LONDON: The £592m spent on radio advertising in the UK in 2015 represented a value of £4.6bn to advertisers, according to a new report.

Prepared by Oxford Economics for Radiocentre, the industry body for commercial radio, Valuing Radio examined the impact of commercial radio on the UK economy and identified a gross value added (GVA) of £683m.

That figure sat alongside a return on investment to advertisers of £4.6bn, based on an ROI of £7.70 for every £1 invested. Earlier research has indicated much higher ROI figures for some consumer-facing industries such as retail (19:1) and leisure and entertainment (11:1), while the most effective campaigns have generated returns of up to £24 per pound spent.

Despite the "explosive" growth of consumers streaming music, the report noted that this has generally been a substitute for music purchase and is becoming the way that people listen to their own music collection; "radio stations still play a fundamental role in driving music sales," it said.

It estimated that radio contributed a value to the music industry of £103m in sales and around £50m in rights payments.

"Commercial radio's popularity with listeners is not in doubt with an incredible weekly audience of 34.3m," said Siobhan Kenny, CEO of Radiocentre. "However the economic activity it supports has never been examined in any detail.

"The results are impressive," she added, "but there is also the potential for even greater value if changes in regulation and a shift to more distinctive BBC radio services can be achieved."

John Whittingdale, the secretary of state for culture, media and sport and not a renowned supporter of the BBC, said: "This Government is committed to doing all it can to support the success of commercial radio so it continues to provide this value to audiences across the UK and [to] advertisers now and in the future."

A Warc Best Practice paper on Understanding Radio Audiences noted that radio often suffers in the marketplace from a belief that it is somehow less impactful than television.

A key challenge, it suggested, is embracing electronic measurement in order to fully integrate radio into market-mix models for properly assessing ROI.

The latest forecasts from the AA/Warc Expenditure Report, which draw from Radiocentre data, expect radio adspend to rise 4.3% this year and a further 3.8% in 2017.

Data sourced from Radiocentre; additional content by Warc staff