Forget TV, as advertisers are tuning in to radio. But why?

May 8, 2018 8:00 am

BK3HRM Radio mit Miniglobus

Radio advertising spend amounted to $32bn worldwide in 2017 and is expected to rise by 1.3% this year. This is according to an analysis by WARC, the global marketing intelligence service, of its data for the 96 markets included in its Adspend Database.

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Broadcast radio reaches three-quarters of homes across key markets

On average, radio reaches 75% of households every week across WARC’s 12 key markets – Australia, Brazil, Canada, China, France, Germany, India, Italy, Japan, Russia, United Kingdom and United States.

Data show that reach is highest in China at 98% or 457.5m homes in 2017. While the equivalent share drops to 77% in the US, the 97.2m households reached is the second-highest total among the measured markets.

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Broadcast radio has gained in the majority of key markets

Data show that while broadcast radio’s share of global display advertising spend has decreased by 1.6 percentage points (pp) to 7.2% over the decade to 2017, the medium has gained share of display spend in the majority of key markets since 2008 – most notably in China, the world’s second-largest radio market with spend of $6.5bn. This equated to a 6.4% share of all Chinese display spend last year, up 1.2pp since 2008.

Radio’s share was also up in India (+0.6pp), Germany (+0.5pp), Australia (+0.5pp), Canada (+0.5pp), Italy (+0.1pp) and France (+0.1pp) over the period.

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Much of radio’s global share has been eroded by a dip of 4.0 percentage points in the US, the world’s largest radio market at $13.6bn in 2017 (44.1% of all radio spend worldwide). With the US removed, radio’s share of display adspend has grown globally by 1.0pp over the last ten years.

Spend on digital audio formats is rising in the US

While spend on broadcast radio has fallen in the US each year since 2012, US advertisers are investing more heavily in digital audio formats, particularly on streaming platforms such as Spotify.

39 million American adults now own a smart speaker, and two in five (39%) are using it at the expense of traditional AM/FM radio. However, 71% of owners say they are listening to more audio since purchasing a smart speaker.

WARC believes US advertisers will spend $1.6bn on digital audio advertising this year, most of which (81.3% – $1.3bn) will be delivered via mobile devices. Separate research in the UK shows the targeting capabilities of digital audio advertising are particularly attractive to practitioners.

The finding comes at a time when company reports show that almost half (49%) of Spotify’s ad impressions were delivered programmatically – by utilising consumer data – last year.

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Podcast sponsorship offers a clear value exchange

While podcast advertising is nascent, data show that the format outperformed pre-roll video in driving purchase intent in 57% of cases. Almost four in five (78%) US consumers said that they did not mind the ads or sponsorship messages because they knew they were a means of supporting the podcast. This suggests that most consumers understand the value exchange of podcast advertising.

Summing up, James McDonald, Data Editor, WARC, says: “Broadcast radio continues to be a staple for advertisers, and its share of display investment has grown in the majority of key markets, most notably China, where reach is high and CPMs are low compared to other media.

“In the US, advertisers are investing more in digital audio, lured by the format’s targeting capabilities on platforms such as Spotify. Podcast sponsorship also presents an opportunity, as consumers seem willing to tolerate advertising in exchange for supporting the content they love.”

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AMEinfo Staff
By AMEinfo Staff
AMEinfo staff members report business news and views from across the Middle East and North Africa region, and analyse global events impacting the region today.



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