Ciaran Davis on ARN's digital audio success and the importance of regional

Jason Pollock
By Jason Pollock | 25 August 2023

ARN Media is seeing people are consuming its radio content whenever and wherever they want, which includes an increasing range of digital platforms including iHeartRadio, DAB+, desktop or mobile devices.

The broadcaster is reporting digital audio advertising revenues up 37% to $8.8 million and ARN’s podcast network increasing listeners by 23% and downloads by 25% for the first half of 2023,

“What's very powerful, from my perspective, is that the traditional radio content that we produce is just as relevant in the digital world and that's very satisfying to see,” said Ciaran Davis, the CEO of ARN.

“That gives me great confidence on sort of the sustainability and future of the radio industry."

Davis said that with so many of the Australian population listening to podcasts, it's becoming more akin to mass media in his view - and the consumption is not coming at the cost of radio listening either, but proving to be quite complimentary.

“We're growing audiences by using a different form of audio, which is terrific, and to see the level of consumption growth that we've had over the last two years particularly is good. I think advertisers are starting to lean into it a bit more," he said.

Davis said ARN’s podcast revenue isn't coming at the expense of radio revenue either; what the audio player is finding is that clients are using podcasting for different formats, particularly in the area of brand building. 

“We're very pleased with the platform of iHeartRadio, we're very pleased with the level of consumption we have on that and we're pleased with the sales representation deals that we have and the content that we're providing," Davis told AdNews.

“We've spent the early part of the year with our sales teams, looking at the product offering, simplifying it, making it easier to sell and since then, we've seen a very good uplift of revenue across the network.”

David said one advantage that operating in the audio space provides is not having to compete against other media, as opposed to a sector like TV.

“As streaming services come on board and threaten free to air, they're not relevant to us, because people consume media when they're doing other things anyway,” he said.

“They're in the gym, they're going for a walk, they’re in the car, they're in the office, they're at home. I look at podcasts and say, ‘actually, that's probably much more a magazine type of content that we're producing - it's niche and it’s special interest’.”

With ARN taking top spot as a network for metro AM/FM stations in Australia for four of the last five GfK surveys and commercial radio listeners overall up 298,000 people in 2023 compared to 2022, Davis said that the content that all radio operators are producing and putting out is engaging audiences, hence why commercial radio has sustained over a decade of growth. 

“I do see it to continue growing and I think the powerful thing about radio is whether it's in a metro market or regional market, it has that live and local element to it and the connection that audiences have to personalities,” Davis told AdNews.

“That's a really critical thing that our friends in the tech world and global platforms can’t replicate and it's something that that is keeping the radio industry very, very healthy in this country. 

Back in June, ARN acquired a 14.8% interest in SCA for $38.3 million, a move that Davis said came about due to ARN’s belief that the sector both companies operate in is undervalued. 

“This is a tough cycle that we're in from an advertising perspective, but the fundamentals of our business is very good: our balance sheet is strong, our net debt is at 0.8, we produce great cash, we make strong dividends,” he said.

“We know the SCA, business very well. It's a very strong business. We think both businesses will come through this cycle, in a healthier state, and with that, there’s a medium-term value creation for shareholders.” 

ARN Regional, encompassing 46 stations across 26 markets, broadcasts 147 localised shows across its regional network, more than any other Australian audio broadcaster.

Davis said that regional is critical to ARN’s strategy. The company are strong believers in the live and local content that it produces and thinks the level of investment it makes in regional markets, in talent and in localised content is the strongest in the country and that no other media can compete with it.  

“We understand that that localism forms a much deeper connection with audiences, which is growing our audiences and has resulted in a number of very strong performance for us in regional markets,” said Davis.

“As a result of that, advertisers are getting engaged - our performance of local regional revenue this year has been strong; back slightly a little bit, but off very, very strong growth last year.”

“The economies in local Australia are doing reasonably well, there's investment in infrastructure, there's investment in employment, people have moved out from metro areas into regional centers during COVID are finding regional centers quite lively and thriving.”

Davis said although the national revenues for regional have fallen slightly – ARN’s regional advertising revenues totalled $52.2 million, down 4%, significantly impacted by reduced government advertising spend – he envisions that government spend coming back later this year. 

On a statutory basis, ARN Group revenues from ordinary activities of $165.9 million decreased $6.1 million on the prior period. Davis said what the trading update has pointed to is that being flat on last year is not a bad performance, certainly not as bad as maybe some in the market would have thought. 

“We do have categories that are performing well and spending, so it's not all doom and gloom,” Davis told AdNews.

“I do think we will come through it and we'll come through it in a better fashion, because at times like this, radio tends to perform pretty well, because with limited marketing budgets, with the reach and frequency that we have, the immediacy that we have and the level of creativity and integration we have, we produce a very quick turnaround is very welcomed by clients.”

Looking at the market overall at the moment, Davis said it’s a short market. 

“I think the return on investment for brands, for marketers, for brand managers is paramount,” said Davis.

“Speed of turnaround of briefs and speed of implementation is really, really important. Obviously, there's a bit of pressure on CPMs as a result of the shortness in the market, but equally I think clients are focused on getting the ROI, which radio does pretty well.”

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