The radio advertising market, while not yet back to pre-COVID levels of spend, is returning fast, says HT&E CEO Ciaran Davis.
Revenue at the owner of radio network ARN surged 21% to $109.9 million in the half year to June as the advertising market returned from the depths of the 2020 pandemic.
HT&E shares closed yesterday 6.8% higher at $1.72.
Davis describes ARN as “indisputably the dominant player in Australian radio,” with the number one network position for thirteen consecutive surveys.
The company is upbeat about the rest of the year. Davis says advertising grew 19% in July and August will be similar.
“This is telling me two things,” he told AdNews.
“Advertisers now realise that radio is still being consumed and have a huge level of confidence because they know that their ads and their advertisements are being heard and consumed.
“The other thing is that the top four of the top five categories are now in positive territory, the big spenders like retail and government insurance and auto dealers.
“The area where it's slower to come back is the SME market. Some of them are struggling or closed, particularly in the leisure and entertainment and event space.
“But some businesses actually have started to revamp their business models and become much more online transaction focused.
“We know that radio is a great driver of digital activity, sending people into websites and apps and digital search.
“From our perspective the lockdowns are a concern but we're watching it. We are still seeing positive sentiment, we're still seeing positive briefing, and we think that the SME market will come back but it's going to be a little bit slower than anticipated.
“I was hoping that by now, we would be back into parity with 2019. It's going to be a little bit longer.”
And the company is seeing strong growth in digital and in podcasting.
Digital audio has been growing at an annual compound rate of 80% 2019 and is now writing more than $1 million a month in revenue.
Almost 2.4 million people actively listen to commercial radio via mobile, smart phone or PC/tablet each week.
“Nearly 40% of the population in Australia now listens to a podcast,” he says.
“But research that we've done shows that less than 25% of ad agencies are considering it as part of the media mix.
“There's a number of reasons for that. We have to educate the market better and continue to invest in really good quality content creation and audience growth. We've got to make podcasting easier to buy, we've got to have a consistent measurement system across the industry, and provide an effective attribution model that will get advertisers interested.
“We know that when advertisers do engage with the right creative with the right podcast and the right audience, that's certainly particularly in a brand building exercise, it's a very, very powerful medium.
“Our broadcast radio business is going well, radio advertising is returning, and our margins are exceptionally strong again.”
Here's how ARN sees the ad market:
Podcasting
ARN is seeing growth from podcasting and digital audio formats.
This isn’t coming from, or at the expense of, traditional radio.
“We're not cannibalising either our listenership or our revenue model,” Davis says.
“We're actually going to invest in sales capability and research and measurement systems targeting that digital dollar, which is about 50% of the ad market.”
When COVID hit, there was a view, now found to be inaccurate, that people only listen to radio when in the car to and from work.
“What we've seen is that with the quality content that we produce, as an industry, people will search on whatever platform they can," he says.
“Increasingly, that's in a digital environment whether it be on laptops, PCs, smart speakers, particularly, which has grown over 50% in the last 12 months on mobile, because the content is engaging, because it gives a sense of normality, because this sense of community.
“There's a sense of trust from presenters that people like.
“We've got a balance sheet and an opportunity to invest in growth areas for audio that's not cannibalising our core business and that's quite exciting.
“It's early days, absolutely, but we're very encouraged by the level of audience engagement and content being consumed, and the speed with which we're starting to monetise that … from a low base but that's only going to accelerate.”
Positive
Davis says it’s incredibly important to remain positive about where Australia is going as a country that this current crisis is going to end.
“I know people are struggling,” he says.
“Certainly know our staff have good days and bad days. They've got families and doing homeschooling. I’m doing that myself and it's really challenging.
“And the next few weeks are going to be hard. But you know, as somebody who speaks to people on the other side of the world pretty much every day, life is returning to normal.
And it's because there has been a vaccination. We just focus on that and we will get back to normal.
“Then that's really interesting for advertising and media companies like ours, because there's such a pent up demand for people to get out, to spend, go on holidays, go to restaurants, go to clubs, go to events, go to concerts.”
Have something to say on this? Share your views in the comments section below. Or if you have a news story or tip-off, drop us a line at adnews@yaffa.com.au
Sign up to the AdNews newsletter, like us on Facebook or follow us on Twitter for breaking stories and campaigns throughout the day.