PWC’s Outlook report’s radio revenue predictions

PWC’s Australian Entertainment Media Outlook Report has predicted that radio revenue will remain steady over the next five years at about 2.7% to 2.8% of total media revenue spending.

While the report takes into account the short term effects of Covid, it has a much broader outlook, predicting forward to the state of the media industry until 2024.

The report says: “Radio’s role as a ‘resilient companion medium’ was maintained through much of the lead up to COVID-19, given the need for people to access up to date and trusted news during the summer bushfire season, then regional floods before the pandemic took hold.”

However, the report gets egg on its face with its predictions about morning and afternoon drive shifts during covid. Perhaps it was written before the significant industry research that shows commuter audiences have not fallen off during covid lockdowns, or perhaps it just got it wrong, or made assumptions that we now know were wrong.

Radio audiences in breakfast and drive have not declined.

PWC wrongly says: “Alas, the marketing was negatively affected by COVID-19, with significant audience declines as key commuter audiences exited the market under work from home conditions.”  GfK research contradicts this wrong assumption.

Despite that faux pas, the PWC Report does have some solid observations and predictions to make about radio and other media.

The report predicts slight growth in radio revenue, which includes streaming, in its outlook, which again wrongly mentions audience declines in commuting shifts.

“Australia’s total radio market came in at A$1.609b in 2019 and is expected to have contracted by 10.6 percent in 2020. A return of radio growth may be prolonged as key audiences within the Drive timeslot will be slow to return, but revenues will be buoyed by streaming and podcasting which are predicted to reach A$807m in 2024, a 11.55 percent CAGR based on the mid-point forecast scenario.”

 PWC got it right about declining revenue during covid and about disrupted consumption habits:

“The onset of COVID-19 impacted the radio sector in multiple ways: the disruption of consumption habits, the curtailing of audience measurement, and a soft advertising market meaning advertising budgets, to the extent still available, have been refocused largely to digital media.”

While there have been numerous challenges during 2020, says the report, “the suite of products available to the radio segment (including streaming and podcast) provides the sector with a multipronged recovery opportunity.”

The report says audio streaming continues to be dominated by Spotify, “with the streaming service growing its podcast offering in 2019 and 2020 through purchases of a range of content from Gimlet Media to Joe Rogan as the battle for content and user attention shifted from music artists to podcasts.” It quotes the Edison Research finding that 60% of Spotify users in Australia subscribe to the paid service, up from 47% in 2019.

“Australia has some of the highest rates of podcast listening in the world, with podcasts no longer a niche product, and now reaching a much wider audience.  The Australian podcast market is growing rapidly, with monthly downloads up to 48.7 million in September 2020 compared to 13.2 million in October 2019.” PWC predicts that the growth trend will continue throughout the forecast period, as listener numbers are expected to continue to increase, as the proliferation of English language content and smart speakers continues.

Podcast advertising is becoming increasingly sophisticated as traditional direct-response advertisements give way to targeted, dynamically-inserted advertising, says PWC, predicting audience and advertising growth in that audio segment.

The report sounds a warning about advertising to radio businesses, telling them to look for new ways to keep advertisers interested in what they have to offer:

“While the return of audiences and new products and services provide strong opportunities for the audio industry, the sector will need to find new ways to attract advertisers by increasing ease of transaction, targeting and measurement. The challenges posed by COVID-19 to advertisers has driven more confidence in the digital options available, and as such, radio will need to continue to develop systems to remain competitive.”

Figures in the report vary according to assumptions about the rate of covid recovery, so three scenarios are offered, which is sensible given that no one can really predict the path of the covid virus.

The full report is available here.






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