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19|10|06

Radio Advertising Market Research

Ofcom today published research into the radio advertising market. The research assesses the competitive constraints on radio advertising and explores the extent to which the pricing of radio advertising is influenced by the pricing and availability of alternative advertising platforms such as local or regional newspapers.

The Competition Commission last examined the radio advertising market in April 2003. Since that point, the commercial radio industry has experienced a decline in advertising revenue.

The research will help shape Ofcom’s future analysis of the effects on competition of specific developments within the radio industry; for example, if Ofcom is required to consider a complaint or dispute, undertake a market review or provide a submission to the Office of Fair Trading in relation to a radio industry merger.

Ofcom examined two distinct markets within radio advertising:

• Indirect: where an advertiser uses a media buying agency to purchase advertising via a radio group’s sales house. Ofcom’s research identified that price increases would be constrained as a result of media buying agencies moving budgets away from radio to other media. Television, online and press advertising present the strongest competitive constraints on the pricing of indirect radio advertising.
• Direct: where the advertiser purchases airtime from sales teams at individual radio stations separately and directly. Pricing of direct radio advertising appears to be constrained by press advertising; advertisers generally view spending on press advertising to be interchangeable with spending on radio advertising.

The document, Radio Advertising Market Research, can be found on the Ofcom website at:

http://www.ofcom.org.uk/research/radio/reports/definition/

Ends.

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