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Radio

Executive summary

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.

The combination of reduced commuting time plus the suspension of audience measurement during the pandemic created challenges for the radio sector. The sector will need all aspects of its product mix - broadcast, streaming and podcasts - to help drive a recovery from the advertising contractions brought about by COVID-19. Podcast growth has been a driver for the industry in 2020, fueled by greater access to content in both services and devices.

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.

Forecasts at a glance

Terrestrial Radio Market (A$ millions)

*2015 - 2018 figures have been updated to reflect recently available market information

CAGR 2019-2024 based on gradual recovery trajectory

Terrestrial Radio   0.3%

 

Streaming/Internet Radio (including Podcasts) (A$ millions)

CAGR 2019-2024 based on gradual recovery trajectory

Streaming/Internet Radio (including Podcasts)   11.55%

 

Total Radio Market (A$ millions)

*2015 - 2018 figures have been updated to reflect recently available market information

CAGR 2019-2024 based on gradual recovery trajectory

Total     3.93%

 

Through to the beginning of 2020, radio listening had been a resilient method of audio consumption and was encouraged by the spread of digital commercial radio broadcasting. 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.

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 todigital media.

At the height of the pandemic, in-person surveying for audience measurement by GfK, was put on hold with surveys 3, 4 and 5 cancelled, though the latter was replaced by GfK’s Radio Pulse e-diary survey of a smaller (2,240 person)52 sample covering May to June listening. The core audience in Breakfast and Drive were often not commuting to work and therefore the opportunity to listen was moved to the home environment where there are competing demands for attention. While the true impact of the pandemic on terrestrial radio will not be known until 2020 reporting is completed, initial in-year estimates showed up to 27 percent contraction in advertising revenues year-on-year to September 2020.

While there have been numerous challenges during 2020, the suite of products available to the radio segment (including streaming and podcast) provides the sector with a multipronged recovery opportunity. In response to increased time spent at home, in September Commercial Radio Australia (CRA) partnered with Google to make 350 Australian AM, FM and DAB+ digital radio stations, including all commercial radio, ABC and SBS stations, available via voice command on Google Nest speakers and displays.

A gradual return of commuters to work will drive prime time radio audience and ratings providing support to advertisers to return to the medium, though the timing of this is likely to be prolonged given the changes to many workers’ home and flexible working conditions.

Audio streaming in Australia 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. According to Edison Research, 60 percent of Spotify users in Australia subscribe to the paid service, up from 47 percent in 2019.53

Australia has among 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 201954. This growth trend will continue throughout the forecast period, as listener numbers are expected to continue to increase through the period as the proliferation of content and smart speakers continues.

A number of factors have made podcasts especially successful in Australia: it is one of a number of countries to benefit from sharing a language with other, larger markets, which ensures a greater depth of content is available to podcast listeners than the country could produce on its own. Specifically, access to the world’s largest podcast producer in the US is a major advantage. Many of the most popular podcasts in Australia are produced overseas, notably long-running staples like the US-produced The Joe Rogan Experience and Stuff You Should Know. But locally produced podcasts are also growing; terrestrial radio show catch-ups are proliferating, news and current affairs such as The Squiz and true crime series such as The Lighthouse and Teacher’s Pet also continue to prove popular.

Podcast advertising is becoming increasingly sophisticated as traditional direct-response advertisements give way to targeted, dynamically-inserted advertising. Podcast producers’ access to detailed audience analytics is improving, especially since the launch of iOS podcast analytics in 2018, as well as the growing use of analytics-rich platforms like Spotify and Acast. This can be expected to lead to further improvements in measurement and targeting in the coming years.

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.

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