How profitable is the radio business today

Radio remains profitable: But new investments are due

Economic situation of radio: stable advertising market and new technologies

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The situation of private radio in Germany remains positive thanks to the stable radio advertising market. This is a key result of the study "Economic Situation of Broadcasting in Germany 2018/2019". The WiLa was developed on behalf of eight media companies under the leadership of the Bavarian State Center for New Media (BLM). BLMplus has compiled the most important results for the radio market and gives an outlook on how things will continue.

Radio market remains stable and digital revenues are growing

In 2018, private radio in Germany achieved total revenues of 720 million euros, which corresponds to an increase of almost three percent compared to 2016. Revenues from advertising and sponsorship amount to 612 million euros (+ 2.3%). That is around 85 percent of all income.

Classic advertising time marketing is still dominant with around 98 percent of advertising revenues. With around 12 million euros, online advertising revenues account for two percent of the radio station's advertising revenues. At first glance, the revenues from the online segment seem manageable, but they have been growing continuously since 2014. They have increased by 57 percent compared to the previous year.

The importance of programmatic advertising is increasing

Programmatic advertising is also becoming popular in the online audio sector and is gaining in importance: three quarters of radio providers in Germany use the technology to automatically market audio advertising space based on user data.

Corresponding ad technology is used primarily in nationwide and state-wide radio. Only eight percent of local radio stations stated that they were already selling programmatic advertising in this early market phase.

Investments in the digital business are pending

In the German private radio business, costs rose faster than income in 2018. The broadcasters spent 634 million euros on their programs and broadcasting operations. This corresponds to an increase of four percent compared to 2016.

The largest cost factor is personnel costs at 212 million euros - they are up by almost seven percent compared to 2016. Total employment in private radio increased slightly from 6,935 to 7,018 employees.

Looking for employees with digital know-how

Radio operations are becoming more complex: the increasing number of employees is an indication of the growing willingness of broadcasters to react to changed consumer behavior and to bring employees with digital know-how into their companies.

In addition, there are considerable investments and costs that are necessary for a suitable technical infrastructure, especially in the areas of smart data and ad technology.

Private radio business remains profitable

According to WiLa, the bottom line is that the private radio business remained profitable in 2018. It has been possible to stabilize the cost coverage ratio at the level of previous years: the cost coverage ratio for nationwide radio is 111 percent, nationwide radio is 117 percent and local radio is 109 percent.

Further information:

You can find the article on the economic situation of the television market here.

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