Media buyers warn radio against rate increases and cutting ads

Radio’s share of the London advertising market is likely to be hit by rate increases at Heart 106.2 and Magic 105.4, as well as GCap Media’s decision to cut the number of ads on flagship station 95.8 Capital FM, according to media buyers.

The concerns follow Chrysalis Radio’s decision to introduce a 14 per cent increase in rates for Heart in London and a ten per cent increase at Heart 100.7 in the West Midlands. EMAP-owned Magic is also planning to increase its rate by an undisclosed amount.

The changes come just weeks after GCap revealed plans to dramatically reduce its advertising inventory by allowing only two ads for each break. The company has revealed that it will lose &£7m in revenue in 2006 and 2007.

But industry observers say there is no guarantee that this money will be shifted to other radio stations and that it is just as likely to be moved to other media, such as outdoor and newspapers, in the short to medium term.

One media agency insider says: “I think that there is a risk, but it is down to the dynamics of how different agencies plan and buy radio. Some could easily shift it into different media.”

A newspaper industry source says: “Money won’t just come out of Capital, it will come out of radio because other stations will fill their slots twice as fast even if they don’t put up their rates.”

Chrysalis Radio chief executive Phil Riley says the group is responding to signals from the industry: “London is always a very competitive market and we are always competing with outdoor and press.”

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