SENIOR advertising industry figures were divided last night on whether the new national licence will be a cash cow or a long hard struggle.
Radio Ireland, which is to spend £3.5 million setting up the new station at studios in Dublin's Temple Bar, believes that it can initially win a 10 per cent share of the £35 million Irish radio advertising market. This would rise to £6.5 million within three years, the group argues. But industry experts are not so sure.
One advertising industry figure expects the new station to secure about £2.5 million in advertising revenue during its first 12 months, while another advertising executive agrees with Radio Ireland's promoters that the station should win £3.5 million worth of advertising in its first year.
The value of the overall Irish advertising market grew by 9 per cent last year to £269 million, with outdoor poster/billboard advertising posting the strongest growth, increasing by 17 per cent. Cinema advertising increased by 16 per cent while radio advertising grew by 11 per cent.
The main areas which use radio advertising are finance, food, and consumer retail products, particularly those which appeal to women working in the home. Over the past five years, total spending on food advertising in Ireland has increased by 61 per cent to almost £35 million, while spending on advertising personal hygiene products more than doubled to just over £20 million.
Radio Ireland will appeal to listeners in the 25 to 45 age group, particularly women working in the home, and wealthy males in the ABCI categories. The station's promoters argue that demand for radio advertising actually out strips supply in these sectors. Two thirds of RTE Radio 1's audience are older than 45 while two thirds of those who tune in to 2FM are aged between 15 and 34.
However Mr Steve Shanahan, media buyer with QMP in Dublin, argues that the "gap" between radio advertising supply and demand, which is most discernible in the run up to Christmas, is an artificial one. It occurs only because the Government has limited the amount of advertising time available on RTE Radio, and would disappear as soon as the rules are relaxed Mr Shanahan says.
He believes that the new national station "will find it a tough battle". After the Century experience, "advertisers will not be in a hurry to rush in", according to Mr Shanahan. Most will wait for up to three months, until the first listenership figures are known, he added.
Mr Shanahan expects the advent of the Riverdance group, as Radio Ireland is popularly known, to expand the current radio advertising market. A successful new station should win 10 per cent of the radio advertising market in its first year, rising to 20 per cent by year three. The 25 to 44 year old market is a safe target as "they tend to have more disposable income", Mr Shanahan says.
He argues that the new station could face tough competition for revenue if local radio companies form a more united front in the search for advertisers. They should be more together and market themselves more on a national co op basis. They could then structure a rate card that would be more attractive to national advertisers."
But the managing director of All Ireland Media, Mr Pat Donnelly, believes that the holders of the new radio licence will only fail if they are inept.
He expects Radio Ireland to initially capture about £3.5 million in advertising revenue, rising to about £6 million two years later.
He disagrees with Mr Shanahan and believes that advertisers will give the new station "the benefit of the doubt". Radio Ireland will begin detailed negotiations with the IRTC almost immediately, and hopes to start its new service in the autumn, in time to capture the Christmas advertising boom.
