GCap 'two ads' strategy hits revenues

GCap Media has admitted that Capital Radio's new "never more than two ads in a row" policy is having a negative impact on its ad revenues.

In its annual results statement, GCap said Capital Radio's ad revenues were down 26 per cent year on year for April and May owing to its "new ad inventory policy".

Last December, Capital announced a new strategy of reducing its ad breaks to a maximum of two commercials in a bid to increase impact for advertisers. GCap has published research that indicates that advertising has 38 per cent more impact following the changes.

The downturn in Capital Radio's ad revenue was matched across the group as GCap reported a 40 per cent fall in profits to £22.2 million in the year to 31 March. Group revenues fell 12.7 per cent to £220.2 million.

GCap said group revenues were down 4 per cent year on year for April and May and was gloomy about prospects for ad revenue in June.

On the plus side, GCap's chief executive, Ralph Bernard, said that total savings from the merger of Capital Radio and GWR would reach £27 million, more than initially predicted. In addition, Classic FM achieved its highest revenues since 2002 and its specialist stations, such as Xfm and Planet Rock, performed well.

- Leader, page 19.