Revenue streams for radio station operators are beginning to strengthen. And the long term picture looks even better. Radio stations have a chance to sell advertising to more local and national clients as the economy recovers. But the sector doesn’t lack for competition from new media formats. The latest news from BIA/Kelsey contains both good news and a cautionary note for operators in this market.
After a big growth year in special event revenue from politics and the Olympics, TV and radio stations are back to focusing on fundamentals. Analysts foresee growth in demand from core marketers for these media formats in 2011. Providers of these traditional media platforms are repositioning themselves for a bigger market in 2012 and they’ll also be using 2011 to merge, acquire and consolidate.
As the economy slowly begins to recover, marketers are returning to some of their favorite media formats. For radio station owners, 2010 is looking particularly strong and revenue growth should continue in 2011. This positive news comes from the most recent release by the Radio Advertising Bureau (RAB).
For decades, consumers relied on radio to learn about new music. But new technology and services like YouTube, Pandora, and iPods have changed the economics and nature of the music industry. According to data from Edison Research, radio still plays a role in the lives of younger consumers but industry operators may want to adjust their strategy to stay relevant to consumers and marketers.
Marketers have long known that radio is a good way to connect with a captive audience. In fact, 93% of U.S. consumers regularly listen to the radio. Knowing the times of day and the types of stations favored by specific demographic groups can also help marketers reach elusive audiences.
Earlier this year, Stu Olds from the Katz Media Group, predicted a rise in radio advertising revenue. And it looks like he was correct, especially for national radio advertising revenue. The numbers will show a 17% growth rate for the second quarter when compared to the same period in 2009.
After predicting a 19% growth rate for radio in the first quarter of 2010, Stu Olds, CEO of Katz Media sees revenue continuing to grow in the second quarter as well. Olds may be uniquely positioned to predict these revenue shifts as his organization oversees ad sales for both Katz radio and the Clear Channel Radio sales portals.
At the end of 2009, BIA/Kelsey predicted TV stations would see a revenue increase to $16.8 billion for 2010. These same analysts reaffirmed revenue expectations for TV in their 2010 U.S. Local Media Annual Forecast released last week. Additionally, radio is expected to reach $13.9 billion in 2010.
Marketers continue to seek the best mix of media formats to reach consumers. While much is made of the growth prospects of new media and the multiple ways in which online video can influence prospective purchasers, consumers spend a significant portion of their day listening to radio. To date, radio’s reach continues to overshadow online when it comes to capturing a share of consume time.
TV and radio media companies can usually count on a sales boost in years filled with state and local elections. And when those years also include Olympic games, the sales picture is even brighter. Despite the slow economic recovery, 2010 should be no exception for media companies. While Barclays Capital previously predicted a 0.3% drop in 2010 advertising, including the Olympics and political categories, the revised projection now stands at a 3.5% gain.
Back in January, reports in Mediaweek suggested a slight upturn of 2-3% in local radio revenues for this year. Now that 2010 is well underway, executives such as Stu Old at Katz Media say that overall radio revenue could be up as much as 19% for the first quarter when compared to last year.
Local TV and radio station operators have some small reasons to cheer about in 2010. The business outlook is predicted to remain difficult but analysts expect gains of between 2 and 3% in these industries this year. Where will the gains be realized? Writing for Mediaweek, Katy Bachman compiled the following information.