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.
At the end of 2010, local radio station revenues reached $14.1 billion, a 5.4% jump from 2009. The news for 2010 was better than expected and Mark Fratrik, vice president, BIA/Kelsey, says this is because, “[t]he higher than expected radio revenues in 2010 reflected the return of national advertisers to the airwaves and some political battles that made an impact in certain markets.” This year, station managers can expect to bring in 3.7% more. And in 2012, when the political machines at the local, state and national levels heat up, the revenue increase should be about 4.5%. By 2015, the projected industry total of $17.983 billion still won’t quite achieve the level reached prior to the start of the recession but the numbers do show a steady recovery.
But as consumers and technology continue to shift to the digital arena, radio stations must do the same. In 2010, $405 million, industry-wide, stemmed from online/digital efforts. This amounts to 2.9% of the industry total. BIA/Kelsey analysts see steady growth here and the online/digital component will look something like this:
- 2011 — $494 million (3.4% of total)
- 2012 — $569 million (3.7%)
- 2013 — $638 million (4.0%)
- 2014 — $705 million (4.2%)
- 2015 — $783 million (4.5%)
Like other media formats, radio is struggling to find its footing in the new digital economy. As operators find the best ways to deliver audiences to advertisers, they can count on their digital efforts to make up a larger part of their revenue base.[Source: BIA/Kelsey Reports Radio Industry Revenues. BIAkelsey.com. 4 Apr. 2011. Web. 20 Apr. 2011]