Traditional media enterprises are working hard to move up the revenue needle for digital sales. This transition is beginning to take place in the local radio market. But some media experts see radio stations, in general, struggling to improve both their digital sales and their overall growth rates.
Both BIA/Kelsey and Borrell Associates (in conjunction with Arbitron) have recently come out with new projections for online radio revenue. Borrell analysts point out that local digital ad revenue should reach $19.9 billion this year. While newspaper, TV and yellow page operators are generating digital revenue in the billions, radio has not achieved similar success. The industry will likely report about $409.9 million in local digital revenue for 2012. This figure will reflect an impressive growth rate of 35% when compared to the previous year's number but is lower than it should be.
Last year, radio pulled in only 1.8% of all local digital revenue. In the wider advertising world, radio brings in as much as 10% of all revenue. Here is how local digital advertising came in for radio operators last year:
- Untargeted banners $121.9 million
- Targeted banners $7.5 million
- Paid search $39.5 million
- Email $37.4 million
- Streaming video $30 million
- Streaming audio $67.4 million
BIA/Kelsey analysts agree that online revenue for radio stations is growing and they see the number hitting $505 million this year and $767 million in 2016. The radio industry’s revenue plummeted during the recession and has been slowly recovering. This year, the over-the-air revenues combined with online will bring the total to $14.6 billion. Mark Fratrik, vice president and chief economist, BIA/Kelsey, notes that news station are particularly strong in many markets with a good mix of digital and over-the-air products.
However, if the industry overall brings in lower digital revenue as a percent of whole than competing formats, the long-term outlook is worrisome for both the local and national markets. Radio operators who are reviewing these numbers are likely looking for new products to give to their reps and are also training their reps to increase both local digital and overall sales.[Sources: Perrin, Nicole. Behind the Numbers. Emarketer.com. 6 Apr. 2011. Web. 28 Apr. 2012; Benchmarking Local Radio Stations’ Online Revenue. Arbitron.com. 2012. Web. 28 Apr. 2012; BIA/Kelsey: Radio Online Rev Up 15% in 2011. Biakelsey.com. 10 Apr. 2012. Web. 1 May. 2012]