• by Jack Loechner , Staff Writer @mp_research, September 3, 2009

Much of Radio's weakness in Q2 and for the first six months of 2009 is linked to marketers associated with the auto industry (formerly Radio's top ad category, now #3) and major retailers feeling the impact of shaky consumer confidence and spending. 

As Q2 unfolded, Jeff Haley, President and CEO of the RAB says that increasing signs of an improving economy emerged, indicating that "we are most likely past the Q1 low point for Radio revenues and are now on the rebound."

According the new RAB report, some advertisers, previously unable to compete against their category's leaders, are using this opportunity to increase their share and position within the market. "Taking advantage of Radio's core strengths, advertisers... are increasing their share of voice on the airwaves, providing encouraging signs," remarked Haley.

Radio's revenue derived from Digital platforms continues to rise, illustrated by a 10% increase at 2009's mid-point. Digital will be an increasingly important sector as Radio continues to evolve into a cross-platform medium. The ability to leverage local advertisers should boost revenue significantly.

Revenue Comparisons - 2009 vs. 2008 (In Millions)
Revenue	$ Q2 '09	% Chg	$ 1st Half 09	% Chg
Local	2,381	-25%	5,185	-25%
National	591	-24%	1,064	-25%
Local & National Combined	3,422	-25%	6,249	-25%
Network	274	-10%	512	-11%
Digital	120	9%	221	10%
Off-Air	355	-13%	619	-13%
Grand Total	4,171	-22%	7,601	-23%
Source: Miller, Kaplan, Arase & Co. & RAB, August 2009

Prior to the downturn RAB projected Off-Air, then comprising Digital and Off-Air revenues, to reach $2B in 2009. Based upon current levels, indicators are that these two sectors in combination may approach this mark by year-end, despite the economy. (Effective 2009, the RAB separately reports Digital and Off-Air.) As confirmation, a recent projection from BIA anticipates Digital advertising alone on Radio is on an upward track.

Revenues from Digital Advertising, Radio Industry ($ in Millions)
Year	Digital Revenues
2007	$180
2008	247
2009	298
2010	426
2011	572
2012	733
2013	908
Source: BIA Advisory Services, August 2009

Americans still want to reward themselves with a restaurant meal. Local and National spending by advertisers looking to cash in on this trend, while down 11% for both the quarter and YTD, moved the restaurant category into the top Radio spot for Q2 and solidified the #2 position year-to-date. 

Restaurants 2009 vs. 2008 Local and National Radio (In Millions)
Advertiser	$ Q2 '09	% Chg	$ 1st Half '09	% Chg
Subway	24.7	71%	44.2	21%
Dunkin Donuts	24.4	23%	47.5	37%
Romano's Macaroni Grill	7.0	138%	10.7	148%
Jack in the Box	6.9	198%	11.8	133%
White Castle	6.0	96%	10.8	156%
Arby's	5.0	382%	10.4	633%
Source: Miller, Kaplan, Arase & Co.,/ X-Ray Markets, August 2009

Based on year-to-date Local/National expenditures, Cellular/Public Utilities

continues to dominate Radio's airwaves, despite slipping to the #2 spot behind Restaurants in Q2. AT&T remains the top advertiser in-category and for Radio overall, but Verizon Wireless has now narrowed the gap by 11 percentage points in the last quarter and 15 percentage points YTD (and is Radio's second-biggest spender).

Automotive advertising may be turning the corner, says the report. Q2 results give some reason to hope that the slowdown is easing. Within the Local and National sectors, the overall category came in at half of Q2 2008 spending - yet markedly improved over the 58% lag in Q1 '09. 2009 YTD results are at 51.3% of last year.

Looking at 2009 as a whole, several import nameplates stand out with full-YTD spending ahead of last years comps:

• Volvo Motor Corp. (+124%, to $16.2M)
• Volvo Dealer Association (+242%, to $3.0M)
• Audi Motor Corp. (+107%, to $6.8M)
• Hyundai Motor Corp. (+4.9%, to $6.0M)
• Kia Motor Corp. (+178%, to $4.8M)

Automotive 2009 vs. 2008 Network Radio (In Millions)
Advertiser	$ Q2 '09	% Chg	$ 1st Half '09	% Chg
GM Corp. Div. (GM)	8.9	27%	16.4	72%
Ford (Auto & Truck Division)	2.9	13%	5.5	6%
Carfax	2.0	57%	3.4	68%
Source: Miller, Kaplan, Arase & Co., / X-Ray Markets, August 2009

TV and Cable companies are benefiting from Americans' increasing tendency to entertain themselves at home - and spending on Local and National Radio puts the category in 4th place overall for Q2 and YTD, with spending just about even with 2008 thus far this year. Among media players who have channeled additional dollars into Radio in 2009 are these cable networks:

Television/Networks/Cable Providers 2009 vs. 2008 (Local and National Radio In Millions)
Advertiser	$ Q2 '09	% Chg	$ 1st Half '09	% Chg
TNT Turner Network Television	10.6	874%	21.1	635%
Lifetime Cable Network	10.2	60%	21.3	11%
USA Network	9.5	73%	11.7	25%
BET Black Entertainment Network	5.3	10%	12.2	11%
Showtime	3.2	61%	5.9	156%
Source: Miller, Kaplan, Arase & Co.,: X-Ray Markets, August 2009

With the tough economy prompting more consumers to brown-bag lunches and share family dinners at home, quite a few food marketers and retailers are zeroing-in on Radio's ability to reach consumers in a shopping mode. The list includes a combination of local and national chains:

• Supervalu (+270% in Q2, +409% YTD)
• 7-Eleven (+156%/+91%)
• Publix Supermarkets (+75%/+81%)
• HEB Food Stores (+384%/+287%)
• Meijer Food Stores (+61%/+49%)
• Whole Foods Market (+53%/+104%)
• Quiktrip (+343%/+278%)

Specialized advertisers will increase their advertising expenditures to promote the value of their services. Of the top 13 advertisers, three are haircutting services and have collectively increased their spending 25% and now account for 18% of the category.

Professional Services 2009 vs. 2008 Local and National Radio (In Millions)
Advertiser	$ Q2 '09	% Chng
Great Clips	6,538.0	27%
Supercuts	2,701.0	35%
Sport Clips	2,267.0	11%
Source: Miller, Kaplan, Arase & Co.,/ X-Ray Markets, August 2009

Specialized retailers infused Radio's Local and National sectors with a 19% second quarter increase, bringing the first half of 2009 up 7%.

Specialty Retail 2009 vs. 2008 Local and National Radio (In Millions)
Advertiser	$ Q2 '09	% Chng
GAP Clothing	11,555.8	760%
K & G Men's Center Clothing Store	4,188.5	100%
1-800-Flowers	4,162.3	22%
Famous Footwear	3,717.9	4%
Luxottica Group Eyewear	3,310.7	1850%
Source: Miller, Kaplan, Arase & Co.,: X-Ray Markets, August 2009

Within the subcategory of Department Stores, Kmart was the third highest spender within Q2 '09 with a 93% increase versus same time period year ago (up $5.2M). Burlington Coat Factory also increased their quarterly spend nearly three-fold (up $2.4M). Offering savings in the Home Improvement sub-category, Ace Hardware increased their quarterly spending 56% (up $1.1M) and True Hardware was up $2.3M - both ending first half '09 up (21% and fifteen-fold respectively).

Local and National Advertiser Category analysis is based on data from Miller, Kaplan, Arase & Co. X-Ray Market Reports. X-Ray Market Reports are compiled from advertiser expenditure data direct from station billing in 35 markets, extrapolated to the entire U.S. Network Radio Advertiser Category spending analysis is based on data from TNS Media Intelligence. 

 

To review the complete report, please visit the RAB here.