Hear This: Some Radio Recovery Predicted For Fall 2010

by Erik Sass , December 3, 2009

radio

The New Year won't bring new cheer to the radio industry -- at least at first, according to the third edition of BIA/Kelsey's quarterly overview of the industry, titled "Investing in Radio." While BIA expects 2010 to bring a slight recovery in radio ad revenues, it will not begin until the second half of the year, meaning that the medium can look forward to at least two more quarters of declines before things start to turn around.

As one might expect, BIA is pretty much writing off 2009 as one of radio's worst years in living memory, predicting total industry revenues of $13.3 billion at year's end -- a 19% decrease from 2008.

2010 will bring a slight improvement, with total revenues climbing 1.5% to $13.5 billion, due in large part to accelerating growth in revenues from online and mobile distribution. In 2009, BIA sees online revenues reaching $382 million -- up 11.7% from $342 million in 2008, with a further 20% increase to $459 million in 2010.

Taking a longer view, BIA expects total radio revenues to increase to $14.6 billion in 2013, with online contributing about $750 million.

While these figures are encouraging, it's worth noting that in BIA's forecast, online revenues will remain a relatively small part of radio's total business, representing just 5% of total revenues in 2013. Indeed, BIA's forecast echoed warnings from other analysts that radio's recovery over the next couple of years will depend on radio groups' ability to leverage online sales as the pivot of integrated marketing campaigns.

In essence, they must use the new online and mobile platforms to sell advertisers on cross-channel campaigns that also incorporate a substantial broadcast component, which still constitutes the majority of the radio business.

This is particularly true for one of the potential high-growth areas identified by BIA in its recent report: local advertisers. They are predicted to increase their spending on local online advertising significantly as the economy improves over the next few years.

BIA pointed to mobile search and local mobile video as especially promising content distribution channels for radio stations, which have traditionally drawn most of their revenues from local advertisers.

radio

7 comments about "Hear This: Some Radio Recovery Predicted For Fall 2010".

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Jonathan Mirow from BroadbandVideo, Inc., December 4, 2009 at 2:03 p.m.
Big sale on buggywhips. Buy one today! Horses are coming back. Serioulsy, people. Radio = DOA Killied by internet streaming. Pandora rules, terrestrial drools.
Reply

John Grono from GAP Research, December 6, 2009 at 7:04 p.m.

Oddly, I do most of my radio listening in the car, as do lots of people. Last time I looked I couldn't find the "Access Internet" button on the dashboard. Situation = no change.

Jonathan Mirow from BroadbandVideo, Inc., December 7, 2009 at 5:49 p.m.

But in an ever-increasing "green" environment, less and less are commuting in their cars (I'm assuming you don't just drive around and listen to the radio). And as far as the "access internet" button - you need to look a bit harder. My 15 year old has that button on his iPod - which is the first thing he plugs into the car stereo as he enters the vehicle. I have the same button on my Droid, which is the first thing I plug into the car stereo when he's not in the car (Dad's stuck in the 80's doncha know...). Situation = changed completely. Your world = fading fast.

John Grono from GAP Research, December 7, 2009 at 11:43 p.m.

I too have Internet access via my Blackberry which is Bluetooth connected to the car audio system - so I hope my world is NOT fading fast as I am uber-connected!

But as I am driving the car I tend (like the majority) access broadcast radio if I listen to radio at all. And with the average people per car being 1.45, then the majority of cars are driver-only. I note with interest the increasing "green" concern and try to align it to the increasing vehicular trips - intent vs action.

Situation = reality check, no change.

Jonathan Mirow from BroadbandVideo, Inc., December 8, 2009 at 5:33 p.m.

I don't quite understand - you have a bluetooth enabled blackberry that you connect to your car stereo BUT you listen to broadcast radio? Ummm...why? Do you enjoy commercials?

John Grono from GAP Research, December 8, 2009 at 5:41 p.m.

Simple Jonathan.

I listen to our Australian national public broadcaster that has a great offering in AM talk-radio for us baby-boomers, or I listen to their FM youth network that was an essential part of my youth. (Note: I don't have DAB+ ... yet.)

Maybe public broadcast radio here in Australia is much better than yours. The point is that "content is king" and the technology is merely a conduit to that content.

Jonathan Mirow from BroadbandVideo, Inc., December 9, 2009 at 6:05 p.m.

My bad - I guess I should've known you were in Australia (uh, somehow). Nope, our public radio stations are few and far between - generally under the banner of NPR, which is nothing I would listen to - all talk, no music. The only music stations we have here (Colorado, USA) are giant corporate conglomerates (generally owned by Clear Channel) and consist of nothing more than PCs in a room slamming out somebody's idea of a playlist while cramming as many mind-numbing commercials as possible into each hour - thus our disconnect. Who knew? The big deal here in "radio" is Pandora (which is now available on mobile phones). You type in the name of a band you like - it creates a personal radio station based around that choice. No ads, just music streaming over your internet enabled phone. I haven't turned on my car stereo in months.