• by Frank Saxe , March 14, 2003

Radio groups say the threat of a war with Iraq is already having an impact on advertising, as buyers request a wartime hiatus and others take dollars off the table altogether. Yet speaker after speaker at Thursday’s Kagan Radio Summit in New York voiced optimism that once the geopolitical situation is resolved, the industry will roar back.

“Some advertisers are standing on the sideline in some cases, although business is good,” said Radio Advertising Bureau (RAB) president/CEO Gary Fries. He said radio buys are suffering the most when they’re linked to television. “Advertisers are keeping their campaigns on the drawing board because they are cross-platform and TV is what is hurting us. It’s harder to get in and out and modify TV creative.”

Interep chairman/CEO Ralph Guild predicts radio is on track for high to mid-single digit gains in 2003, despite concerns over a possible conflict with Iraq. He said that a war is not likely to disrupt advertising significantly, and that most advertisers plan to delay, not cancel, schedules to accommodate special war coverage. Guild’s rep firm has met with a number of buying agencies, and said that so far none has requested a formal “war clause” allowing advertisers to pull out.

Entercom Radio president/CEO David Field said some buyers are requesting to be off the air 48 to 72 hours, with others asking for a 2 to 3 week delay, adding, “Many advertisers, particularly national advertisers, have really thought this through.” Even so, a majority has said nothing.

Clear Channel regional VP Andy Rosen, who oversees the group’s 26 stations in the New York City area, agreed that some buyers are holding back, but said his stations are still “on target” with their revenue projections. Although some automotive advertisers have begun to reduce their spending, Rosen says new spending from Honda, Mazda, and Volkswagen has helped make up the difference.

Most radio operators say despite the war jitters, most categories remain strong. Guild said that among national radio’s top spenders, all are pacing up in the first quarter, including Retail (+20%), Automotive (+10%), Telecommunications (+10%), Cable TV/Broadcasting (+65%) and Consumer Products (+20%).

During the heyday of the dot com boom, many radio groups came under fire from buyers for adding inventory to cash in on increased demand. Today, some worry that the industry will add units to make up for lost dollars, particularly after a war has ended. Fries said radio learned its lesson three years ago, when the industry got its “hands slapped” by buyers. Instead, Field says radio will look to close its CPM gap with television. “The gap is so large, that it will be an important source of growth into the future,” he predicted.

Despite the uncertainty, there remains a great deal of optimism among radio groups. That because advertisers have largely said they are not taking ad buys off the table, but simply shifting dollars further out. While the RAB has gone so far as to put together a “tactical kit” to help stations sell during a war, Fries said RAB numbers show beyond March is “robust,” although he warns that a delay in the war timetable could mean a continued “drag” on the industry.

Jefferson-Pilot Radio CEO Clarke Brown is also confident many of those dollars are simply shifting. His group is pacing up 11% in April and 6% in May. Brown foresees dollars rushing back into the marketplace after any conflict is resolved. He added with confidence, “We’re going to return to that area where we can increase average unit rates.”