Radio Marches In Place With Some Leading, Some Lagging

Radio revenues for Q4 and Full-Year 2013 were flat against comparable 2012 periods which had been buoyed with an influx of political spending at the culmination of the presidential campaign. Final figures were $4.602B and $17.649B respectively.

Spot revenue declined 3% in Q4, in large part due to it being an off year in the political arena. This was offset by strong performances in Digital, Off-Air, and Network Comp. For the total year, Spot was off just 1%, with gains recorded in both Digital and Off-Air; Network ended the year at -4%.

Revenue Comparisons - 2013 vs. 2012 (In Millions)

Revenue

$ MM Q4 '13

% Chg

$FY '13

% Chg

Spot

$3,626

-3%

14,054

-1%

Network

294

+7%

1,122

-4%

Digital

244

+18%

889

+16%

Off-Air

438

+11%

1,584

+5%

Grand Total

$4,602

Flat

$17,649

Flat

Source: Miller Kaplan Arase, March 2014

Erica Farber, President and CEO of RAB, says “… digital continues to gain momentum… Based on Borrell Associates forecast… 22% rise in Digital… on Radio in 2014… category is poised to surpass the $1B mark… ”

Automotive retained its position as Radio’s top Spot category based on 2013 full-year spending, followed by:

  • Communications,
  • TV/Networks/Cable,
  • Restaurants, and
  • Financial Services

Only Communications and TV/Networks/Cable have shifted their positions within Radio’s Top 5 this year.

Revenue Trend, Radio’s Top 5 Categories (% of Total Top 5 Category Spending)

 

2009

2010

2011

2012

2013

Automotive

23%

24%

26%

29%

29%

Communications

22%

22%

19%

18%

22%

TV/Networks/Cable

17%

18%

19%

18%

17%

Restaurants

21%

18%

19%

18%

16%

Financial

17%

18%

17%

17%

16%

Source: Miller Kaplan Arase, March 2014

Farber added that “… the list of categories with upticks underscores Radio’s efforts to diversify and expand revenue growth… advertisers… recognize Radio’s contribution… to successes… in the top tier categories… and want to tap into it… ”

Categories Posting The Greatest Spot Gains Year-Over-Year

Category

Spot Gain

Professional Services

+23%

Communications

+18%

Concerts/Theater/Movies

+12%

Department/Discount Stores/Shopping Centers

+ 7%

Home Furnishings/Floor Coverings

+ 5%

Source: Miller Kaplan Arase, March 2014

The “who’s who” of Spot Radio’s leading advertisers of 2013 is heavy on Communications category advertisers, yet the list contains representatives from TV/Networks/Cable Providers, Restaurants, Insurance, Grocery/Convenience Stores, Automotive, and Beverages

Radio’s Top 10 Leading Advertisers

Q4 '13

FY '13

AT&T

AT&T

Comcast/Xfinity Cable

Comcast/Xfinity Cable

McDonald’s

McDonald’s

T-Mobile

T-Mobile

Verizon Wireless

Verizon Wireless

Safeway

GEICO

GEICO

Safeway

Toyota Dlr. Assn.

Toyota Dlr. Assn.

Kroger

Sprint

Ford Dlr/Honda Dlr (tie)

PepsiCo

Source: Miller Kaplan Arase, March 2014

 

Fourth Quarter Spot Radio saw major increases in two key industries aligned with the impending implementation of the Affordable Care Act (ACA):

Fourth Quarter Spot Radio

Industry

Increase in Spot

Health Care

+32%

Insurance

+21%

As well two other Spot Advertisers

Professional Services

+23%

Concerts/Theater/Movies

+19%

Source: Miller Kaplan Arase, March 2014

Percent change is calculated on revenue adjusted to current year reporting.

Advertiser Category Analysis Summary

Auto Dealers/Dealer Groups/Manufacturers

Automotive Spot spending in Q4 and Full-Year 2013 didn’t quite keep up with the strong surge in the industry’s 2012 rebound year, as volume was off 1% for the quarter and 3% in total – but the category again out-delivered all others.

Beverages

For the quarter and 12-month periods, the Beverage category’s spending declined 27% and 13% respectively. Top Q4 spender Anheuser-Busch increased its Spot Radio presence by 6% but ended 2013 down 3%. Brown Forman, parent company of brands such as Canadian Mist, Jack Daniels and Korbel Champagne, also upped spending 16% for the quarter and was up 33% at year end.

Casinos & Lottery

Although Hotels & Casinos registered a decrease of 18% for Q4, the subcategory ended flat by year end. Revel Resorts and Casino had the highest percent increase (up 590%) in Q4, following a similar pattern as in Q3 and ended 2013 up 175%. State Lotteries upped their over-the-air presence by 10% for the quarter and ended 2013 up 1%.

Communications/Cellular

With carriers ramping up their efforts to attract consumers to new devices and competitive service plans, Spot advertising dollars streamed into Radio in 2013. Radio garnered +18% increase over FY 2012, while Q4 spending grew 2%, placing Communications in the #2 overall category rank for both periods.

Concerts/Theaters/Movies

A 19% increase in Q4 2013 secured this category a growth seat for the quarter. Increases were made by entertainment companies and movie houses concluding year-end with a 12% increase. Live Nation, ranked as the category top spender for the quarter and full year, raised their Spot Radio presence 60% and 11% respectively. 20th Century Fox increased Q4 spending by 482%.

Financial Services

Spot Radio advertising from the Financial Services category for the year declined 9% as Q4 came in 31% lower than the same period last year. JPMorgan Chase took the lead within the category (up from #3 last year), followed by PNC Bank (-39%). Reflecting the improving housing market, Cash Call places third this year based on a 77% increase in spending.

Grocery/Convenience Stores

Food store marketing via Spot Radio was up 3% in the last quarter of 2013; the category’s full-year spending registered virtually no change from 2012’s level. Safeway continued to outspend all competitors on the airwaves by a wide margin. Second-ranked Kroger Food Stores placed 30% more dollars on Radio in Q4 to end the year up 7%.

Health Care

As the Affordable Care Act (ACA) registration deadline approached there was an influx of ad dollars to the Health Care category -- +32% to the Q4 and +3% by year end. Top Q4 spender Kaiser Permanente increased their Spot presence by 33% but slipped to the #2 spot for the year despite a 21% increase. Ideal Image took the category lead at the end of 2013 with a 46% increase. New to Radio, with little to no prior spending, Centers for Medicare and Medicaid Services and Dignity Health contributed a substantial amount to the category’s overall increase.

Home Furnishings

Category advertisers continue to use Spot Radio to support their campaigns as increased housing purchases drove consumers to furniture purchases. A 3% increase for the quarter sprung this category to a 5% increase at year end 2013. Fourth Quarter 2013 is the fifth consecutive quarter that this category has increased its over- the-air presence.

Insurance Companies

As anticipated, Spot Radio spending in the Insurance category enjoyed a significant uptick in Q4 (+21%) as health insurers moved to take advantage of a new market created by the Affordable Care Act (ACA), combining with the ongoing competition among companies offering Auto and Property/Casualty coverage. The category’s year-end total was up 1%.

In Q4, Radio benefited from increases (in spending rank order) by:

  • Blue Cross Blue Shield (+56%)
  • State Farm Insurance (+21%)
  • USAA Insurance (+50%)
  • United Health Care Insurance (+124%)
  • AARP Insurance (+151%)
  • Wellpoint (+425%)
  • Cigna (up nearly eight-fold)
  • Farmers Insurance (+18%)
  • Aetna Health Insurance (up over six-fold)
  • GEICO’s spending dipped slightly (-2%) but still represented a 51% lead over #2 for the period; GEICO’s full-year spend was up 12%.

Professional Services

With a fifth consecutive quarter of increased spending, Professional Services bolstered its Spot Radio presence by 23% -- for both Q4 and Full-Year 2013.

Restaurants

Radio Spot spending in the Restaurant arena declined 16% in fourth quarter, resulting in a 10% decline from 2012 full-year comps. McDonald’s remains the uncontested leader in Restaurant advertising on Radio even as dollar commitments dropped -4% in Q4, -5% FY; #2 Subway also cut some Radio (-16% in Q4, -10% FY).

Retail – Including Department & Discount Stores and Home Improvement

With fewer holiday shopping days and severe weather, the Department & Discount Stores subcategory reduced their Q4 Spot Radio presence by 20% but still ended the year up 7%.

Despite the fourth quarter decline, there were many advertisers that rang up a large presence. TJ Maxx’s triple digit increase in Q4 boosted it to the #1 position.

Home Improvement advertisers decreased their spending, leading the subcategory to spending decreases for both the quarter and full-year, down 6% and down 9% respectively. Noteworthy is Clockwork Home Services that has gone from close to no advertising on Spot Radio to the 7th spender at the end of 2013.

Specialty Retail

While the larger retail category decreased spending, Specialty Retail increased spending 1% in the quarter. Specialty Retail ended 2013 down 8%.

Television/Networks/Cable Providers

This category was off 8% for both Q4 and total year 2013. Overall Spot Radio ranking for the year slipped to 3rd from #2 in 2012, with Q4 consistent at #3 for both years.

Spot Radio, Digital and Off-Air revenues are based on a pool of more than 100 markets as reported by the accounting firm of Miller Kaplan Arase LLP and extrapolated to the entire U.S. Digital Revenue is comprised from activity generated by websites, Internet/web streaming and HD Radio including HD2 and HD3 stations. Network Revenue includes seven major Radio network companies. Revenue data has been randomly verified since 2002.

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