Following a rocky end to 2004, radio ad spending got off to a mediocre start in 2005. According to estimates compiled by the Radio Advertising Bureau, January radio ad spending rose 3 percent over January 2004, a month that was flat relative to January 2003. Following the release, Merrill Lynch revised its projections for 2005 radio ad spending growth to 2.9 percent down from its previous forecast of 3.5 percent. The Wall Street firm said its revision reflected flat growth projections for Clear Channel Communications and Infinity Broadcasting, which represent 18 percent and 11 percent of the radio ad marketplace, respectively. "In our opinion, 2005 will be a slow but steady year for radio advertising, with fewer ebbs and flows from month to month, following several years of 'corrections' that smoothed out the erratic year-over-year comparisons," noted the securities firm's research group. "In other words, the year-over-year comparisons are more normalized in 2005 than the previous few years, creating a more consistent comparison base to grow from." In an encouraging not, Merrill Lynch's analysts do not expect to the growth in satellite radio penetration or other digital media technologies to have an adverse impact on the radio marketplace during 2005, projecting that it would take a "decade" for satellite radio to accumulate 40 million subscribers. Even at that, satellite would only account for 15 percent of the terrestrial radio audience, the analysts said, noting that is "hardly enough to put radio out of business on its own. Remember, the proliferation of cable did not make broadcast TV advertising obsolete. Rather, broadcast TV network and station advertising grew 4% since 1985 despite [the Big 3 networks'] audiences declining to 27% of households from 63% in 1985."
With video gaming already a $10 billion industry, with ESPN looking to market a show around the phenomenon, and with Hollywood and cable channels looking to create ever more vehicles for it, the question for video gaming right now is: "Where can it all go from here?" The answer, from Horizon Media, is anywhere it wants to be. But in particular, a recent survey conducted by the independent media shop suggests that video games will likely become more interactive, and will even be used as a communication vehicle among individuals. PC-based games, in which users can interface with other gamers via the Web, look to be a huge growth segment for this industry--and, with broadband and wireless broadband becoming more and more prevalent, this has the potential to lead to interactive games on other non-traditional platforms such as personal digital assistant's. Video game publishers are constantly looking for new formats and genres to promote their industry and the avenues they are heading down seem to have a lot of potential. With shows like "24" and movies like The Matrix" that already have their own video game, video games are serving as a strong method of brand extension, the survey's authors noted. "Active video game users would like to see the reality TV craze as the next wave of this trend," the survey said. "With shows like "Survivor," "The Apprentice," and "American Idol," consumers can play their own interactive video game, based upon a reality show, and eliminate contestants by interactive voting. By combining interactivity and competition--two staples of the video game industry--this could be a good route for them." These formats also lend themselves to what Horizon is calling "advergaming" or product placement--yet another huge advertising vehicle that could be very positive for the industry, given the tremendous growth in numbers of video game players. It is already estimated that more people spend money on video games than go to the movies--for example, video games saw sales of over $9.9 billion in 2004, whereas the movie industry grossed $9.4 billion with an attendance drop of 1.7 percent. "We think this number will only increase with the help of next-generation platforms," Horizon said. "We see no end to the video gaming boom in sight."
Nielsen's plan to bankroll a $2.5 million fund for researching and developing new methodological research on TV audience measurement (MDN Feb. 18) got mixed reactions from some customers and other stakeholders it was intended to sway. While the announcement--part of a multifaceted response to a variety of Nielsen criticisms outlined in an eight-page letter sent by Nielsen CEO Susan Whiting to clients on Friday--does acknowledge the need for ongoing, independent R&D, it raised questions about how Nielsen's funding might influence a process that the media and advertising industries had been developing on their own. In fact, some skeptical observers believe Nielsen's proposal was made in direct response to a consortium that has been initiated by members of the Media Rating Council, which has already met twice, and which has grown to include the involvement of the American Association of Advertising Agencies (AAAA), the Association of National Advertisers (ANA), and leading ad trade bureaus like the Cabletelevision Advertising Bureau. "The latest meeting proposed the structure of it," George Ivie, executive director and CEO of the MRC, told MDN, adding: "We concluded that ratings services like Nielsen should be involved, but not just Nielsen. We plan to approach Arbitron, and Scarborough, and [Mediamark Research Inc.], and other people. They have some of the best researchers in our business, and we'd like to get them involved." Ivie, who proposed the idea of a consortium, said it would operate independently of the MRC, although the MRC would work closely with the organization, which eventually is expected to have its own, independent management structure. Most importantly, he said it needs to operate autonomously, and "independent of any one ratings service." He said the goal would be to include representatives of other media--including print, radio, and outdoor --as well as to conduct methodological research on other media, and that the Advertising Research Foundation would be invited to play a role. The ARF was created by the AAAA and the ANA with a charter to foster best practices in advertising research. Asked how Nielsen's funding might play a role in the initiative, Ivie said: "I think we would welcome something like that, as long as Nielsen wasn't directing the activity." Nielsen's exact intentions were not clear from the letter issued by Whiting, but executives familiar with Nielsen's plan said the goal would be to allocate some Nielsen staff researchers to be dedicated to the initiative, and to work independently of Nielsen Chief Research Officer Paul Donato's internal R&D efforts. Exactly how the funding would work also wasn't clear. Whiting said Nielsen is creating a $2.5 million fund for independent R&D, but did not indicate how that money would be allocated and dispersed, and who would control its spending--or whether it might be used to back the consortium, or even if it was designed to draw attention away from it. "This fund, which is incremental to our normal R&D investments, will be focused on methodological research," she wrote. "We will ask a small group of clients representing different industry segments to serve with us on a steering committee that will direct the spending over the course of a year. Once we and our clients have evaluated the success of this initiative during the first year, we will determine the size of the fund on an ongoing basis." While Nielsen's funding would likely be tempting for an industry that is always scraping for primary and syndicated research budgets--much less methodological ones--some stakeholders said it would be critical that Nielsen not have any control over the process. "It would be like having the fox guarding the chicken coop," said one Nielsen customer. "The American people can't count on an unregulated monopoly to police itself. Real reform and oversight is needed in the television ratings system," Cynthia Jasso-Rotunno, executive director of Don't Count Us Out, stated on Friday, adding: "Today's announcement demonstrates that Nielsen has accepted that, but they also need to accept that they are not the ones to do it."