• by Erik Sass  @eriksass1, June 4, 2009

The downturn in traditional media has been worse than expected in 2009, forcing analysts to repeatedly revise their already gloomy predictions. In the latest downward revision, BIA Advisory Services said in its recent "Investing in Radio Market Report" that it is forecasting a 15% drop in radio revenues in 2009, to just $14 billion. That's a decrease of over 4% from its March forecast of a 10.6% decline, to about $15 billion.

The new forecast was prompted by continuing weakness in demand for radio advertising in the second quarter, following a 24% drop in total radio ad revenues in the first quarter and a 9% drop in full-year 2008, according to the Radio Advertising Bureau. In fact, the new BIA forecast actually implies a mutedly optimistic outlook for the rest of 2009: to counteract the 24% drop in the first quarter and produce an annual decline of 15%, declines in the three following quarters would have to average no more than 12%.

Indeed, BIA Vice President Mark Fratrik was hopeful that the economy in general and the advertising market in particular may have bottomed out, heralding an eventual recovery. While praising the radio industry's ability to adapt, Fratrik was cautious in his choice of words about the potential rebound in ad demand: "Facing this calamitous situation, radio has shown agility by adjusting its programming and how it's delivered, and listeners are responding. These adjustments could translate into a viable way of attracting advertisers..."

According to BIA, beneficial changes include adoption of new formats, like "all news" -- which make radio better-positioned to carry programming over multiple platforms, including the Web and mobile. Here BIA pointed to the popularity of smart phone "apps" that enable delivery of streaming digital radio to handsets. Michael Boland, the program director for mobile local media for BIA's The Kelsey Group, noted that "this move represents an opportunity to target different demographics of mobile users and gain incremental listeners, especially among younger groups."

BIA isn't the only industry watcher to revise its 2009 forecast for radio downwards. Wachovia analyst Marci Ryvicker said in April that the company was putting its broadcast revenue predictions for the rest of the year under review. She added that revenue data "is incrementally negative and leads us to believe that the local ad environment continues to deteriorate." Originally, Ryvicker had forecast a 13% drop in radio revenue in 2009.