• by Erik Sass , May 27, 2010

Better-than-expected first-quarter ad revenues have prompted BIA/Kelsey to revise its forecast for radio, giving a cheerier outlook for 2010. For the full year, BIA/Kelsey now expects radio revenues to increase 3.7% from $13.7 billion in 2009 to $14.2 billion in 2010.

The new projection partly reflects significant growth in revenues from digital and mobile initiatives launched by radio broadcasters.

The new forecast comes not long after the Radio Advertising Bureau released separate first-quarter revenue figures showing that total radio revenues increased 6% from $3.5 billion in the first quarter of 2009 to $3.7 billion in the first quarter of 2010.

Tempering this good news somewhat, BIA/Kelsey Vice President Mark Fratrik remarked: "We're confident that there is still a lot of room for growth in radio, but it will be a slow and steady rise that shouldn't be measured by the results of a single quarter."

There is undeniable vitality in some radio ad categories, but these remain a fairly small part of the overall business. In the first quarter of 2010, digital revenues jumped 18% to $123 million, according to the RAB, and national revenues soared 19% to $568 million.

BIA/Kelsey also noted radio's continued strength in local advertising, where the medium ranks fourth in terms of ad spending, taking 10.5% of total local revenues of $130.2 billion in 2009 ($13.7 billion).

Per the RAB, local revenues are experiencing the slowest recovery of any radio ad category, with a first-quarter increase of just 2% to $2.45 billion -- suggesting recovery in this key category will be long and slow.