• by Joe Mandese  @mp_joemandese, February 2, 2005

Radio ended a relatively rocky advertising year in 2004 with enough growth to break the $20 billion mark for the first time in the broadcast medium's history. U.S. radio ad spending totaled $21.411 billion in 2004--a 2 percent increase over 2003, according to estimates released late Tuesday by the Radio Advertising Bureau.

National radio ad spending actually declined slightly for the year, dropping to $3.453 billion in 2004 from $3.470 billion in 2003. Local radio ad spending rose 3 percent to $14.479 billion, while network radio jumped 5 percent to $1.081 billion.

While radio managed to boost its ad revenues during 2004, it actually ended the year on a weak note, with total ad revenues declining 1 percent in December.

Following the RAB's release, analysts said they remained neutral on the prospects for the radio industry.

"We expect today's revenue release to have little impact on the radio stocks, since the data point is largely backward-looking and most radio companies will report fourth-quarter results in the next one to three weeks. More importantly, most investors have already shifted their focus to 2005," said Merrill Lynch in a report released by its equities research team. The securities firm said it is sticking with its projections of fourth-quarter 2004 radio revenue growth projections of 2 percent to 3 percent.

"We are maintaining our full-year 2005 spot radio revenue forecast of +3.5%," said the firm, noting that it expects the recent decision by radio giant Clear Channel Communications to reduce the amount of commercial clutter in its radio broadcasts to "have a stronger impact on the radio industry starting in May" and building momentum during the second half of 2004, "as higher demand and sellout levels will allow radio companies to increase unit pricing."