Skip to content


BIA Advisory Services held a webinar to discuss the state of local radio, and the steps the industry needs to take to revitalize itself. BIA President and CEO Tom Buono set the stage with some daunting figures that show radio’s depressed revenue growth as compared with retail spending over the past 40 years.

Using retail sales as a benchmark, radio’s advertising growth was more or less in parity until the early 1990s, when it began to diverge due to recession. The same thing happened in a recessionary period 10 years later, and that divergence has continued to this day.

On another measure, U.S. ad spending has increased at a 17 percent CAGR since 2000: But radio’s share of that overall advertising pie has decreased from 8 percent to 6 percent. Meanwhile the Internet ad portion has gone from 3 percent to 10 percent in the same period.

“Lots of ad dollars for radio are going towards television and the Internet,” contended Buono, adding that EBITDA has decreased around 20 percent on average during the same period for the largest publicly traded radio station groups. Stock performance also paints an undesirable picture, with valuation declines that are greater than all other forms of traditional media.

Picking Up the Pieces

So what can be done about this? BIA Vice President Mark Fratrik argued that radio stations need to better position their unique assets to maintain listeners and advertisers. These include uniquely local content such as news weather and sports, as well as things that can’t be replicated or commoditized such as personalities and advertising that have local flavor.

The local radio industry’s aggregate revenues are less than their consumption volumes, relative to many other media, added Fratrik. Newspapers conversely have disproportionately high revenue compared to their (quickly declining) consumption. This could be an opportunity for radio to gain share with strategic content planning that targets the right demographics.

But there is more to it than content, says BIA Chief Strategy Officer Rick Ducey. A platform strategy has to be recognized, given broadband penetration, online usage and device convergence. These factors point to radio’s need to be in more places, including digital online streams, and on mobile devices like the iPhone.

“People are connecting in different ways and on different devices,” said Ducey. “Radio has done a good job at getting online. Once online, there are new revenue opportunities.”

Further strategies include planting radio chips into more mobile and consumer electronic devices, and the development of branded online destinations and geodomains. This allows content to be “hyperlocalized” in a way that draws out more of the local flavor that Fratrik argued above.

For radio to make some of these shifts, Ducey argues that it should be a natural transition, given some of the similarities it already shares with the Internet and its audience. These include being a free medium that is consumed at home and work by large audiences and that includes locally relevant content.

“All of these attributes can parlay into online media and mobile media,” said Ducey. It can “create traffic and stickiness, which will attract more advertisers.”

Online efforts can not only create auxiliary outlets and sources of revenues but can also revitalize the core “air” business, added Ducey. Streaming audio is a high-growth area and can be a place to add content such as niche data casting, additional channels and iTunes tagging.

“Not a lot of people are doing this, but we see it as the leading edge to what we’re going to see in the future,” he said.

Down to Business: Selling Ads

An important question that joins radio’s content and delivery strategies is, how does the local sales channel evolve in a world of evolving advertisers? This is a slightly different version of the same issue that faces newspapers, Yellow Pages, cable television and any entity selling into the SMB market.

Kelsey Group CEO Neal Polachek argues that broadband penetration, device convergence and game changing devices like the iPhone have a big impact on local sales rep. Reps who once only needed to know their own media inside and out now need a broader understanding of the many forms of media that their advertisers are asking for.

“They’re going to have to be able to understand and offer a value proposition against a whole new set of advertising products,” argued Polachek. “Reps are going to be increasingly selling cable, online, search marketing, mobile and local radio.”

Whereas local sales reps traditionally had the confidence in their level of knowledge with one product, they’re currently facing sophisticated small businesses that know more about some products than they do. The role and impact of the rep is also degraded as we enter an era where local ads are bought based on performance rather sold based on perception.

“Reps 20 years ago did a good job at selling their category,” said Polachek. “Today, they need a broader sense of the product set and they’re going to have to be more analytical in nature [and] understand and explain metrics coming out of different media. This is going to require revitalization, recruitment and retraining of these reps.”

The Best and Worst of Times

The state of the economy will make all these efforts more difficult than they already are. The good news is that recessionary periods have often spawned the biggest technological and communications revolutions of our time. In recent history, Microsoft and the PC era came out of a recession, followed by the beginnings of the Internet era. Then Web 2.0 was born out of the remains of the tech recession that started eight years ago.

Chances are the next shift in how we live our lives and consume our content will materialize as we come out of the current recession. And the seeds for that communications or technology shift will be planted in the coming months. This could be an opportunity in disguise for anyone in the business of delivering content, including radio. This means experimentation and smart planning around new ways to package and deliver content could uncover the next lottery ticket.

“When we come out of recession in nine, 18 or 24 months, whatever it will be … we’ll be left with a different media landscape than what we’ve had,” said Polachek. “From now till then, we’ll need intense learning about where this thing is going to come out in the end.”

This Post Has 0 Comments

Leave a Reply

Back To Top