2008 Radio Advertising Outlook
Digital HD Radio Is Revolutionizing Sound Quality and Audience Reach
New technology and political campaigns promise to make 2008 an exciting year for the radio advertising business.
These are volatile—some say exciting—days for radio advertisers. In 2008 they are looking at revolutionary radio technology, changing audience demographics, new audience targeting opportunities, record political advertising, growing Internet competition and probably increasing ad rates.
Those developments represent radical changes for an industry that was still nurturing a series of negative trends as recently as 2007.
Probably the most significant development facing the industry in 2008 is the rapid rise of HD Radio Technology, which the Radio Advertising Bureau (RAB) has called "the most significant advancement in radio broadcasting since the introduction of FM stereo more than 50 years ago." The rise has come in spite of some serious criticism on WIRED Magazine of the digital sound quality.
HD Radio is a trademarked technology that allows both AM and FM stations to broadcast programs digitally instead of in analog. It was developed and licensed several years ago by iBiquity Digital Corporation and is primed to capitalize on its rapid growth in 2008.
At the start of the year RAB said HD Radio technology was already available to over 80 percent of the U.S. population through more than 1,500 stations.
"Signal fading, static, hisses, and pops are a thing of the past as HD Radio delivers FM-quality sound on AM and CD-quality sound on FM," RAB said on its website.
Listeners can attain HD Radio simply by purchasing a new radio equipped to handle the technology. No subscription fees are required.
Ford, BMW and Volvo have already committed to installing car HD Radio units in some of their newer models.
Meanwhile the HD Digital Radio Alliance has committed $230 million in radio airtime to promoting consumer appreciation and use of HD Radio.
Alliance President Peter Ferrara said "over the last two years, we have raised consumer awareness of HD Radio to 77% … Now it’s time to convert that awareness and access into consumer action."
Retailers are prepared to sell thousands of sets. Major players like WalMart, Sony, Best Buy, Circuit City and Radio Shack are promoting the new units, some at $200.
The revolutionary new technology will inevitably impact the economics of radio advertising as HD Radio competes with other ad media, improves listening quality and reach, and opens new programming and advertising formats and opportunities.
The extent and direction of that impact is still to be determined and will depend to a great extent on how the radio industry can enhance its Internet operations and compete with Internet rivals in delivering performance-based advertising.
RAB said the HD Radio will "deliver tightly targeted audiences" and will create "more opportunities for advertisers to integrate their brand with program content and connect on an even deeper level with their customers. "
The impact will be influenced in 2008 by what is expected to be the greatest volume of political advertising the nation has ever known. Industry executives expect radio to capture somewhere between six and 10 percent of the spending on presidential and Congressional campaigns.
One estimate puts radio’s share of the 2008 political advertising at $272 million, which would give the industry more time and perhaps more revenue to capitalize on HD Radio advantages.
