Radio Audience and Advertising

Young Music Listeners Increasing, but Ad Revenue Falling

Oct 23, 2008

Radio Advertising Bureau reports both local and national ad revenue down from 2007 despite more listeners. But industry is holding its own against iPod music competiton.

The Radio Advertising Bureau (RAB) reported in October 2008 that the industry’s advertising revenue slipped continuously through the first nine months of the year, despite an increase in the size of its listening audience. RAB said radio was reaching 235 million unique listeners every week, up about three million listeners.

The bureau’s report for the month of September showed a nine percent decrease from 2007 to 2008 in traditional local and national advertising and an eight percent decrease in total revenue. Local advertising revenue was down 10 percent and national ad revenue was down seven percent.

RAB says its local and national revenues "are based on approximately 100 markets as reported by the accounting firm of Miller Kaplan Arase & Co."

Off Air Revenue Declines

The September report also showed the first decline in what the RAB calls "off air" revenue, which includes the industry’s internet, mobile and navigation system income. That category was up six to 18 percent in the first eight months of the year.

In August, RAB said the off air revenue in the first six months exceeded forecasts, increasing at more than 12 percent over the previous two years. The bureau said the first half performance underscored "radio’s ability to adapt to changing media patterns" and projected the revenues would "approach $2 billion by the end of 2008."

However, third quarter revenues have not matched the earlier gains, increasing only six percent in July, ten percent in August and then declining one percent in September.

Traditional Local Advertising Down

Radio’s traditional ad revenue totalled $8.4 billion in the first half of 2008. Local revenue accounted for nearly $7 billion of the total, but that was down 6 percent from the first half of 2007. The 2007-to-2008 month-to-month comparisons were down five percent in July, 11 percent in August and 10 percent in September.

National advertising was estimated at $1.428 billion in the first half of 2008, a decrease of 11 percent from the first half of 2007. In month-to-month comparisons with 2007, it dropped 15 percent in July, 14 percent in August and seven percent in September. The smaller loss in September may reflect some increase in political advertising as presidential and Congressional campaigns accelerated their spending.

In contrast to earlier years when straight network news was a staple of radio programming, national radio advertising now depends heavily upon political and/or shock commentators such as Rush Limbaugh, Bill O’Reilly, Al Franken, Sean Hannity, Howard Stern, Don Imus, Jim Hightower and Neal Boortz. A presidential election year provides abundant content for such programming.

Young Music Listeners Increased

However, radio’s reported audience increase in 2008 came from 14-to-24 year old music listeners, where iPods were expected to provide stern competition.

According to Andrew Hampp in Ad Age.com, a Paragon Research study indicated that the young people had increased their radio listening 11 percent while decreasing their iPod listening 13 percent.

RAB President Jeff Haley said the study confirms "what the radio industry has heard anecdotally." He attributed the gains over the iPod to radio’s ability to provide "the serendipitous experience" of new music.

The copyright of the article Radio Audience and Advertising in Radio Advertising is owned by Carroll Trosclair. Permission to republish Radio Audience and Advertising in print or online must be granted by the author in writing.