in 2010: More struggle
Declines in ad spending will ease next year
By Louisa Ada Seltzer
Dec 23, 2009
Along with newspapers and magazines, radio has been particularly hard hit by the recession.
Radio advertising hasn't seen a year-to-year rise in some two and a half years, and year to date in 2009 ad spending is off another 22.8 percent, according to TNS Media Intelligence.
Like print, radio has been hurt badly by the rise of new technology.
Innovations such as MP3 players, GPS devices, and satellite and online radio have whittled away at terrestrial radio's audience and, perhaps more importantly, created the perception of radio as a fuddy-duddy medium among some media people.
And 2010 will be another bad year, though not nearly as bad as the past two. Ad spending will slide another 4.4 percent after falling 20.7 percent this year, forecasts Magna's Brian Wieser.
But assuming that radio continues to adjust to this new landscape, with lesser revenue and increasingly reliable data provided by Arbitron's portable people meters, which continue to roll out across the country, those spending declines will even out by 2011.
Like spot television, spot radio stands to benefit from a recovery in the auto advertising sector, which is expected to begin next year.
"Though auto spending is down overall, growth could stem from some automakers that are in a strong position to gain market share increasing their spend in local markets," says Wieser in a 2010 forecast issued earlier this month.
"We feel relatively better about where auto is going, though it's going to take a while before it gets back to levels of where it's been in the past," one media buyer tells Media Life.
To a large degree, radio's hurt reflects the internet's success, both in terms of advertising and programming. Media people say that radio budgets often suffer when a client wants to experiment with the web, as they shift money from one medium to the other.
"The dollars coming to the internet have to come from somewhere, and some of the advertising is coming out of radio," the buyer says. "Radio is struggling more than TV."
The web's huge success as a music provider has also hurt radio in many ways. These days listeners can download their favorite tracks, sometimes for free on a band's web site, to listen to whenever they want instead of waiting for those songs to play on the radio.
Or they can tune into a narrowly targeted web station like those on Last.fm, which serves up tunes tailored to users' tastes. That's much more appealing to real music lovers than terrestrial radio, which targets thousands of listeners at once, or even satellite radio, which is a premium service.
Too, radio listening has been hurt by other new media devices, such as smartphones with music capabilities and MP3s. Though Nielsen has been pushing a study that shows that radio is still by far the most popular listening medium, Magna notes that listenership is down from a decade ago.
Too often, radio seems quaint. Local traffic reports, once the exclusive domain of radio, have been rendered unnecessary by GPS devices, email traffic alerts and satellite radio stations devoted to local traffic.
Still, radio is trying to adjust to this new world. The PPM data, while often reporting lower listenership than the paper diary system, has given buyers much more reliable data, and as the real estate and retail categories improve, dollars will begin slowly flowing back into radio.
That could mean that by this time next year people won't be talking about radio advertising's massive losses but another issue that looms in the new year: The fate of Howard Stern.
Stern is in the final year of a five-year, $100 million contract that, when he signed it, seemed to signal a radio revolution, bringing with him the sort of legitimacy that had been missing from the then-fledgling industry.
Fast-forward to 2009, and these days every celebrity from Jimmy Buffett to Oprah Winfrey to James Carville has a presence on satellite, but that has not translated to commercial success.
If Stern stays on satellite, it will be for significantly less money than he made in his last deal. And if he leaves, he may discover that he has far less influence and appeal than when he jumped, after years of delivering his antics to a far smaller audience.
Louisa Ada Seltzer is a staff writer for Media Life.