I’m puzzled by the radio industry. As I wrote in a recent Inside Radio column, it has the greatest potential and the weakest realization of the Internet’s possibilities.
Our most recent assessment of the radio industry’s efforts shows that it is on track to get $231 million from local online ad sales this year, up 5% from 2008. Sounds like a lot, until you consider that competitors in the TV, newspaper, yellow pages space are getting more than $1 billion each from local online sales.
Despite radio’s potential, I don’t see the industry achieving more than a 2% share of online advertising anytime soon. Our forecast calls for radio to see a slight uptick next year in interactive sales, growing 15% to $265 million. (This is just for local radio stations; if you add online sales from national radio sites like CBSRadio.com and ESPNRadio.com, the overall total comes to about $380 million this year.)
Radio Stations Local Online Revenue 2003-2012
The “potential” comes from the fact that radio has the second-largest number of feet-on-the-street sellers of local advertising – about 18,000 in all. Newspapers have the most at 31,000, and yellow pages the third-largest sales force at about 14,000. But the radio industry also has something that no other local media competitor has: The only daily produced local entertainment program, and a deep understanding of social networking. Think of the strong affinities that form around music genres such as country, classical, adult contemporary, hip-hop, sports talk, politics, and hard rock.
Isn’t the Internet about social networking? Aren’t advertisers turning to the Internet for ways to promote themselves and connect with “engaged” niche audiences like this?
Radio operators know this business model well. A few are indeed leading the way, like Long Island Radio Group’s money-saving and coupon site, www.yourli.com. The group has branched out beyond the CallLetter.com mindset and is using the Web to reach into the space once dominated by newspapers and direct mail. Radio One is also leading with sites like www.elev8.com and www.blackplanet.com.
I wish others would take the cue.
NOTE: If you’re interested in hearing more, I’ll be highlighting some of the top performers in the industry at the Radio Ink Forecast Summit Dec. 8 in New York. If you’re planning to attend and would like to meet, please let me know. We’ll also, we’ll be delving deeper into radio’s opportunity and highlighting a few of the industry’s most innovative stations during our own conference in February. Hope to see you there!
Tags: Borrell Associates, Gordon Borrell, local online advertising, Long Island Radio Group, radio, Radio One, radio online
Gordon,
I suspect part of the problem is declining listenership, especially among the younger age groups. We all grew up listening to radio, but that has changed. Many of today’s youth get their music from internet radio and MP3.
Heck, the only radio they might own is the one in their car, and they probably don’t know how to use that one.
Certainly, the radio stations have the sales staff to grow, but if the demographics aren’t there, then neither will the advertisers.
Google grew into the largest online advertising channel with virtually no sales force (except for the largest advertisers and agencies). They had the visitors, however, so the dollars flocked there.
All the more reason to expend resources on online media. If the radio industry attacked today’s “new media” the way they attacked the new media of the 1950s, they’d own it. Fifty years ago, there was lots of investment with the intent of leveraging their radio broadcast knowledge into becoming the No. 1 TV station. Why are so many of them satisfied with having Web sites that look like graveyards for logos and banner ads? Why aren’t they intent on becoming the No. 1 local Web site and reaching the audience they’ve lost? It’s not because the digital managers don’t “get it.” I think it’s because the CEOs and chairmen don’t get it and starve their digital folks of resources.