One of the biggest users of radio advertising, Anheuser-Busch, is significantly cutting spend in the medium for the second half of this year. Some thought the move was to cost cuts to fend off a hostile takeover bid by Belgium-based, Brazilian-run InBev. Last week, A-B execs outlined a billion-dollar cost-cutting plan they said would create comparable value to InBev’s $46 billion offer. However, A-B CEO August Busch IV said last week that those cuts did NOT involve media spend. So the reality is they’re moving media dollars around, not cutting them–and radio takes the hit.
According to AdAge, A-B has begun to inform major station groups that it is cutting and/or eliminating its spot radio buys for the remainder of this year in many markets. The cuts have already affected Clear Channel stations in multiple markets, according to the story.
“They represent a significant blow to the radio industry, and not just because A-B is a big spender, shelling out $38 million on radio ads last year from its total measured media outlay of $475 million,” said AdAge.
RBR observation: Yes, this is going to be a big hit for national. Local distributor dollars are likely not going to fill the gap. The big deal in all of this is a leading user of radio is slashing radio spend to move it elsewhere. What does that say to other big consumer goods advertisers in the medium? One has to wonder what caused the big shift—are we just not telling the right story about radio? Are the younger demo numbers just getting too shaky in the age of the iPod? If HD Radio numbers were a bit better with consumer adoption, we could offer up something unique—like a national HD-2 “Bud Radio” network or something. But we’re not there yet. Hopefully the troops will rally and head out to St. Louis soon.