With a digital revenue increase of 15% in 2013, radio is poised to grow 22% this year — surpassing the half-billion mark in digital advertising for the first time — according to a new report issued by Borrell Associates on behalf of the Radio Advertising Bureau.
The report, Benchmarking: Local Radio Stations’ Online Revenues, states that the average station made $166,490 in digital advertising, or about 3% of its total revenue. Some large-market stations are making millions, Borrell reported. Average revenue for four-station clusters is approaching three-quarters of a million dollars.
The report is based on Borrell’s ongoing industry-wide surveys of more than 7,400 local online operations in the U.S. and Canada, including more than 2,790 radio stations in 751 clusters. This report analyzes data from three principal sources: ad revenue as reported by the stations, local business ad spending, and a radio manager survey asking questions about digital revenue resources, sales methods, expenses and other digital operations. This year’s manager survey is comprised of 294 respondents representing 2,010 stations.
Along with detailed benchmarking, the report offers insights into what radio managers are thinking with regard to their digital ventures. The majority of managers (62%) believe their sales reps are talking to the wrong buyers when trying to sell digital and an overwhelming majority (92%) believes that more training would help boost digital sales at their stations.
“There are a lot of positives here,” said Gordon Borrell, CEO of Borrell Associates. “We’re still seeing three-fourths of the managers say they believe digital sales hold a lot of growth potential, and now we’re seeing some clear suggestions on how to tap it. Training is an opportunity, as is the need to get more buy-in from upper management. Apparently, the rank-and-file are trying to get the word back to the general that there’s gold in them thar’ hills.”
Overall, radio sellers closed $426.3 million in local online advertising last year according to Borrell Associates. They expect the number to hit $520 million this year as many radio groups expand into selling fast-growing digital services. Those services, popular among local marketers, include app development, Search Engine Optimization (SEO) and social media and email management. Based on the report, one-third of station groups have expanded into those offerings.
“We’re experiencing year-over-year double digit growth in Radio; and to truly maximize this revenue stream this survey continues to provide us with areas to improve upon and ultimately grow our overall revenue share,” said Erica Farber, President and CEO, RAB. “Most notably, sales managers are looking for continued training for their sales staffs and a better understanding of the digital buying community. The RAB is poised to help in this area through our professional development programs and outreach.”
From the report:
“The radio industry continues to find success tapping the fast-moving digital advertising stream. Last year digital ad sales increased 15% for radio stations, to $426 million. The average station made $166,490 in digital sales last year and the average cluster made $715,790. That equated to about 3% of total station sales. This year we’re forecasting 22% growth for radio’s digital revenue, breaking the half-billion-dollar mark for the first time. Overall, managers we surveyed were optimistic that digital sales would continue to rise.
The growth isn’t coming just from selling banner ads and in-stream commercials. One-third of stations reported that they are now selling digital products that include overall management of their advertisers’ Internet presence via app development, email management and optimizing their websites to be noticed by the search engines.”
More insights from the report:
•• 52% believe digital sales suffer because reps have to sell radio.
•• 32% believe radio sales suffer because reps have to sell digital.
•• 42% rated their sales team’s ability to sell digital as poor.