Radio gained digital share in 2012, and it looks like many stations are building on that momentum in 2013, according to a report issued by Borrell Associates on behalf of the Radio Advertising Bureau. Moreover, there appears to be significant profit in local digital sales operations, the report concludes.
The report, “Benchmarking: Local Radio Stations’ Online Revenues,” says radio grew its online ad revenues 22% last year, outpacing the 20% overall increase in local online ad spend. That was enough to achieve a share increase of two-tenths of a point, to 2.0%.
The report is based on Borrell’s annual industry-wide survey on more than 6,200 local online operations, including more than 2,000 radio stations in 527 clusters. This report analyzes data derived from three principal sources: media ad revenue, local business ad spending, and a special radio manager survey asking questions about digital revenue resources, sales methods, expenses and other digital operations.
The growth signaled a boost for the radio industry, which had lost digital ad market share for three years against aggressive sales from newspaper, TV, yellow pages and Internet pure play competitors. The results offer strong evidence that radio is turning the corner in digital sales.
“In terms of digital advertising, radio has been in a come-from-behind position for years,” said Gordon Borrell, CEO of Borrell Associates. “But it looks like quite a few groups are breaking out and even challenging their newspaper and TV competitors for a slice of that very large digital pie. I hope the data in this report will show radio general managers and general sales managers that it is entirely possible to generate millions in digital sales, and that there’s a high likelihood that these sales hold significant profit margins.”
Overall, radio sellers closed $370.7 million in local online advertising last year. Borrell expects the number to pass $420 million this year as many radio groups double down on digital sales efforts. Much of that growth will be fueled by stations budgeting for unusually high growth. In a survey of 1,075 radio stations administered in January as part of the report, 17% said they expect growth of 30 percent or more this year.
There’s more good news for radio: Stations are diverting their focus from banner advertising and branching out to sell other, more popular formats like email advertising, paid search and even video ads. While banner ads were the largest single source of revenue for 32% of the stations who participated in the survey, the number dropped to 22% for 2013.
“Digital strategy among radio stations and groups is varied,” says Erica Farber, RAB CEO. “Revenue opportunities continue to grow for those who are pushing the digital limits with online and mobile initiatives. As radio further defines and focuses on monetizing their digital platforms and applications, we will continue to see growth for radio in revenue and market share.”
RBR-TVBR observation: When stations look at their terrestrial signal as a way to drive digital revenue—and convey this to advertisers that are moving toward online marketing efforts—the game is changed. Start with the online campaign and look at the terrestrial signal as the driver.