Radio’s Q3 local down 10%; Nat. down 12%


In the midst of this challenging economic climate, the financial picture for Radio had some bright spots, reports the RAB in a Q3 and YTD radio ad spend analysis. Most notably, Radio operators’ strategic efforts to offset cutbacks in traditional advertising have paid dividends as Off-Air continues its steady growth with increases from online and experiential marketing.


Preliminary Q3 reports indicate widespread year-to-year declines across media. Commenting on Internet advertising’s flat Q3 results, David Silverman, a partner at PricewaterhouseCoopers LLP, stated that, “a weakening economy will continue to be a challenge for all forms of advertising-supported media.”

“Although Radio companies are not immune to the current economic downturn, Radio’s flexibility across traditional and emerging platforms provides advertisers multiple channels for consumer engagement,” observed Jeff Haley, RAB CEO. “By leveraging the strength of Radio’s on-air brands, advertisers can communicate with their
customers in relevant environments.”

Network Radio saw consistency from Wal-Mart, Home Depot, and General Motors Corporate (including its divisions), with Wal-Mart taking the lead as the sector’s top spending advertiser with nearly $42.7 million invested through Q3 ‘08.

With their own bottom lines reduced, most marketers curtailed spending across media. Radio did experience growth in certain key categories, particularly Insurance and Restaurants, in the Local and National sectors.


The extended Political season for the 2008 Presidential race proved beneficial to Radio. In the 35 markets that report advertiser detail to Miller, Kaplan, Arase & Co., campaigns on Local and National Radio carried some $20.6 million of messages in Q3. It moved the year-to-date tally to $54.9 million – spending which offset the drops among many of Radio’s perennial leading spenders. In addition, Network Radio was endorsed by the political hype with $6.2 million in Q3 ’08 and $13.8 million year-to-date according to TNS Media Intelligence.

Political Spending Analysis

The 44th president will be inaugurated into office soon, following one of the most historic presidential races. Here’s a recap of Political spending. In a comparison of Local and National Q3 and YTD ’08 political spending in the Miller Kaplan markets to the last presidential election year of 2004:

• Q3 ’08 saw a 20.5% increase versus Q3 ’04 (+$3.5 million)

• YTD ’08 tallied in a 43% increase over the same time period from ’04 (+$16.6 million). Also in the Local and National sectors, Issue/527s won the quarter as the largest spender infusing more than $2.7 million dollars with year-to-date ending over $7.8M in the 35 Miller Kaplan reporting markets:

* Various committees, associations and organizations followed with a $.7M and $2.2M investment in National and Local Radio’s Q3 and year-to-date totals, respectively
* Candidate dollars, led by Barack Obama and followed by John McCain, collectively added $.2M to Q3 ’08, closing out year-to-date at $1.2M
* The bulk of all political funds was spent in the West region in Q3 ’08
(42%) and year-to-date (47%)

Additional political quarterly and year-to-date breakouts:
• Central – 23%; 21%
• East – 18%; 19%
• South – 11%; 10%
• Southwest – 5%; 3%
According to TNS, Q3 ’08 Network Radio was supported by T. Boone Pickens’ Plan ($1.4M), Obama for President ($1.0M), research and educational think tank, Heritage Foundation ($0.4M), along with Issue/527 and various organization spend.

Advertiser Category Analysis

In the Local and National sectors, the Insurance category has proved to be the most durable for Radio in 2008, up 16.0% in Q3 and up 18.4% for the year thus far. Contributing to this strong pattern, top advertisers GEICO, Nationwide, Allstate, State Farm, Farmers, and Progressive all have insured a strong voice on the airwaves by turning up the spending volume. Number one GEICO continues to dominate, at more than double Nationwide’s year-to-date expenditure.


Insurance also proved to be Network Radio’s third largest category, with a 33.9% increase to Q3’08 ($17.7M) and 30.8% year-to-date ($49.3M), according to TNS Media Intelligence. Boosts from advertisers not previously on Network Radio in quarterly and year-to-date such as Aetna ($2.0M and $5.9M) and Nationwide ($.4M and $.9M) contributed to the growth. Other growth was due to advertisers who increased their Network Radio spending:


Professional Services
The second-largest Local and National growth category year-to-date, nearly a third of this category’s expenditures was allocated in the West Region for both Q3 ’08 and year-to-date (32% and 34% respectively).

The beverage industry continues to pour money into Radio, resulting in combined Local and National gains of 2.9% for Q3, 5.5% year-to-date.
Soft-drink giant Coca-Cola’s spending in these sectors increased in Q3 as Radio’s share more than doubled. This category leader is up 24.8% YTD.
Second-place Pepsi put a stopper on spending in the quarter, but has super-sized year-to-date spending by 34.1%. Heineken USA is up 34.2% for the year after increasing its Radio budget in Q3, while Molson Coors’ spend grew 5.1% and 12.9% in Q3 and year-to-date, respectively.

McDonald’s remains the dominant advertiser in the Restaurant category year-to date, outspending its closest competitor by 138%. To keep their names top of mind among the hungry public, key Quick-Service Restaurants doled out an increased portion of ad money to Radio, with spending in Local and National up 3.0% in Q3 and up 3.7% year-to-date 2008. In fact, all of the top four advertisers in this category have turned up the heat for Radio:


The restaurant category is also using Network Radio to remind consumers where to eat by adding sustenance to the sector with a 17% Q3 ’08 increase versus Q3 ’07 and 10.7% year-to-date. Ruth’s Chris topped the quarter with a 3532% increase versus year ago – bringing in the quarterly tab in at $1.7M. Increases to this sector’s quarterly bottom line were also fed by: Burger King (+315%) and Bojangles (+274.4%). Advertisers who were present this quarter (and missed same time last year) were: TGI Fridays and CiCi’s Pizza.

Retail: Department /Discount Stores & Shopping Centers
Radio’s Local and National year-to-date take at the retail cash register has grown 2.5%, boosted by stores targeting increasingly cost-conscious consumers. Among the top 10 spenders in this category, those upping their budgets in 2008 are Wal-Mart (#2, up 41.6%), Target (#3, up 63.2%), JC Penney (#5, up 10.2%),
Kmart (#8, up 215.1%), and Goodwill Industries (#10, up 35.1%).

While slowing consumer confidence greatly impacted this category in Q3 (down 9.7%), Target represented a bright spot by nearly tripling Radio spending (up 162.9%). This major splurge brought Target’s Q3 Radio spend to 76% of Wal Mart’s (versus just 24% in Q3 2007) – although Wal-Mart has outspent its major
competitor by 242% YTD.

In the Network Radio sector, this category grew 16% for Q3 ’08, bringing the year-to-date figure up 25%. Greatest growth came from Wal-Mart, with a 78.3% increase (up to $17.2 M) in the quarter, closing out year-to-date up 148.1% (to $42.7M). Home Depot increased its Q3’08 spend by 1.7% (to $11.8M) — but it
was not enough to off-set its year-to-date total (down 5.9% to $33.4).

Dealing with high gas prices, low consumer confidence, and the lending meltdown, the automotive industry was hard-pressed to invest money on advertising in Q3. However, several makers with fuel economy and lower-priced
model appeal pumped up their local and national Radio budgets in the quarter, as did luxury retailer Mercedes-Benz Dealer Association – and these all are still pulling ahead on year-to-date spending, too:


While the economic downturn is reflected in Network Radio’s automotive category, it did not negatively impact all advertiser spend. While parent General Motors Corp. decreased its Q3 ’08 outlay (-19.1%), it still came out year-to-date up 9.4% (to $34.6M). However, the category was fueled by increases from other advertisers. Carfax used Network Radio in Q3 ’08, bringing its year-to-date figure up to $5.8M). Also mirroring the Local and National sectors, Mercedes-Benz used Network Radio, adding $1.6 M to the quarter and closing out year-to date at nearly $5.0M.


Communications/Cellular/Public Utilities
AT&T scaled back Radio spending slightly in Q3 (-1.5%), but remains Local and National Radio’s largest advertiser this period and for the year (at $199.2 million and $466.8 million, respectively). Competitors Verizon Wireless, MetroPCS, TMobile, and Leap Wireless all called for more Radio in Q3 ’08 — and two are pacing well ahead for the year:


RBR/TVBR observation: We would have thought that Q3 political dollars would have at least kept things a bit more flat, but not the case. While these numbers are scary, not many readers will be shocked with how things are today with the economy. However, there are some bright sides to this Q3 report and we appreciate RAB spelling them out for us. It does show more evidence that online is where we can capitalize the most going forward—online tied in with on-air.