The Southern California Broadcasters Association forecasts “busy and active” ad spending activity for its 170 member radio stations in Los Angeles and San Diego during the fourth quarter, according to a new SCBA report.
“The radio industry has not seen a more turbulent era in decades,” SCBA president Thom Callahan says in its fourth quarter Market Guidance Report. To this Callahan adds, “Therein lies both challenges and opportunities for both our clients and our members. While we continue to actively monitor and report on disruptive forces facing our clients, we are also looking for considerable growth as ad categories remain in the ebb and flow of today’s economic environment.”
Key ad categories listed in the 26-page report include automotive, healthcare and broadcast television.
In other Q4 highlights from the trade group’s forecast for radio ad spending in 25 key ad segments and subsets:
Automotive: With eight straight months of auto sales declines on a national basis, SCBA forecasts radio advertising declines of 8% for Los Angeles and 4% for San Diego for dealer associations and local dealerships. Since manufacturers (or Tier 1) ad allocations “are planned and purchased largely out of the control” of local radio stations, any OEM projections are “with risk,” the report says.
Professional Services: “Continued growth” is the forecast for this category, which consists mostly of attorney services. “A significant trend will be legal advice and counsel for immigration issues,” the report says. Specifically it calls for 5.1% radio ad growth in L.A. and 3.8% for San Diego for personal and family legal services.
Financial Services: These include consumer credit counseling and debt relief consolidation firms, and the sector is expected to increase its radio allocation by 4.2% in L.A. and 3.1% in San Diego in Q4. In a sign of an improving economy and consumer confidence, total household debt in the U.S. for August is at a record high. That means “the consumer will go deeper in debt in Q4 2017,” the report predicts, “fueling the growth of these debt reduction services.”
Home Improvement: An ongoing housing and affordability crisis in Southern California is apparently good news for the home improvement sector as home and condo owners stay put and look to improve their current digs. As such, SCBA projects a 3.6% Q4 radio budget boost for the category in L.A. and a 3.2% increase for San Diego.
Cellular Carriers: After wireless providers pulled back their radio advertising in Q3 the SCBA projects a 2.1% increase in L.A. and a 1.4% increase for San Diego in Q4. “This is a highly volatile and competitive space which indicates the competing carriers will be attacking Sprint’s current issues and their continued current erosion of customer share,” according to the report.
Restaurants: This key radio category, which includes all fast food and quick and casual restaurants, remains a growing perennial radio user with a 2017 YTD growth rate of 15.5%. With expanding locations for most major chains and same-store sales up through August 2017, the outlook calls for a 3% radio ad spend increase in L.A. and 2.1% for San Diego. “Southern California has run contrary [to] the national trend that is less dining out by the American public as grocery prices vs. eating out prices gain parity,” SCBA says. “That trend remains outside of California.”
Healthcare: With health insurance companies pulling out of the Affordable Care Act and the uncertainties of the marketplace in California, the SCBA calls for a 7% decline in L.A. and a 3.8% drop in San Diego. “This projection could change significantly if federal health care laws are changed, but for now, the SCBA remains cautious on this segment.”
Television/Networks/Cable: Continuing to suffer from disruption, SCBA expects a further decline of 3.8% for L.A. and a 1.2% dip in San Diego.
Casinos/Lotteries: The region’s booming casino industry, marked by more venues opening and others expanding operations, is expected to draw more regional travelers and holiday spenders in Q4. That’s likely to bring an average 3.2% increase in spending on AM/FM radio for Q4 for L.A. and a 3.9% uptick in San Diego.
