Radio Industry Revenues expected to remain low in 2009.

While declining revenues in radio seem reason to write the industry’s epitaph, there are clear indications that small and mid-size markets are performing better and that income from digital sources is quickly proving itself to be a part of radio’s future. According to BIA Advisory Services’ first edition of its quarterly Investing In Radio Market Report, 2008 closed with $16.7 billion in revenues (including online revenues), a decline of -8.5 percent from 2007. However, BIA’s data indicates that markets that are 51 and over were down only an average of -6.6 percent. BIA’s research also charts that the industry had online revenues of $247 million in 2008, up $67 million from 2007. Online revenue will increase an average of $132 million a year through 2013, a clear demonstration that as radio transforms into a cross-platform medium leveraging its local advertisers it will boost its revenues significantly.  BIA predicts that the industry will start a slight positive trajectory beginning in 2011.

In 2009 the top 50 markets will see revenue declines in the -11 percent range, while mid-sized and small markets (ranked 51 and higher), such as Grand Junction, CO, Grand Forks, ND-MN, and Odessa-Midland, TX will be slightly lower at -9.64 percent. BIA sees the smaller markets as continuing to provide services to their local advertisers and maintaining their presence in the local media marketplace.

“Despite all appearances, radio is still a viable medium as evidenced through listener numbers, revenue growth in certain markets, and the popularity of specific formats,” said Mark R. Fratrik, Ph.D., Vice President, BIA Advisory Services. “Tough times will make owners think hard about what they are doing now and should be doing in the future. Technological advances such as online advertising, mobile device advertising, and other new-to-radio advertising could be a solution for offsetting declines in traditional radio revenues, especially in larger markets where these options could have a greater affect.

The chart below shows the percentage of changes in radio revenues from the past five years and BIA’s expectations for the coming five years.
 
The struggles of the radio industry began a few years ago but have been exacerbated by changing technologies and the recent problems in the financial markets. Station owners have been left to grapple with both strategic and tactical decisions for the long and short term in order to remain solvent.

“While expense cutting may be necessary in this economy, radio broadcasters must accelerate their transformative process and recognize where they exist in the media ecosystem,” said Rick Ducey, chief strategy officer of BIA. “To do this they must recondition their sales teams, think more locally, look at their advertisers through a different lens, consider migrating to other platforms, and start partnering with other organizations to provide more for their audience.”

For more information at http://www.bia.com