Radio Industry Strong – 5% to 6% Increase In 2002.

Radio will grow 5% to 6% in 2002 predicted Gary Fries, President and Chief Executive Office of the Radio Advertising Bureau (RAB) during his State of the Industry speech this morning at the NAB (National Association of Broadcasters) Radio Show in Seattle.

“Our industry is good, stable and strong, but my fear is that you will relax,” he cautioned. “It is a lot easier to grow when things have forward momentum than it is to try and stop negative momentum and turn the corner,” he said. He urged the industry to capitalize on the current revenue growth and announced that in July, total combined local and national Radio sales figures increased by 9%. Fries referred to that increase as “phenomenal” when compared to last July’s sales figures, which were down 4%.

“It is the people in this business that did that,” Fries said and noted that local Radio sales for July were up 7% and national numbers for the month had increased 16%. “That is the momentum we want to continue to see,” he said.

“That 9% increase was more difficult than the 15% increases we had a couple of years ago. They came easy, this one came hard.” Fries also said that the month of August would post positive growth of 6% to 7% and noted that pacings for September were currently between 7% and 8%. That number would build to double-digits, he said, following 9/11. According to Fries, October is also on track for double-digit increases of 15%, November will be 10% to 12% over last year and December will grow by 11% to 13%.

Fries went on to analyze what is fueling Radio’s growth and pointed out that categories were strong across all sectors. Over the first six months of 2002, concerts/theatres were up 23%, financial services rose 13%, appliances/electronics climbed 12% and automotive was up 9%. The next category was restaurants, further indicating that it is Radio’s traditional advertisers showing faith in Radio’s ability to reach customers. “When you have forward momentum, seize it!” he urged.

“Business is healthy, but it is not that simple,” he warned. “We are working on a positive platform, but we need to pay attention and get involved. There are many issues facing us.”

Fries discussed the importance of Electronic Invoicing (EDI) and encouraged Radio broadcasters to motivate vendors into making this a priority. “We have to be easy to buy,” he said. “Advertisers want credibility and are demanding it of their agencies. They need proof.”

Fries opened his speech with comments on the incredible opportunities on the horizon for Radio that will evolve out of the many changes in technology. He also noted the philosophical shift in Radio. “We are starting to come back together,” he said. “The captains of our industry say they cannot grow their companies if the industry does not grow. Your competition is the other media.”
Fries discussed IBOC (in-band, on-channel digital Radio) and noted that the developers of digital Radio focused on the sound quality, but pointed to the many revenue-generating opportunities the technology presented. “It’s probably the best opportunity that has ever existed for sales,” he said and discussed the merits of increasing “virtual units.”

Regarding the advent of the Portable People Meter (PPM), Fries urged Radio broadcasters to be a part of the development. “You cannot sit by passively,” he cautioned. “If you have a concern, you have to voice it. You need to study this.”

The issue of minorities and women in Radio broadcasting was also a topic of Fries’ speech and he pointed to the RAB’s latest Training Academy Management Class for Women and the BMI-sponsored Minority Scholarship Program for the Academy.

Fries made mention of the recent revenue-reporting verification program supported by the RAB, which calls for random audits of 40 stations per quarter. “We must protect the integrity of our business,” he said. “There is no future in doing things wrong. We are a public industry and we have an obligation. The listeners of our stations trust us.”