Biggest Ad categories on Radio remain, but spent less in ’05.

The Radio Industry had flat revenues in 2005 compared to the previous year. However, peeking behind the Industry’s sideways move, some of the largest Radio advertising categories plummeted dramatically, including a 3.3% decline from 2004 among the largest categories. Media Monitors, the leading firm that identifies ads in major US markets on radio and in newspapers, retained Wall Street financial analyst James Boyle to explore its database from the Industry’s major markets to ascertain the changing Industry trends by Ad Category.

In his latest report issued, Boyle notes these newsworthy trends among top Radio Ad Categories in 2005:

1. Biggest ad spenders weighed down Radio’s 2005. The top 25 Ad Categories bought 15% more spots than the next 175 largest Radio Ad Categories in major markets in 2005, according to Boyle.

However, the biggest spenders purchased 4.4% less spots in 2005 than the over 5,000,000 spots they paid for in 2004. Whereas the next 175 largest Ad Categories stayed flat with 4,220,000 spots bought in both years.

The #1 category of radio advertisers was Auto, which included domestic, Asian and European manufacturers, domestic dealers and auto services like tires and repairs. Auto aired 1,070,000 spots in 2005, significantly ahead of Media with 720,000 spots, both numbers rounded off to the nearest ten thousand.

Media (#2) included primarily TV Networks and Cable Channels but also Newspapers, Cable Systems, Satellite Radio, Magazines, and Online Services. Then came Financial (#3), Entertainment (#4), Restaurants & Night Clubs (#5), Pharmaceutical (#6), Healthcare (#7), Food & Beverage Retailers (#8), Telecom (#9), and Home Improvement/Hardware (#10).

2. Auto is easily Radio’s biggest ad category, yet domestic dived while Asian ascended. Automotive was the largest Radio Ad category in both 2004 and 2005 with nearly 1,100,000 ad spots placed, and about 50% larger than the next largest ad category, Media. Boyle notes, “It was very much a Dr. Jekyll and Mr. Hyde Auto picture,” while pointing out that Domestic Auto Manufacturer ads fell 7% in 2005 from the prior year, Asian Auto Manufacturers rose 7% in 2005 and Asian Carmakers’ ad spots actually surpassed Domestic Manufacturers for the first time.

3. Double-Digit drops dominate solo double-digit increase, often due to mergers. Boyle observes, “There were many mergers in several industries that disrupted ad spending in those categories throughout 2004 and 2005,” noting the largest ad spot declines were in the categories of Telecom (off 35%), Department Stores (off 16%), Beauty & Diet (off 14%), and Beverages (off 12%).

The only double-digit increase was Insurance (up 22%), while the Home Improvement/Hardware and Entertainment categories increased 7 and 8%. Boyle commented, “The Radio Industry had a sluggish 2005 revenue year as it intentionally reduced commercial inventory to improve its product for its listeners and advertising clients alike, and its ad rates did not improve sufficiently to outweigh less spots sold.” The analysis of Media Monitors’ 2005 database affirmed that was indeed the case. Perhaps it was a more daunting transition than had been expected as it was unexpectedly aggravated by several of its largest Ad Categories sputtering.

Further trends of note by Boyle, of Radio’s Top Ad Categories:

The Industry’s Top 200 Categories purchased nearly 9,100,000 commercial spots in 2005, in the ten major markets alone, according to Media Monitors’ data. However, that was a 3.3% decline from 2004, when the top 200 Ad Categories had bought nearly 9,300,000 spots on Radio No movement among top 5 categories, ’04 to ‘05. The Spot Ten Categories ’05 chart from Media Monitors shows that in 2004 and again in 2005 the five largest ad categories retained their same relative positions.

Auto was the largest category, Media was 2nd, Financial was 3rd, Entertainment was 4th and the Restaurants ad category was 5th. Below the top 5, Telecom had the largest drop by finishing 9th in 2005 after holding the 6th spot in 2004. In fact, additional analysis from Boyle shows that Telecom plummeted from 900 weekly spots per major market in 2004 to merely 621 weekly spots per major market in 2005 based on the Media Monitors database. The best upward ranking move was Insurance, which zoomed from 17th to 12th and bought 531 weekly ad spots in 2005 versus 436 weekly ad spots in 2004, both per major market.

Radio has concentrated purchasing power from its largest 25 Ad Categories. In 2004, the top 25 Radio ad categories bought 20% more spots than the next largest 175 ad categories. Even with the biggest ad spenders disproportionate decline in 2005, the biggest 25 Radio Ad Categories purchased 15% more spots than the next biggest 175 Radio Ad Categories. Boyle added, “It appears the Radio Industry is perhaps concentrating too much on its very largest, but often hindered, clients.”

In forthcoming weeks, Boyle will provide additional analysis of commercial airplay on Radio stations. Media Monitors has served major radio groups, newspapers, media researchers, ad agencies, and media analysts in the USA since 2004.

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