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Local Radio Bouncing Back, Slowly

The BIA Financial Network has released a new study with good news for local radio: while spending will increase only 0.8 percent this year over last year, revenue will grow as much as 2 percent in 2007 and will continue to increase through 2010.

According to the BIAfn study, spending on local radio will see some relief in coming years, but will never regain the revenue growth of earlier times, writes Media Life. The study points out that the situation is not a reflection on the value of local radio but rather comes as a result of more competition for advertising dollars.

Holding down growth this year are a number of factors, including the loss of Howard Stern to Sirius and Clear Channel‘s Less Is More strategy, which reduced the amount of inventory for sale, says Mark Fratrik, vp of BIAfn. Fratrik also believes that advertisers have a perception of radio as outdated and less attractive than newer media, however.
Young people, in particular, are migrating to new forms of media, including satellite radio.

In Sept., ad spending on local radio dipped 1.5 percent on a year-to-year basis for the first six months of the year, according to TNS Media Intelligence. While network radio was down just 0.6 percent, national spot radio slipped 1.4 percent.
And for the third quarter of this year, the Radio Advertising Bureau is reporting that while national revenue is up 2 percent, local revenue is down 2 percent.

Other local media is seeing dramatic growth: ad spending on local cable is expected to increase 19 percent, say researchers at Kagan, and local online ad spending should soar 31 percent next year, according to Borrell Associates.

Fratrik says the ongoing rollout of HD radio may spark revenue growth in the long term by expanding the number of stations available in each market.

In the meantime, radio might continue to struggle. To counteract that struggle, last spring the Radio Advertising Bureau launched a print advertising campaign to promotes radio’s effectiveness for advertisers and their agencies.