Spending has slowed this year for many segments of media, but for radio the slowdown dates back to last year. According to monthly estimates from the Radio Advertising Bureau, the medium has not seen a year-to-year uptick in spending since April 2007, when it rose 2 percent. During the first half of 2008, radio spending slipped 6.5 percent, according to TNS Media Intelligence. More recent monthly reports have seen high-single-digit declines, with local ad revenue taking the biggest hit. Media people don’t see things improving in 2009 either, with automotive spending sliding by double-digit percentages this year and unlikely to rebound anytime soon. Dennis P. McGuire, vice president and local broadcast group director at Carat, talks to Media Life about when and if radio will rebound, why restaurants may be the next problem advertisers, and what effect the XM-Sirius merger has had on the market.
 
Local radio revenue has been in a long slump. Do you think it will pull out of it when the general media economy begins to recover, or are there other factors at play here?
 
Well, I really think that 2009 won’t be a good year. I think we can possibly see a drop in revenues as high as 8 to 10 percent. I think it’s going to be a very tough year for radio. I think that the radio stations are going to have to think of creative ways to sell their product in tandem with the internet.
 
The internet gives radio the visual it has never had and it can help radio somewhat by utilizing the net to come up with creative extensions. It has to be something a little broader in nature, whether it’s tie-ins, streaming, or directing listeners to clients’ web sites.

These are all things that have been done but there’s going to be a greater reliance on them.
 

What has been the biggest drag on local radio this year?
 
I think the major thing has been the auto industry. I read that auto sales are down around 33 percent for 2008 versus 2007, and this has wreaked havoc on both radio and TV. I think the loss of those dollars has been very important. And that’s really hurt the stations, they rely on local dealers in their markets to give them the foundation of their financial strength during the year.
 
In the past, stations knew the dealers were coming in, and some would book early, then the stations would build their other clients. But that foundation isn’t there. And if it is, it’s in a severely weakened state.
 
I also think retail will hurt, and you many even see weakening in the restaurant field as well. The casual dining to upscale dining will hurt, although fast food, in actuality, might be able to increase because they will come in and fill a void.
 

By contrast, what have been the bright spots?
 
I think if we talk about the bright spots, there’s been some interest in HD radio. Not to the degree we’ve hoped, but there is an interest.
 
Also, I think radio has been starting to take advantage of the internet, and that’s been exciting. Over the past year or two some stations have come in with clever promotional ideas tying into the internet, and so radio has been forced to be more creative.
 
Right now I’m hoping, even though it will be a bad year, that radio can somehow salvage a couple share points in terms of ad dollars by going up against television and going to advertisers and saying, “These are hard times, why not start looking more intently on radio, which has lower cost-per-points?”
 
What radio has to do, going into a recessionary economy, is position itself as a viable alternative to television.
 

Where is radio compared to two other struggling media, newspapers and magazines?
 
Newspaper and magazines are still struggling, no doubt, with people getting a lot of their information online, but radio still has that connection with the audience. It’s still a personal media vehicle that reaches out to people.

They have their favorite stations and personalities, and I think people feel more of a connection with radio and those personalities. There isn’t as much of a personal connection with newspapers or magazines.
 

What is radio's best sell to media buyers and planners?
 
Cost efficiencies, reach potential and frequency potential. These three in nutshell.
 
And again, radio’s ability, with clever use of DJs, to get endorsements. People like their favorite stations and DJs, so when they do live reads for a product, the fact that they’re talking about it gives the appearance of an endorsement and there’s a perception on the part of the listeners that this person, who I like as a personality, is endorsing this product.
 

What do you make of the Interep situation? What do you see unfolding there and how will it impact the market?
 
From what I’ve been reading, it’s a shame. I’ve always felt the two big giants out there, Katz and Interep, were giving us a level playing field because they provide checks and balances.
 
I do understand that within the next couple weeks Interep is waiting for venture capitalists or other buyers to beat Katz’s offer, and I would like to see both players remain separate. It provides healthy competition in the industry. That’s not to say Katz wouldn’t provide good services, I just feel that having two choices make for a more level playing field.
 

Has the XM-Sirius merger had any effect on the marketplace, and do you expect it to?
 
At this point, no. We look at XM and Sirius for network radio buys, and what they’re doing now is culling back their list of offerings.
 
What we may see at the end of all of it is a stronger product. It will be a tighter array of offerings.

What we also hope to see is more demographic information and more research information for Sirius-XM that we can go to our clients with and say, “This makes sense for your account.” But we need that documentation, and I think they’re getting themselves there.
 
With the merger between the two, I think the new product will be a tighter product and perhaps a good choice in the network radio mix.