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for radio, despite it all New study predicts huge growth for digital formats Sep 5, 2007 With online ad spending continuing to surge, much of it at the expense of other media, it's no surprise that the web is forecast to surpass radio as an advertising medium this year in the U.S. But while it looks indeed grim for traditional radio, it could well be that radio over the longer term will benefit from the rise of the internet as a complementary medium, profiting from the same technologies behind the web's growth. That's the finding of a new report from eMarketer, the New York-based research firm. “There seems to be no reason why this market cannot find a new lease on life and benefit from the growth in the online sector,” writes Ben Macklin, senior analyst and author of the report. “Advertisers should not abandon radio in favor of the web but combine the two to take advantage of the unique attributes of each.” The report forecasts that this year ad spending on the internet will hit $21.7 billion, outstripping the $20.4 billion forecast for radio advertising spending. And by 2011 advertisers will spend nearly twice as much on the internet as on radio, according to the report, at $44.0 billion for the internet compared to $22.6 billion for radio. What's hurting traditional radio is its declining share of the media pie, in terms of time spent with media. Folks are listening to less radio as they spend more time on the web. As Macklin puts it in his report, “Traditional radio is losing its significance in people’s lives." Yet radio still has a huge share, with a weekly cumulative audience of 282.8 million in the U.S., according to data from Bridge Ratings, and in fact some 90 percent of Americans still tune in to traditional radio each week. Further, radio is going through a whole set of changes that promise to widen its appeal, and many of those changes are occurring online. Indeed, Macklin believes that the key drivers in radio's future as an advertising medium will be station web sites and streaming internet audio. The number of traditional radio listeners is expected to remain relatively stable, at 274 million in 2015, but other areas are expected to grow rapidly. The audience for internet radio--simulcasts of traditional radio stations online and internet-only stations--is expected to grow from 72.0 million in 2007 to 187.3 million in 2015, according to Bridge Ratings. Satellite radio subscriber numbers are forecast to hit 30.0 million in 2015, up from 13.6 million this year, while the number of mobile-phone audio listeners will hit 70.3 million, up from 4.1 million. Finally, podcasting is expected to grow from 2.9 million to 8.4 million, while high-definition terrestrial radio hits 5.0 million, up from 0.3 million over the same period, according to the Bridge Ratings forecast. Looking at the overall picture for marketers, Macklin sees many synergies between radio and the internet. “The radio-internet combination is a compelling prospect for both broadcasters and marketers alike,” he writes. For instance, internet users often use more than one medium at a time, with 39.2 percent of teens regularly listening to the radio while surfing the internet, according to data quoted from BIGresearch. Given that, says the report, advertising on internet radio is a key way to drive listeners to a web site. Advertisers can also use radio to snare a listener while in the car and then stay in touch online at the office. Meanwhile, in online ratings for the week ended Aug. 26, Microsoft held the top spot among parent companies, followed by Google, Yahoo, Time Warner and News Corp. Online for the second straight week. The top five brands were Google, Yahoo, MSN/Windows Live, Microsoft and AOL Media Network. LowRate Source was the new No. 1 advertiser with 7.7 million impressions, followed by No. 2 NexTag at 5.7 million, both up from last week. With 32.3 million ads served, Yahoo was again the top advertising site, well ahead of No. 2 MySpace at 6.7 million. Sessions per person per week were up one over the previous week to 17, with domains visited per person up two to 41. Average PC time per person per week was up 2.87 percent to 17 hours and 51 minutes.
Top 25 advertisers
#
Company
Impressions (000)
1
Low Rate Source
7,728,898
2
NexTag, Inc.
5,754,900
3
Countrywide Financial Corporation
4,013,456
4
AT&T Corp.
3,071,893
5
InterActiveCorp
2,638,624
6
Netflix, Inc.
2,028,706
7
Experian Group Limited
2,014,236
8
Reunion.com L.L.C.
1,576,645
9
State Farm Insurance Company
1,132,843
10
General Motors Corporation
1,099,163
11
Verizon Communications, Inc.
985,551
12
Wachovia Corporation
901,786
13
Apollo Group, Inc.
735,068
14
Monster Worldwide, Inc.
716,848
15
United Online, Inc.
638,190
16
Ford Motor Company
572,826
17
eBay, Inc.
533,965
18
Privacy Matters
510,055
19
StubHub.com
509,306
20
Echostar Communications Corporation
494,182
21
SinglesNet
421,680
22
E*TRADE FINANCIAL Corp.
396,976
23
Scottrade, Inc.
395,036
24
InPhonic.com
394,142
25
Bank of America Corporation
382,713
Source: Nielsen//NetRatings AdRelevance
Note: Nielsen//NetRatings AdRelevance service estimated online advertising expenditures account for CPM-based image-based advertising. All reported estimated expenditures and impressions do not account for the following placement types: text only, paid fee services, performance-based campaigns, sponsorships, barters, in-stream ("pre-rolls") players, messenger applications, partnership advertising, promotions and email campaigns. AdRelevance currently does not report estimated spending for paid search advertising. Above data does not include any house advertising activity. Nielsen//NetRatings AdRelevance reporting data reflects advertising activity served on pages accessible via the World Wide Web and not within AOL's proprietary service.
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