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Good question.
One rosy forecast for '02, a chorus of doubters
By Gabriel Spitzer
Many a forecaster has been burned over the last year, as projected economic turnarounds have seemed to recede ever farther into the distance.
But some still refuse to be deterred. Among them is Gary Fries, president of the Radio Advertising Bureau.
In a recent report, the RAB revealed that year-to-date radio revenues were off by 8 percent through October. Local money was down 4 percent, while national had declined 19 percent.
But Fries nonetheless believes a turnaround is nigh. Or pretty close anyway.
He is projecting that radio will stage a strong comeback next year. National will halt its precipitous decline and finish the year flat, and local money will actually come up 4 percent, Fries predicts.
Overall, Fries has radio revenues up 3 percent in 2002.
Other forecasters think not.
"That’s wishful thinking. Overall, I have it down 4 percent next year," says Jack Myers, chief economist at the Myers Reports.
"It’s a little rosier than I expect," says Bob Coen.
Coen is Universal McCann’s forecasting sage and the person to whom the ear of Madison Avenue turns twice yearly for his pronouncements on the health of the ad economy.
Coen, though less bearish than Myers, forecasts that national radio revenues will drop by 1 percent and that local will come up 2.5 percent.
In arguing that radio is healthier than the numbers might suggest, Fries points out that the top-15 markets account for most of the decline.
In those markets alone, national is down a full 24 percent year-to-date and local is down 7 percent, for an aggregate decline of 12 percent.
"After the top-15 markets, radio is performing reasonably well," Fries says in a statement.
But to some that sounds like so much spin.
"The bulk of the declines are national and the top-15 markets are heavily weighted toward national business," says Myers.
"I think he’s underestimated how deeply the economy will be affected at the local level into next year. There’s a sense of optimism in his words that we’ve hit bottom, and I don’t think that’s the case."
Moreover, take out the top-15 markets from the overall marketplace and there’s not a whole lot left.
"It makes sense because the revenue in the top-15 markets is what percentage of the overall marketplace? It’s got to be astronomical," says Richard Cotter, senior partner and regional broadcast manager at Mindshare.
"So I don’t see that there’s any great hidden truth there. And I don’t know of any radio market out there that isn’t incredibly soft."
These days, few in radio are predicting a turnaround before the fourth quarter of next year.
"The market continues to be quite soft. And unless there’s some major stimulus package passed at the federal level that really jumpstarts the economy, I think we’re likely to see a continued slowness in radio advertising through the first three-quarters of 2002," says Mark Lefkowitz, executive vice president and media director at Furman Roth Advertising in New York.
"To go from national sales of 19 percent down to flat is going to require a significant pickup in ad spending that I don’t see happening."
As in other media, most advertising categories on radio seem to have softened more or less uniformly, with one possible exception: cars.
"Automotive is certainly quite buoyant," says Lefkowitz.
"The automotive industry introduced zero percent financing in the immediate aftermath of Sept. 11, and they have been heavily promoting it. And they are in radio more than they typically have been in the past. They have seemingly reallocated dollars from television to radio."
Lefkowitz says he wouldn’t be surprised to see modest growth next year, if only because stations are under enormous pressure from their corporate owners to show revenue gains.
Fries predicts that radio will end 2001 down 8 percent, meaning it would have to hold more or less steady in November and December.
But early indications suggest that may be a tall order.
"He’s put in that job by the owners of the radio stations. It’s as much a pep talk and rah-rah-rah as anything else. I just don’t see any evidence," says Lefkowitz.
"The weeks leading up to Christmas are usually some of the busiest weeks of the year. But in places like Los Angeles and New York, two weeks ago you could have called and had your pick of inventory in December.
"Two or three years ago you would have had to get in in October, or you were done. The markets are wheeling and dealing in what are supposed to be the busiest weeks of the year."
December 20, 2001 © 2001 Media Life
-Gabriel Spitzer is a staff writer for Media Life.
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