Buyers think radio may be off the dial

'There
will be minimal growth, probably lower single digits. I’d be surprised if we saw 5 percent growth. I think it will be more like 1, 2, or 3 percent. The ad budgets are either flat
or down.'

Buyers think radio
may be off the dial

See ad growth in low single digits, not RAB's 8%

By Elizabeth White

    The year 2001 is going to be great for radio. For just whom, buyer or seller, depends on who you are talking to.
     The Radio Advertising Bureau is predicting ad revenue growth of 7.5 to 8 percent this year, even with the disappearance of dot.com advertisers.
    That's not anything like the 13 percent growth for 2000, announced last week by RAB president Gary Fries, but still a pretty number for station operators and not such a pretty one for ad buyers, many of whom got stuck paying higher rates during the dot.com craze.
    But industry analysts think that Fries’ predictions for revenue growth in 2001 are overly optimistic, considering the shift in the economy since last April.
    "That number sounds high. Before they grow the revenue they have to replace the dot.com revenue that will be lost," says Kevin Gallagher, vice president and media director at Starcom Worldwide. "And that was a big chunk of the revenue last year."
   Primarily because of the dot.com slowdown, Gallagher says that radio ad revenue growth will be much less than Fries suggests.
    "There will be minimal growth, probably lower single digits," says Gallagher. "I’d be surprised if we saw 5 percent growth. I think it will be more like 1, 2, or 3 percent. The ad budgets are either flat or down."
    According to Fries, the dot.com slowdown will have an effect only in the timing of next year’s growth. Fries says that compared to last year, 2001 will start slow and finish strong.
    Last year, radio posted the largest expenditure growth among local media and the third largest growth among national media. Radio grew 12.5 percent locally and 18 percent nationally.
    And although that high growth was driven primarily during the first two quarters, Fries remains confident that the growth will continue through next year. He cites the newly consolidated radio operators as the major factor in driving next year’s growth. He also says that as an 80 percent local medium, radio is better able to weather a national slowdown in ad spending.
    Other analysts have predicted that revenue growth will be slower in 2001 when compared to 2000 because last year was an exceedingly abnormal year for both local and national media.
    In December, Bob Coen, senior vice president of forecasting at Universal McCann, gave a moderate estimate for radio, predicting that national ad spending would increase 5.5 percent in 2001.
   Coen predicted an overall ad spending increase in all media of 5.8 percent, with a 6.3 percent increase in national media and a 5.0 increase in local media. He considered the dot.com ad explosion to be one factor among many-- the Olympics, the elections, and the U.S. Census-- that boosted ad revenues unusually high in 2000.

-Elizabeth White is a staff writer for Media Life.

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