|
|
appears farther off
Second-half projections are being scaled back.
By Gabriel Spitzer
Since the economy turned south, radio has had one eye glued to the second half of 2001, when all harm was to be reversed.
Sure, the first two quarters would be lousy, but just wait until July, the industry said.
Now that July is near at hand, the forecast is decidedly gloomier. While the second half of the year should bring better times, it now seems that radio will be lucky to end the year even slightly ahead.
Earlier this month, Morgan Stanley analyst Frank Bodenchak reduced his projections for radio revenues, predicting a 3 percent drop in the second quarter, down from flat growth.
In the second half of 2001, he predicts that revenues will increase just 5 percent, rather than the 7 percent he predicted earlier.
Overall, Bodenchak projects a flat 2001.
Bodenchak’s is just one of many predictions by Wall Street analysts and media buyers that has radio growing less than expected, if at all, this year.
"I still see a delay in the recovery. Anybody talking about the stock market or the economy who says 'I think we’ve reached the bottom' hasn't any clue," says Bruce Heim, vice president, director of national broadcast at TN Media.
"Advertising lags behind the economy. The ad dollars aren’t going to catch up until three to six months after the economy goes up."
The coming upfront TV market, which is expected to be very soft, will also likely work against radio, with some advertisers pulling radio dollars to take advantage of bargain TV pricing.
"The sad thing about radio is that when clients are planning, it’s often the last thing on the list and the first thing off," says Heim.
"Radio overall is the stepson of media planners. Especially if the TV market is down, advertisers will have the opportunity to get more into TV. If there’s really a cutback in budgets, they may look at specific media and say, maybe we’ll take the radio off."
The recently averted Hollywood writers' strike, while it would have devastated television, might have channeled some ad dollars into radio instead. Now that the writers have a contract, and indications are that the actors' guilds will settle as well, radio is right back where it started.
Even though upfronts may be soft, some advertisers will likely commit less money in advance to television, banking on a friendly scatter market later this year.
If for some reason the scatter market turns out harder than expected, there is still a chance that a bit of that money could hop the fence into other media, radio included.
"If they gamble wrong and the scatter market turns out to be hard, maybe they’ll try to look at efficiencies, and radio will get some money down the pike," says Mark Lefkowitz, senior vice president and media director at Furman Roth Advertising.
"But I don’t think radio managers should be thinking that this is playing into their hands."
And even then the effect on radio would be small.
"I think that [leftover advertising] money will find its way into the treasuries of the specific companies, back to their bottom line. Not much will spill over into radio," says Howard Nass, executive director of local broadcast at TN Media.
"They’re going to hold their money to protect against bad purchases. This year we believe the scatter market is not going to be significantly higher than the upfronts."
Moreover, says Nass, there are comparatively few advertisers who buy both network radio and national television. Telecommunications, gums, candy, fast food and entertainment are heavily invested in both media, but beyond that the radio and TV universes will likely remain separate.
Predictably, the radio industry sees things a bit differently.
"Advertisers are being reluctant to commit large funds far in advance, and radio is considered a very good advertising medium on a closer-to-the-campaign type of plan," says Gary Fries, president of the Radio Advertising Bureau.
"Right now I think that’s a major factor. They’re going to be much more careful with their dollars, and that battle favors radio.
"Any time national advertisers withdraw from widespread campaigns and go to surgical-type campaigns in certain markets, that is a swing to local money. We have the ability to maintain growing ad-rate integrity with local advertisers better than the big broadcasters."
The radio industry has long contended that radio’s flexibility makes it a better buy in an uncertain economy. But those benefits may not be visible on the balance sheets for some time.
"That flexibility could show radio more money, but not more than they had in 2000. They’re still going to be in a hole," says Jean Pool, director of operations at Mindshare.
"Budgets would potentially be affected in the longer run, going into 2002. In retail, for instance, there’s a possibility that they’ll say nope, TV’s too expensive, and I’ll hold it back and use it in other media.
"But that money could go anywhere: into local broadcast, non-traditional, shelf allowances—a million different places."
Meanwhile, radio ad rates are headed in one direction: "Down. All you have to do is live on this planet to know that," says Pool.
"How could radio, or any other medium, be divorced from what’s happening around it? We’re all in the same boat, and the boat either floats or it doesn’t."
May 17, 2001 © 2001 Media Life
-Gabriel Spitzer is a staff writer for Media Life.
Printer-Friendly
Version | Send
to a Friend
Cover Page | Contact
Us
