Radio’s 2012 outlook: Solid growth

Unlike most other media, radio advertising continued its steady pace of growth throughout 2011, with national and new media sales especially strong to end the year.

The forecast for 2012 is fairly rosy as well.

Like television, radio will see a large infusion of political money, which will keep it from sliding back into negative territory like newspapers and magazines, two other media that suffered along with radio during the depths of the recession.

And traditional radio usage remains high, despite the rise of the iPod, once considered one of radio’s biggest challengers, and the likes of Pandora, the internet radio giant.

Media buyers and planners remain
devoted to the medium in part because it is so ubiquitous. Like television, radio is essentially inescapable, and just about everyone listens to it in one form or another.

“The radio industry has maintained its value, both from a dollar and sales volume perspective. Sales across the country have been steady,” wrote Mark Fratrik, vice president at Chantilly, Va.-based local media analysis firm BIA/Kelsey, in a recent report.

Radio’s reliability will drive up spending as well as pricing on radio during the new year, predicts ZenithOptimedia, the London-based agency.

Overall spending will be up 2.1 percent, with local spot, which accounts for the bulk of all spending, up 2 percent and network radio up 3 percent.

Network radio has been particularly strong during the second half of the year. October ad sales were up 6.5 percent, which prompted ZenithOptimedia to revise its earlier prediction of 2 percent growth for 2011 upward.

The category seemed to benefit from the pre-holiday sales rush.

“Retail scatter campaigns promoting multiple sales events are the main driver for increased dollars,” wrote ZenithOptimedia in its report.

In local spot, most ad categories have also rebounded, though a couple continue to lag.

“Automotive seems to have come back pretty well, but homebuilding continues to struggle mightily due to the ongoing mortgage problems,” says Nancy Haynes, principal at Collins, Haynes & Lully.

“First-time buyers often can’t get a loan, and move-up or retirement buyers can’t sell the current house in order to move to a new one.”

All that said, radio is not without its challenges in 2012, and like most other media, the biggest one is the continued encroachment of new media on old.

Pandora and other online-only radio sites are a concern for radio stations and not just because of the threat they represent to its listenership.

The bigger concern about Pandora is that it runs far fewer commercials, a couple of minutes per hour.

Stations worry that listeners, who currently hear between 12 and 18 minutes of ads each hour on terrestrial radio, will become dissatisfied with the relatively heavy advertising load.

Similar fears were raised about satellite radio years ago, but that new medium has never quite fulfilled its promise.

Still, with traditional radio listening still dwarfing online, concerns about Pandora are a longer-term worry.

For now,
new media has afforded radio stations opportunities that will help them continue to grow in a time of uncertainty for traditional media.

In the meantime, radio will have room to build up its digital offerings, and while the process has been slow, progress is being made.

“Many stations have excellent digital products for advertisers,” Haynes says.