Radio revenues from local online advertising increased by 22% last year to $370.7 million, slightly outpacing overall local online advertising growth of 20%, according to a study conducted by Borrell Associates on behalf of the Radio Advertising Bureau. Radio still accounts for just 2% share of the local online advertising market, which is largely controlled by pure play companies (46.2%) and newspapers (23.6%). Still, almost three-quarters of station managers believe that the internet holds significant potential for their stations.
In a recent report, the RAB revealed that radio’s digital revenues grew by 8% in 2012, suggesting that the local online ad market is growing faster than the overall market.
Meanwhile, although the 98% share of the local online ad market that radio has been boxed out of represents an “enormous growth opportunity,” radio may actually lose share next year. That’s because Borrell forecasts 31% growth in the market overall this year (to $24.5 billion), but relatively weaker 14% growth for radio’s local online ad revenues.
The study suggests that radio managers have their eyes on the wrong competition. While pure-play and newspaper companies eat up about 70% of the local online ad market, when asked who their digital competitors are, only about half of radio managers pointed to pure plays (28.7%) and newspapers (20.9%), while an outsized proportion (17.4%) see other local radio stations as their primary competition.
Other Findings:
- Radio stations derived about half of their online advertising revenues from banner ads, and roughly 20% from streaming audio ads.
- Radio gets a far smaller share of its sales from targeted banners (7%) than do TV and newspapers (36%).
- The proportion of survey respondents who said that banners are their largest source of revenue fell from 32% last year to 22% this year.
About the Data: The report analyzes data derived from three principal sources: 1) Media Ad Revenue: Borrell’s database of ad revenue and expenses for 6,260 local online operations in the U.S. and Canada, including 2,668 local radio stations1 in 717 clusters. 2) Local Business Ad Spending: Borrell’s database of Local Ad Spending Report estimates for every U.S. Digital Marketing Region (DMR). 3) Radio Manager Survey: A special online survey conducted in January 2013 encompassing managers at 1,075 stations asking questions about digital revenue sources, sales methods, expenses and other issues related to digital operations.
