Radio Gaining Audience -- but Not Ad Revenue - From Ad Week This Week

Radio Gaining Audience -- but Not Ad Revenue
Medium Holding Its Own Against the IPod, Trying to Embrace New Media

By Andrew Hampp

Published: October 20, 2008
NEW YORK (AdAge.com) -- Radio has been right behind newspapers as the old-school medium most adversely affected by digital developments. New research, however, shows that radio is actually gaining audience, even in spite of its closest competitor, the iPod.


A recent online study from Paragon Research polling more than 400 14- to 24-year-olds about their music-consumption habits found that the youth demo has increased its time spent listening to radio 11% this year, while its time spent listening to iPods has actually decreased 13%. The study coincides with the Radio Advertising Bureau's annual RADAR report, which shows that AM/FM radio listeners increased by 3 million in 2008, bringing the number of weekly radio listeners to 235 million.

Jeff Haley, president-CEO of the RAB, said the Paragon study confirms what the radio industry has heard anecdotally by reflecting the "lack of inertia in the MP3 experience. You don't have the ability to refresh or any kind of automated way to come across great new music. As a result, that isolated programming effect does not allow you the serendipitous experience the way radio does."

But more listeners are not doing much to boost radio's fortunes. Industry revenue has been largely flat to down in the past five years due to the gradual migration of listeners to MP3 players and online radio -- not to mention advertisers' simultaneous migration to other niche media such as cable TV, web portals and, to a smaller extent, satellite radio. Its two core advertisers -- the automotive and retail industries -- are being slammed the hardest by the financial crisis, particularly at the local level, which is where radio makes more than 65% of its total ad revenue. Radio ad revenue was down 6.5% during the first two quarters of 2008, making it the second-most-declined medium next to newspapers, which suffered a 7.4% decrease in ad spending during the same period, according to TNS Media Intelligence's spending report on the first half of 2008. Internet spending was up 8%, a margin notably smaller than the increases it posted in recent years due to the stabilized growth of display advertising.

And it's not as if radio can blame the iPod for the ad declines. Jim Boyle, senior radio analyst for C.L. King & Associates, said although the iPod has had some affect on radio listening, its impact on radio ad revenue has been minimal at best. "It's not as though you have to compete with the iPod to go to the local auto dealer in Ohio for an ad," he said. "Even if they chew into your listenership, the pie is still a much bigger pie. You may only lose a very small percentage of your cost-per-thousand point."

Self-inflicted wounds
And as the industry's highest-ranked executives have readily admitted in recent years, radio hasn't done a good job of embracing new media. As Frank Flores, chairman of the New York Market Radio Association and VP-general manager of the Spanish Broadcasting System, put it, "We've let everybody brand us and put us in different places. The internet branded us as slow and a dinosaur, iPods and streaming just made us seem like your father's brand of communicating, and we've done nothing to dispel that."

That's why its biggest industry initiative to date, dubbed "Buy from FM," is aimed at making FM radio tuners available on every MP3 player and cellphone in the next five years so consumers can identify and buy the songs they hear on the radio directly from their devices. Its first partner in FM song tagging, Microsoft's Zune, just rolled out in 450 stations nationwide, with the RAB and National Association of Broadcasters in "aggressive talks with many carriers to extend the platform," Mr. Haley said.

The RAB has also embarked on a similar partnership with the American Association of Advertising Agencies called the "universal ad ID program," designed to make radio commercials as interactive as the purchase-enabled songs to which they're attached. Mr. Haley said 56 of the top 100 advertisers have adopted the technology thus far, with initial tests expected to roll out in the second half of 2009.

Of course, it's going to take a lot more than Zune's 4% to 5% share of the MP3 market if radio wants to make major inroads in monetizing the music-discovery market, particularly among young influentials. And convincing Washington and the major wireless companies to get onboard "Buy from FM" without Apple's initial support will be tricky at best. "If you don't have the top market-share leader who is dominant in the field, you have your foot in the door, but the door is harder to open," Mr. Boyle said.

Lisa Delio, exec VP-managing director, local broadcast at MPG, said the ad market for reaching young listeners is very finite, so even if overall listening is up, there are only so many ad dollars that can be dedicated to reaching them.

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More Matt Keating Tour Dates - A Little Message From Matt Himself

Just back from a full month of touring, promoting my new double CD
QUIXOTIC, had a week off, and now...I'M BACK OUT!! check out the
dates, and if you're near one, come by. Also, for New Yorkers...i'm
playing CMJ with a full band on October 23rd at a club called
Rehab...it' sounds like an intervention on me so bring all of your
friends...details below...cheers, mk

Oct 8 2008 5:15
Austin, Texas
Momo's
618 West 6th Street, Suite 200
http://www.momosclub.com
special afternoon show

Oct 9 2008 8:00
Ft. Worth, Texas
The Fairmount
http://www.thefairmountlive.com/

Oct 10 2008 8:00
Memphis, Tennessee Java Cabana
http://javacabanacoffeehouse.com/events.html

Oct 11 2008 7:30
Alexander, Arkansas Jim Apel's Barbeque/House Concert
2209 Karen Ln
Alexander, Arkansas
This is a really cool guy who i met when i played The White Water
Tavern a few weeks ago...should be a fun hang..barbeque and house
concert with yours truly providing solo acoustic songism

Oct 13 2008 10:30 AM
Knoxville, TN WDVX Blue Plate Special
http://www.wdvx.com/programs/blueplate.html
a live performance on this cool radio show!!

Oct 13 2008 8:00
Knoxville, TN Time Warp Tea Room
1209 North Central St.
Knoxville, TN 37917
865-524-1155

Oct 14 2008 8:00
Chapel Hill, NC The Cave
http://www.caverntavern.com/

Oct 15 2008 8:00
Decateur, Georgia Eddie's Attic
http://www.eddiesattic.com/

10/23/08 8:00-NYC CMJ Show
Rehab
25 Ave B
New York, New York
http://www.clubmidway.com/indexfull.htm
CMJ SHOWCASE/Kaiser Cartel to follow at 9:00

PRESS FOR MATT KEATING'S QUIXOTIC

Veteran popster with a double CD just crammed full of first-rate
songs, some ballads, some more rock-oriented, but quality all the
way." -- USA Today

His songwriting genius is in abundant display on his fantastic new
album. -- Philadelphia Inquirer

It may take a sprawling affirmation of his relentless talent the
likes of his latest two disc album QUIXOTIC to finally turn heads. A
self-assured, prolific song man who avoids the blustering pomp of
similar coffee-shop heartthrobs. -- Nashville Scene

Fantastic two-CD set from the terrific singer/songwriter, turning in
23 new songs that roll out like a comforting road trip with an old
friend. -- River City Reader


to buy QUIXOTIC:
http://www.indiekazoo.com/mattkeating
to listen:
http://www.mattkeating.com
http://www.myspace.com/mattkeating