BIA/Kelsey: Online/digital powers local revenue growth

Tuesday, November 19, 2013 - 12:00pm

BIA/Kelsey today released its Annual U.S. Local Media Forecast for the next four years, with data covering 2012-2017. In it, two pillars of local-media revenue growth are identified: digital, and mobile. Traditional revenue (such as over-the-air and print) are forecast to remain essentially flat.

The report’s top-line forecast is bullish. Local media revenue growth is predicted to pace at a compound annual growth rate (CAGR) of 2.8 percent. That forecast maps dollars to grow from $132.9-billion to $151.5-billion after four years. The growth is driven by an optimistic online/digital forecast, which sees that revenue segment growing at a CAGR clip of 13.8 percent. Traditional ad revenues will experience fractional growth during the period, with an annual growth rate of one-tenth of a percent.

At a quick glance, the report might seem uninspiring for radio, whose participation on the digital side rises from 0.4 percent to 0.5 percent. But Mark Fratrik, Chief Economist at BIA/Kelsey, refutes that as a gloss: “It’s a half percent of the total advertising marketplace. The total marketplace [will experience] about a $19B increase. Radio will have a higher percentage of a larger pie.”

Doing the arithmetic, a slightly larger portion of a much bigger pie translates to substantial dollars. Radio’s ownership of the 2013 digital pie is worth approximately $532-million, and radio’s slightly increased share of the larger 2017 pie will be worth about $758-million. That dollar growth over the four-year period is 42 percent.

Talking to RAIN this morning, Fratrik emphasized the lumpiness of a radio industry which unevenly pursues digital-revenue opportunities.

“Some radio companies are much more aggressive than others at generating digital, online revenues. The increase of digital share is good news, [and] there are some broadcasters who are doing better than that. Any radio station has the potential to do better [than the forecast numbers]. Radio has assets that many other media companies covet. The local content, the local sales staff, and relationships with local advertisers.”

BIA/Kelsey: Radio stations are more than just radio stations

Wednesday, November 13, 2013 - 12:40pm

Local media consultancy BIA/Kelsey released a state-of-the-industry report titled “Local Radio Stations Profiles and Trends for 2014 and Beyond.” The study identifies an 11.5% share of local media revenue going to AM/FM. Vice President and Chief Economist Mark Fratrik, who authored the report, summarized the findings with a positive slant: “Local radio is surviving, and in some instances thriving, and poised to compete will in the new marketplace.”

RAIN spoke with Dr. Fratrik about the digital side of radio revenue, and how radio can thrive in an increasingly Internet-oriented market.

RAIN: Your report is optimistic about radio holding its own in a changing marketplace.

MF: We’re bullish on radio. It takes a different mindset to move into this new [digital] arena. Some radio stations are already thriving. At BIA/Kelsey, we’re very into the whole concept of radio stations being more than just radio stations. [They are] local media companies in many ways, providing access to [new] audiences to their advertising clients. One of the growing ways is certainly online activity, the digital area.

RAIN: The headline metric of the report is the 11.5% percent share of local media going to radio. Is there a breakout of how much is digital advertising?

MF: 11.5% was over the air, and 0.4% was online.

RAIN: When there’s a disparity like that, there are two ways to interpret it. One interpretation is that the online side is underperforming. A more optimistic view is that there’s great upside for digital.

MF: Glass half full, glass half empty, right? It’s interesting to contrast with newspapers. With newspapers you get a larger percentage of their advertising is online. Newspapers started earlier, and are being forced to go online because print is declining precipitously.

I think for radio it’s an opportunity. Radio’s core revenues are solid. It’s not great growth -- one-to-two percent a year. But digital represents great potential. Maybe radio was slow to move into [the digital space], hoping that over-the-air would rebound. But I really do believe that radio has great assets in the local marketplace that can lead to substantial revenues.

RAIN: Are there other challenges with a new medium, in addition to speed of adoption? You might have to develop new creative formats for advertisers, and to educate advertisers about new value propositions.

MF: I agree, but that doesn’t explain why newspapers have been able to make greater inroads into the online game. I would argue another reason: Transforming your entire staff to thinking beyond just over-the-air.

RAIN: Do you think newspapers have been more desperate?

MF: Very much so. [Many local papers have reduced publishing] to just three days a week. Necessity is the mother of invention.

RAIN: Do you have a view about how broadcast radio can build up the digital revenue side?

MF: Streaming is part of it. [Also] getting more traffic to the station websites. There’s no reason why radio stations can’t sell video advertising on their websites.

I also think broadening services to include what is collectively called “digital agency” activities. Being an advisor to small and medium businesses in the local marketplace. Explaining SEO, website development, how to run daily deals, what to do with your Facebook page. Broadcasters, with their local sales staffs, can get into these areas and work with local businesses. Some radio groups are [already] becoming digital agencies, providing other services to their advertiser clients.

RAIN: So the station would act as a local consultancy about digital realities.

MF: Right. And obviously, digital advertising would be part of it. But it’s not the only part. When you walk in as a consultant, you have more credibility. Newspapers are doing it, and some local magazines. Any media company with established local relationships can do it. The only thing limiting radio is creativity, and radio people have a lot of creativity.

BIA/Kelsey says radio should see online ad revenues grow nearly 11% a year

Wednesday, March 27, 2013 - 3:05pm

BIA/Kelsey projects online ad revenue for radio will grow 10.8% annually over the next five year (while on-air ad revenues will grow only 2.5% a year), hitting $818 million by then. The group's new Investing in Radio Market Report is out today.

Radio earned $491 million online in ad revenues last year, accounting for just over three percent of total revenue (though markets like Boston earned as much as 14.2% online).

The RAB reported radio's Q4 2012 digital revenue at $206 million (up 11%), and overall 2012 digital revenue at $767 million (up 8%) (see RAIN here). BIA/Kelsey recently released its forecasts on local media ad spending (and the digital share thereof) (see RAIN here). The Pew Research center predicted satellite and online-only radio have an even brighter digital ad revenue upside (see RAIN here).

RAIN Summit West will feature two panels, "Profiting from Mobile" and "Jump Start Your Revenue," to examine trends and discuss strategy to maximize digital revenue. More info is here.

Read more about BIA/Kelsey's report today in here.

BIA/Kelsey: Digital's share of growing local ad spending to hit 28% in next 5 years

Monday, March 18, 2013 - 12:20pm

BIA/Kelsey now projects local media ad spending to hit $148.8 billion by 2017. Digital's share of that growth -- now just over 17% -- should grow to nearly 28% in that time.

That projection includes a drop in "traditional media revenues," from $109.4 million last year to $107.6 million, Tom Taylor points out here.

"By 2017, the firm estimates online media will take more than $41 billion of the nearly $149 billion that companies will spend, which means higher investments overall in advertising and marketing," reports MediaPost (here).

Local mobile ad revenues to grow, says BIA/Kelsey, but will be a smaller share of overall mobile

Tuesday, November 6, 2012 - 2:00pm

In its U.S. Mobile Local Media forecast for 2011-2016, media advisory firm BIA/Kelsey forecasts U.S. mobile local ad revenues to grow from last year's $664 million to $5.8 billion by 2016 -- a compound annual growth rate of 54.2%.

This is mobile advertising that is targeted based on a user’s location.

Locally-targeted mobile ads, as a percentage of the overall mobile advertising spend, will grow from 41% in 2011 to 58% in 2016, according to the report (see chart).

That percentage is actually down from an earlier forecast. "This was due to slower than expected advertiser adoption of location targeted mobile ads," BIA/Kelsey explains. "Though there’s exploding usage, representing supply (ad inventory), it hasn’t been met with the same demand (ad dollars), thus keeping mobile ad rates depressed."

BIA/Kelsely clients can access the full Annual U.S. Local Media Forecast 2011-2016 online here

BIA/Kelsey forecasts a 12.1% increase in radio's digital dollars this year

Monday, October 8, 2012 - 11:25am

BIA/Kelsey forecasts radio's online and digital revenues will reach $491 million this year, a 12.1% increase over 2011, in its U.S. Local Media Forecast (2011-2016): Full Edition.

Radio's overall revenue was revised downward, however, to $14.868 billion for 2012 (which is still a 2.2% increase over 2011). Of that, $14.377 billion is expected to come from over-the-air advertising, an increase of 1.9% from last year.

Radio Ink comments that broadcasters' relatively small digital take "may support the theory that committing too many resources to digital just isn't worth it yet. Or depending on how you look at it, it may also support the theory that radio is only getting a small portion of digital because of a lackluster effort."

Read more in here and in Radio Ink here

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