If it wasn’t for digital advertising revenue, the radio industry would be flat as a pancake.
That’s the key headline from BIA/Kelsey’s 2017 Investing In Radio report, set for release on Tuesday morning (3/28).
Online radio dollars are set to bring the industry another 0.9% in total local ad dollars in 2017, putting radio’s total share of the total local advertising pie at 10.5%. Radio’s over-the-air share local ad dollars in 2017 stands at 9.6%.
That puts radio behind online/interactive (12.5%), and total television (14%).
The silver lining for radio is the rate of growth for digital advertising income at U.S. AMs and FMs, with the industry reporting a 14% increase in online revenue in 2016. In contrast, there was “only a slight bump” in over-the-air income.
The bottom line: Overall industry over-the-air advertising revenue stayed relatively flat at around $14.1 billion in ’16.
“In an age where consumers have many entertainment choices, local radio maintains its strength and popularity in the marketplace among national and local advertisers,” said BIA/Kelsey SVP/Chief Economist Mark Fratrik.
He took a positive take on radio’s overall revenue trajectory, adding, “Our forecast also notes that by 2021 we expect radio to surpass newspapers and become the fifth largest media category among advertisers.”
WTOP COMES OUT ON TOP
To little surprise, Hubbard Media’s all-news WTOP-FM 103.5 in Washington, D.C. is the nation’s top revenue-generation station. It took in some $67.5 million in advertising revenue.
The News/Talk category experienced an overall improvement in 2016, likely due to the 2016 election season.
Fratrik says online revenue will again drive radio in 2017, with online up about 12% and over-the-air revenue increasing by less than 1%.
Deals Set To Transpire?
BIA/Kelsey, as do many industry observers, believes 2017 is more promising than last year for radio station transactions. In particular, Fratrik believes Entercom’s tax-free merger with CBS Radio will spur new deals.
In 2016 just 556 station sales were seen, representing nearly $500 million in transactions across the industry.
“We are encouraged by the Entercom purchase and how it will affect the competitive landscape,” Fratrik said. “The combined group will be closer to the size of industry leader iHeart Media and we expect the transaction to have a positive effect on radio since both organizations are progressive and well-run.”