Friday, December 03, 2004

Early warning for the owner of your station

"Here Comes Online Radio - Can Local Broadcasters Tune In To The Opportunity?" is a new report from analyst of Portsmouth, VA (757-686-8769)

Click on the link above to get a free copy of the EXECUTIVE SUMMARY.

In brief: "While local media duke it out over the growing share of online ad spending, the major portals rush to capture the online radio audience. "Meanwhile, the nation’s 13,500 broadcast radio stations have seemed, well, tuned out. What faces radio operators is an opportunity to increase listener loyalty, broaden their audience and grow non-traditional revenues. Given their lacklustre response so far, the likelier scenario isthat the major portals and Internet start-ups may swipe this audience – orat least all but the drive-time segment – from local broadcast stations altogether."

The report says terrestial radio has about five years to get into action or lose.

"Online radio today is reminiscent of the early days of the Internet. The audience is overwhelmingly male, educated and higher-income. Accordingly, this audience has a very high buyers’ ranking for CDs, cars, homes, computers and travel. But this audience is also very small. Barely10 percent of the U.S. adult population listen to “online radio.”

So this game has only just begun. We gauge the streaming-audioaudience at roughly 20 million people1 and the advertising side of this business for both streaming audio and banner placement at $35 million2,or 0.3 percent of the $10.5 billion spent this year on Internet advertising. As many as half of these online listeners have come on board in the past year, pushed mainly by relentless online marketing by AOL, Yahoo andMSN for their online radio networks."

* Arbitron/Edison Research places the audience for streaming audio at approximately 40 million monthlyunique visitors, which includes many one-time visitors. The core audience of regular channel listeners isabout half that, or 20 million.

* Borrell Associates projects streaming audio ad revenues at $4.5 million for 2004 and general onlineadvertising revenues for broadcast radio Web sites at $30 million.

Question is: which comes first .. the audience or the revenues?

Rhetorical question: is consolidated radio willing to invest now and wait five years for the revenues to grow to meaningful numbers?

Or, will the audience have discovered new brands in the emerging space by then?

The Borrell report suggests that Internet radio will boast 60 million U.S. listeners, and generate $300 million in ad sales, by 2009. BUT.. to put THAT in perspective, Airplay Monitor and Billboard just reported RAB's prediction that if radio revenues do nothing but remain flat for November and December, compared to 2003, the industry can still expect to celebrate breaking through the $20 billion barrier. The industry only needs to post a 2.03% gain over 2003’s $19,603,000,000 in total revenue to hit the elusive $20 billion mark. The last time radio came oh-so-close to breaking through that benchmark was in 2000, when total industry revenues hit $19.85 billion. But then came the “Net Bomb” and a general economic recession, which pushed radio revenues down 7.5% in 2001. Last year, according to Radio Advertising Bureau figures, radio’s $19.603 billion was a 1% gain over 2002. As of October, per the RAB, radio revenue dipped slightly by 1% in October 2004 when compared to October of last year, but national experienced its biggest increase in six months, jumping 6% over last October. Year-to-date, the RAB says, all combined radio revenue for January through October of 2004 was up 3% compared to the same period in 2003.

Thus, personally, I'm still betting on RADIO longterm. After all, we have 95% reach of all persons 12+ each week. The new technologies have a long way to go to catch up, as long as we don't help them by ignoring competitive threats.

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