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Friday, May 27, 2011

Economy Still Challenging For Radio

BIA/Kelsey Lowers Expectations

As we near the halfway point of the year, reports from the local radio industry reveal that growth has slowed more than expected. According to a blog by Mark Fratik at kelseygroup.com, BIA/Kelsey now expects that over-the-air local radio revenues to grow only 3.4%, down from 5.4% growth in 2010.

The good news is that online revenue growth is proving to be very strong for local radio stations. We now forecast that online revenue growth will be over 15% for all of 2011 with double digits increases for the following four years. These revised estimates are included in BIA/Kelsey’s 2nd edition of the 2011 Investing in Radio Market Report released Thursday.

Several reasons are causing the lower than expected revenue growth for local radio stations, with economic and new media having the biggest influence.

Clearly, the overall economy is not growing as fast as everyone had hoped and, in turn, advertisers are being cautious with their media buys. Plus, even with several months of overall employment gains, the overall unemployment rate is still over 9% and consumer confidence is still not overly strong.

Now, where the local economy has proven to be more vibrant, radio has benefitted from increased spending. Markets seeing growth of 6% in over-the-air-revenues this year include Houston-Galveston, TX, Pittsburgh, PA, Minneapolis-St. Paul, MN, Tampa-St. Petersburg-Clearwater, FL, and Austin, TX.

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