Borrell Projects Loss In Local Radio Revenue

Borrell Associates, which tracks local ad spending, forecasts continued declines in on-air ad revenue over the coming five years, from $12.75 billion in 2016 to $12.08 billion to 2020, a decline of more than 5 percent.

MediaLife reports that over the decade from 2010 to 2020, ad revenues will decline by $3 billion, projects Borrell.

Gordon Borrell and Corey Elliott, Borrell’s director of research, cite five factors for the decline:

• Stiffer competition, with more media competing for what’s actually a shrinking pool of ad dollars.
• Dated image. Radio is seen by advertisers as old and unhip compared to YouTube and Facebook.
• Lack of digital expertise. Most sales reps aren’t all that savvy about digital media.
• Cost. Radio spots are cheap, but audiences at any given moment are small and fleeting, so reaching a sizable cume requires high frequency, and thus high cost in the end.
• Poor sales message. Many stations just aren’t telling their story well .

The sad part of it all, says Borrell, is that radio remains a very powerful medium.

Two qualities stand out, he says. One is its ability to drive action. The other is its scrappy nature.

“Radio, more than other media, is willing to get creative and make advertising work. It’s an emotional medium that generates strong affinities in the community. And those affinities can extend to advertisers when, say, a favorite announcer on a country music station talks about how he loves shopping at Bob’s Country Clothes Emporium, or when a classic rock announcer tells everybody how much he loves cranking up the ZZ Top while driving his Chevy Silverado to work.”

The problem, what holds radio back, Borrell says, is not the medium but the executives who now manage the industry. It’s in their refusal to realize and take advantage of the potential of digital to bring in new listeners and advertisers.

“Radio will undergo a radical transformation into a more powerful entity as soon as longtime industry executives retire, ” he quips.