It was perfect timing. On Monday, Entercom CEO David Field launched a pro-radio marketing campaign in several publications read by big advertisers, hoping to start the conversation that leads to more money flowing to radio. Today, BIA Kelsey released its local advertising projections for 2018 and, despite a whopping 5.2 percent increase in local advertising spend, from $140.9 billion in 2017 to $151.2 billion in 2018, they are predicting a decline for radio.
Will David Field be the lone wolf publicly pushing radio’s strengths to big advertisers? Or will others join him in the battle to take revenue back from fraud-filled digital and away from the cord-cutting TV market? Time will tell, and we now have a revenue marker in the sand if the BIA numbers are correct.
BIA/Kelsey is forecasting a total local advertising revenue pie of $151.2 billion in 2018. That’s up 5.2 percent from $140.9 billion this year. If that number holds up, it will be the largest annual increase in five years. The company says traditional media will get 64.7 percent of that total and digital will snatch up 35.3 percent.
Political will be a big reason the revenue jumps so much next year. BIA/Kelsey Chief Economist Mark Fratrik says, “The strong economy and the expectation of highly competitive statewide political races next year reinforce our outlook that local advertising revenue will show strong growth in 2018. Combine these factors with the continued strength of traditional and online media and the revenue landscape for next year looks robust.”
So who will get what? Here’s a look through the BIA/Kelsey crystal ball:
#1) Direct Mail preserves its lead position with a 25.4 percent ($38.5 billion) slice of the local advertising pie.
#2) Local Television will get the second-largest chunk at 13.8 percent ($20.8 billion). It will continue to be the largest player (more than 60 percent) in the local video-advertising market. Revenue growth within the total local video advertising segment will come from local mobile video (growing to more than $1 billion) and local online video (increasing to more than $2 billion).
#3) Mobile takes over third, representing 12.6 percent of local advertising spend in 2018 and BIA says that will grow to 19.2 percent by 2022. More specifically, the adoption of mobile local advertising tactics (geo-fencing, click-to-call, and click-to-map) continues to grow among national advertisers that tend to gravitate toward effective, increasingly available, and currently undervalued mobile local ad inventory. The forecast also projects significant ad spending in native social advertising next year due to its ability to target and reach local consumers. Social media ad revenues from mobile (not including tablets) now represent about 71 percent of total social ad spending and will grow to nearly 80 percent by 2022 as more of the user activity shifts away from desktops.
#4) Radio gets 10.4 percent of the total in 2018 or $15.7 billion — 9.4 percent will be over-the-air and 1 percent from online.
#5) Newspapers are a close fifth at 10.2 percent or $15.4b.
In 2017 BIA/Kelsey says radio will finish with $15.5 billion, $14.1 billion from over-the-air and $1.3 billion online.
And in 2022, BIA/Kelsey is projecting radio will increase to $16.7 billion, $14.6 over-the-air and $2.1 billion online. That will still be only 9.6 percent of the total local advertising pie in 2022, a smaller percentage than radio will finish with in 2017 and is projected to finish with in 2018.
Mark Fratrik says 2017 was a year of basically no growth in radio over-the-air advertising, with future years also only showing small increases of less than 1 percent annually. “Increased streaming audio competitors and increased competitors for advertisers has basically kept the over-the-air advertising stagnant, with online efforts by stations continuing to help support a slight overall revenue growth.
“Many radio groups are continuing their efforts in online activities which bolster the overall revenue of these stations, as station operators recognize that future revenue growth must come from these sources.”