BIA/Kelsey defines that local media marketplace as all local media/services that provide access to local audiences. In other words, it includes all of the media that local radio stations compete against for national and local advertising spending in their markets. The total spending for all of that media for 2013 is estimated at $132.7 billion according to BIA/Kelsey. BIA/Kelsey is forecasting that local radio stations will receive 11.5% of all advertising revenue spent in local markets in 2013, placing it fourth behind direct mail (27.2%), newspapers (16.1%) and television (14.9%).

Advertisers who do use radio as part of their advertising mix are generally quite pleased with the results they get from that advertising. In BIA/Kelsey’s annual Local Commerce Monitor (LCM) survey on advertising and marketing of small and medium businesses (SMBs), we ask several questions on the satisfaction of the various advertising and marketing choices made. For the group of businesses who do advertise on radio, 36% rated the perceived ROI of radio advertising as either excellent (10-19 times return on that investment) or extraordinary (over 20 times the return).

The radio industry is facing ever increasing competition from new and innovative digital media outlets that are available to local and national advertisers. At the same time, listeners have alternate ways to receive their audio entertainment programming, news and information — satellite radio, internet radio sites, iPods and MP3 players to name a few. While the audiences attracted to local radio stations are getting smaller, annual revenues are still increasing, albeit at rates much lower than historical averages.

BIA/Kelsey’s State of the Industry report also looks at which format categories have increased their revenue share over the past 12 years and which have seen declining revenue shares. Spanish language stations have seen the largest jump in revenue share in 2012, more than doubling their 2000 share as the Spanish population has continued to grow and advertisers are seeing the value in reaching this audience. Sports, which appeals to the popular Men 18-34 demographic, saw the next largest increase. Adult Contemporary (AC) stations not only had the highest revenue share in both 2000 and 2012, it saw the third largest increase. So who were the biggest losers among format categories from 2000 to 2012? Easy Listening saw its revenue share plummet from 4.3% in 2000 to 0.2% in 2012, losing more than 95% of its revenue share. Other hard hit format categories were Talk and AOR/Classic Rock.

BIA/Kelsey’s State of the Industry report describes the local radio station industry that finds itself in this incredibly complex and competitive marketplace — audience levels, revenues, technology advancements, new competition.

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2012 General Services Ad Spending by Media

But 2012 is the last year that Print Yellow Pages is expected to be on top in the General Services vertical. BIA/Kelsey expects Direct Mail to surpass Print Yellow Pages in this vertical in 2013. By 2017, Print Yellow Pages’ share of the General Services advertising pie is expected to fall to 11%, with Internet Yellow Pages’ share growing to 12%. BIA/Kelsey projects General Services’ advertising revenue on Internet Yellow Pages to surpass their Print Yellow Pages counterpart by 2017. Direct Mail will continue to be the dominant medium in the General Services vertical, with nearly 26% of the advertising revenue.

Health is the next biggest vertical for Print Yellow Pages advertising with 17% share. As advertising revenues for Print Yellow Pages decline, general services and health will remain the top two verticals for the medium.
By 2017, total Print Yellow Pages advertising revenue will have declined from nearly $5.5 billion in 2012 to $2.2 billion, a five year compound annual growth rate (CAGR) of negative 16.5%. All of Print Yellow Pages’ verticals are expected to have double digit declines between 2012 and 2017, with the biggest dollar loss coming from General Services.

Internet Yellow Pages, on the other hand, is expected to increase from less than $2.2 billion in 2012 to $3.3 billion in 2017, a five year CAGR of 9.0%, making Internet Yellow Pages the third fastest growing medium out of twelve, according to BIA/Kelsey’s Media Ad View Plus.

More information on Media Ad View Plus is available here.

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BIA/Kelsey projects Out-of-Home advertising revenue to grow from $7.3 billion in 2012 to $9.0 billion in 2017, a compound annual growth rate (CAGR) of 4.3%.

While leisure/recreation was Out-of-Home’s biggest spending vertical, more leisure/recreation advertising dollars went to newspaper in 2012 than Out-of-home. In 2012, Out-of-Home Advertising was the second highest media among Leisure/Recreation advertising, according to Media Ad View Plus, with 18.5% of the vertical’s advertising spend. Newspaper accounted for 21.7% of the vertical’s advertising spend. However, as newspaper’s advertising revenue continues to decline, BIA/Kelsey projects leisure/recreation spending on out-of-home will outpace newspaper in 2014.

2012 Leisure/Recreation Ad Spending by Media

Media Ad View Plus breaks the Leisure/Recreation vertical into 10 subcategories: Traveler Accommodation (Hotels-Motels); Airline Transportation; RV (Recreational Vehicle) Parks and Recreational Camps; Performing Arts Companies; Spectator Sports; Museums, Historical Sites, and Similar Institutions; Amusement Parks and Arcades; Gambling Industries; Other Amusement and Recreation Industries; and Motion Picture and Video Exhibition. In 2012, Traveler Accommodation (Hotels-Motels) accounted for more than 35% of the spending on Out-Of-Home advertising in the Leisure-Recreation vertical.

The Out-of-Home advertising medium includes more than just billboards. The chart below, from the Outdoor Advertising Association of America (OAAA), shows the different Out-of-Home displays available to advertisers.

Source: OAAA

According to OAAA, billboards accounted for 64% of Out-of-Home advertising in 2012, followed by transit with 17%, alternative with 12% and street furniture with 7%.

More information on Media Ad View Plus is available here.

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Unlike other media, radio advertising is quite diverse, generating 10% or more of its advertising from five different verticals. Retail (18%), Financial/Insurance (17%), Restaurants (14.5%), Automotive (14%), and Technology (10%) accounted for almost 3/4 of advertising on radio in 2012.

Diving into the top vertical, Retail, warehouse clubs and supercenters accounted for the largest share of retail advertising, 22.7%, just as it was in other media I’ve discussed, such as newspaper and direct mail.

Three out of eleven subcategories accounted for a combined 67% of the advertising spend in the financial/insurance category: commercial banking, securities brokerage and auto insurance.

Media Ad View Plus breaks the restaurant category into seven subcategories. Three of these subcategories accounted for 83.5% of advertising revenue in this category for radio: full-service restaurants, supermarkets and other grocery stores (not including convenience stores) and quick-service/fast food restaurants.

For automotive, auto dealers and manufacturers accounted for nearly 77% of the category’s advertising spending, much as it did for television and newspaper.

In the Technology category, the wired telecommunications carriers and wireless telecommunications carriers (except satellite) accounted for a combined 72% of the advertising spend in the category.

BIA/Kelsey projects radio advertising revenue to increase at a compound annual growth rate (CAGR) of 2.85% from 2012 through 2017. In 2017, radio advertising is projected to reach nearly $16.9 billion, representing 11.4% of total advertising spend for the year. Retail, financial/insurance, restaurants, automotive and technology are expected to remain the top categories for radio advertising spending in 2017.

More information on Media Ad View Plus is available here.

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In a previous blog post, I mentioned that newspaper was the medium of choice for real estate advertising in 2012. However, while newspaper accounted for 27.7% of real estate advertising spend, the real estate vertical accounted for only 2.5% of newspaper advertising revenue. Retail (23.5%) and automotive (16%) were actually the largest vertical categories advertising with newspapers in 2012, according to BIA/Kelsey’s Media Ad View Plus.

Approximately 22% of the retail advertising revenue going to newspapers came from one of the 28 retail subcategories broken out in Media Ad View Plus: warehouse clubs and supercenters. For automotive, more than 77% of the advertising revenue going to newspapers came from automotive dealers and manufacturers. This isn’t surprising, as both warehouse clubs/supercenters and automotive dealers/manufacturers have the highest spend in their respective categories across all media.

BIA/Kelsey projects that newspaper advertising revenue will continue falling, reaching $21.3 billion in 2013, a loss of 5.4%. By 2017, BIA/Kelsey expects newspaper’s share of total advertising spend to have continued to decline, falling to just under 12% of total advertising spend. Newspaper advertising revenues are expected to fall from $22.5 billion to $17.8 billion, a compound annual growth rate (CAGR) of negative 4.7%. This projection places newspaper in third place in advertising spend, behind direct mail and television, but just ahead of radio and online.

With advertising revenue dropping, newspapers are looking for alternative sources of revenue. “Digital pay plans are being adopted at 450 of the country’s 1,380 dailies and appear to be working not just at The New York Times but also at small and mid-sized papers. Twinned with print subscription and single-copy price increases, the digital paywall movement has circulation revenues holding steady or rising. Together with the other new revenue streams, these added circulation revenues are rebalancing the industry’s portfolio from its historic over-dependence on advertising,” says The Pew Research Center’s Project for Excellence in Journalism’s State of the News Media in 2013 report.

BIA/Kelsey projects that in 2012, online represented 13.8% of newspaper’s advertising revenue. This is expected to increase to 20.5% in 2017.

More information on Media Ad View Plus is available here.

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2012 Real Estate Ad Spending by Media

So nearly 28% of real estate ad spending goes to newspaper and 24% goes to online, according to Media Ad View Plus, but where are home buyers actually looking for homes? According to National Association of Realtors in their 2012 Profile of Home Buyers and Sellers, “nine in 10 home buyers today rely on the internet as one of their primary research sources, and 52 percent turn to the web as their first step.”  As you can see below, while 90% of home buyers might use Internet as a primary research source, the National Association of Realtors reports that only 27% use newspaper ads.

• Internet: 90%
• Real estate agent: 87%
• Yard sign: 53%
• Open house: 45%
• Newspaper ad: 27%
• Home book or magazine: 18%

In a joint study by National Association of Realtors and Google, entitled The Digital House Hunt: Consumer and Market Trends in Real Estate, they found that 89% of new home shoppers used a mobile search engine and that 68% used a mobile application throughout their research process.

Not surprisingly, given the National Association of Realtors and Google’s findings, online advertising spending is expected to grow rapidly.  By 2017, online is expected to be the medium of choice for real estate, with nearly 41% of the advertising pie, according to Media Ad View Plus. Meanwhile, newspaper’s share of the real estate advertising pie is expected to decline, reaching less than 7% by 2017. Mobile is also expected to benefit from the newspaper industry’s continuing decline, as its share increases from 1% to 12.6%.

2017 Real Estate Ad Spending by Media

BIA/Kelsey is projecting online’s revenue share to start surpassing newspaper’s in the Real Estate vertical in 2013.

More information on Media Ad View Plus is available here.

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Television dominated the Government/Political/Religion (“GPR”) vertical in 2012, according to BIA/Kelsey’s Media Ad View Plus. In 2012, television’s $3.1 billion of advertising from GPR represented nearly 3/4 of total advertising for this vertical.

2012 Government/Political/Religion Ad Spending by Media

The $3.1 billion of GPR advertising represented 15% of the television media’s total ad spend in 2012, with the vast majority of it coming in the Fall (September to November), based on information from the Television Bureau of Advertising (TVB). TVB has studied the spending patterns in the political category for the past several election cycles. The vast majority of political spending occurs in the Fall (September to November), with the exception of primaries, which provide some advertising revenue from January to September, at least in markets within battleground states. “Clearly local TV’s role as the campaign media workhorse has not changed” states the TVB about the 2012 election season.

GPR advertising is cyclical, peaking during big national and local elections, which occur during even years. The more hotly contested the elections are, the better for local television stations. In 2017, an odd year with no major political elections, the GPR advertising landscape is vastly different, with only 19% of GPR advertising revenue going to television. More GPR advertising revenue will be going to direct mail than television in 2017, according to Media Ad View Plus. In odd years, such as 2017, GPR is dominated by smaller local elections, which rely more on direct mail to get their message to voters in their districts rather than advertise to entire television markets.

2017 Government/Political/Religion Ad Spending by Media

The bounty that can be GPR revenue during the even years is not equal across the 210 Nielsen television markets. Markets located in battleground states will see greater GPR advertising spend than markets in states that are heavily red or blue. States such as Ohio, Virginia and Florida have become predictable battlegrounds states. These so called “purple” states see boosts during even years, with the Presidential, Senate and House races.

More information on BIA/Kelsey’s Media Ad View Plus is available here.

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According to BIA/Kelsey’s Media Ad View Plus more than 43 percent, or $10.7 billion, of retail advertising dollars went to direct mail in 2012. That $10.7 billion represents 30 percent of direct mail’s total ad spending. Furthermore, BIA/Kelsey doesn’t expect that to change much by 2017, where retail is still projected to spend 43 percent, or $12.3 million, on direct mail.

2012 Retail Ad Spending by Media

So what types of retailers are spending money on direct mail? The largest spending retail specialty is warehouse clubs and supercenters, with $2.35 billion in spending on direct mail in 2012. This is more than double its closest competitor, discount department stores, which spent $1.1 billion.

What attracts retailers to direct mail over other media? According to direct mail companies, unlike ads on radio, television and newspapers, which go out to everyone in the market, direct mail can be targeted to a particular location or demographic, providing a better ROI. This could be valuable to brick-and-mortar retailers with fixed locations. Not everyone subscribes to a newspaper, watches TV, listens to the radio, or owns a computer or smartphone, but everyone gets mail.

The National Federation of Independent Business (NFIB) says that direct mail is an old-school marketing method that still works for small businesses. “Direct mail can be an effective part of any marketing campaign. Yes, email, Facebook and even Twitter work for some small businesses, but that doesn’t mean tried and true methods like direct mail should go by the wayside.”

According to BIA/Kelsey’s Media Ad View Plus, overall direct mail accounted for nearly $35.8 billion out of a total $132.2 billion in U.S. advertising dollars. That’s a whopping 27.1 percent of total advertising dollars, making it by far the largest media category. Newspapers, the next largest medium, accounted for 17.1 percent of total advertising dollars in 2012, followed by television in third place with 15.7 percent.

BIA/Kelsey expects this to change somewhat by 2017, with direct mail still on top with 25.1 percent of total advertising dollars, followed by television with 15.1 percent, with newspapers falling to third with 11.9 percent.

More information on Media Ad View Plus is available here.

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