The entrance into a new digital age has brought endless changes to the world. Current media is in a state of transformation, undergoing great modification in its traditional medium form – from print to digital. The century old Radio industry is not excluded from this transition. It is facing ever increasing competition from new and innovative digital media outlets that are available to local advertisers, but within this competition lies opportunity.

Publisher Eric Rhodes, a leading voice for progressive radio, gave his take on “the new digital stuff” and introduces new areas for the radio industry, such as “the connected car” in the first session of Day 3 at Leading in Local conference.

BIA/Kelsey’s advertising revenue forecasts illustrate that national advertisers play a significant role in the purchasing of advertising opportunities across many different local media outlets. In 2012, our estimates are that national brands spent $45.2 billion dollars in local media advertising such as direct mail, television, print yellow pages, radio, out-of-home and more. This amount accounts for more than a third (33.6 percent) of all spending in local media. “The Radio industry is caught between two worlds” said Rhodes. Current radio owners are invested heavily in transmission costs and they see no compelling reason to back out of it now. They have seen little decline on listening time in the last years – only between 1-2 percent. Compounded with the difficulty to monetize digital radio when consumed out of market areas, makes the idea of transition far more difficult. The radio industry is waiting for things to get further developed, but entities such as Clear channel and iHeartRadio are investing heavy and it may be too late for the traditional players in the space to transition. As we know, digital moves fast, so although Radio maybe okay now, it may not be with continuation of newer developing technologies in the digital space.

The “connected car” emerged as one of the most important touch-points on the horizon for radio, given that the car is where audiences continue to report that a good deal of radio listening continues to happen.   Tech savvy consumers are already listening to streamed audio in their cars via blue-tooth through their smart phones, or connecting through plug-ins, and the configuration of the dash board could make a real difference to Radio’s future. People are no longer carrying radios on them. However, Rhodes said “It’ll take 8 years for 50 percent of the U.S. cars to have connected dashboards and 16 years for 100% of them to be connected.”

The question remains: Where and when does the transition need to happen?

The post At Leading in Local: ILM 2013: Radio Living in Two Different Worlds appeared first on BIA/Kelsey - Local Media Watch.

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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