RAB/Borrell Report: Radio Growing Digital Sales Share

Radio gained digital share in 2012, and it looks like many stations are building on that momentum in 2013, according to a report issued by Borrell Associates on behalf of the RAB. And there appears to be significant profit in local digital sales operations, the report concludes. The report -- "Benchmarking: Local Radio Stations’ Online Revenues" -- says that radio grew its online ad revenues 22% last year, outpacing the 20% overall increase in local online ad expenditures. That was enough to achieve a share increase of two-tenths of a point, to 2%. The report is based on Borrell's annual industry-wide survey on more than 6,200 local online operations, including more than 2,000 radio stations in 527 clusters. This report analyzes data derived from three principal sources: media ad revenue, local business ad spending, and a special radio manager survey asking questions about digital revenue resources, sales methods, expenses and other digital operations. "In terms of digital advertising, radio has been in a come-from-behind position for years," says Borrell Associates CEO Gordon Borrell. "But it looks like quite a few groups are breaking out and even challenging their newspaper and TV competitors for a slice of that very large digital pie. I hope the data in this report will show radio general managers and general sales managers that it is entirely possible to generate millions in digital sales, and that there's a high likelihood that these sales hold significant profit margins." Overall, radio sellers closed $370.7 million in local online advertising last year. Borrell expects the number to pass $420 million this year as many radio groups double down on digital sales efforts. Much of that growth will be fueled by stations budgeting for unusually high growth. In a survey of 1,075 radio stations administered in January as part of the report, 17% said they expect growth of 30% or more this year. There's more good news for radio, according to the report. Stations are diverting their focus from banner advertising and branching out to sell other, more popular formats like email advertising, paid search and even video ads. While banner ads were the largest single source of revenue for 32% of the stations who participated in the survey, the number dropped to 22% for 2013. "Digital strategy among radio stations and groups is varied," says RAB President and CEO Erica Farber. "Revenue opportunities continue to grow for those who are pushing the digital limits with online and mobile initiatives. As radio further defines and focuses on monetizing their digital platforms and applications, we will continue to see growth for radio in revenue and market share." The full study is available to RAB members on the RAB.com website. A free webinar featuring the study results will also be presented by the RAB, March 7. To register for the webinar, click this link.