Study: Radio Increasing Focus on Digital Sales

RADIO ONLINE | Monday, February 8, 2016

The radio industry grew its digital ad revenue 11.4% last year, to $550.8 million, and is poised to grow even faster this year, according to a study conducted by Borrell Associates on behalf of the Radio Advertising Bureau (RAB). "Benchmarking: Local Radio Stations' Online Revenues," the 4th annual benchmarking report, showed that the average market cluster made $951,756 in digital sales last year, with the average station making $231,210. With forecast growth of 14%, the report said, digital advertising will account for 6.5% of station revenue by the end of 2016, a full point above what it was in 2015.

"All signs point to the radio industry mobilizing even more in the interactive space," said Borrell Associates CEO Gordon Borrell. "Eighty-two percent believe there is strong potential-the highest we've ever seen; 62% believe that their sales teams' ability to sell digital products is solid-up from 52% a year ago; and 37% believe their digital strategy is headed in the right direction-up from 27%."

"Digital continues to be radio's fastest growing sector. Stations that are laser focused on increasing revenue beyond their core broadcast business are experiencing the benefits," added RAB President/CEO Erica Farber. "The results from this study provide us with insights of where efforts are paying off and what additional training is needed for radio to continue with this trajectory. The RAB is here to help with that knowledge and training."

The research studied digital revenue for 2,704 stations and surveyed 250 managers on their attitudes toward digital ventures. It documents digital revenues, market share, sources of revenue, methods of billing, and opinions on station strategies. Among some of the findings:

• One-third of stations surveyed believe their sales reps are talking to the wrong buyers when trying to sell digital products. Three years ago, two-thirds believed that was the case.
• Only 16% believe that radio sales suffer because reps are forced to sell digital advertising. That's down significantly since 2014, when more than half felt that way.
• Conversely, 24% believe that digital sales suffer because reps focus on radio advertising. Three years ago, twice as many felt that way.
• The average radio cluster received 0.26% of all locally spent Internet advertising. There were some, however, achieving 15 times that - up to nearly 4%.