S&P Report Releases Radio Annual Outlook for 2022

RADIO ONLINE | Tuesday, August 30, 2022

SandP Market Intelligence

According to the newly released S&P Global Market Intelligence's Kagan unit and its Radio & TV Annual Outlook, the U.S. broadcast station industry is expected to reach $36.47 billion in total advertising revenue in 2022, up 12.9% from $32.31 billion in 2021. Core ad categories have mostly bounced back to pre-pandemic levels, with the exception of the automotive, retail and travel categories, which are still soft.

The local ad market has been stronger than the national side of the spot ad business for many station owners. The firm's 2022 projection breaks down to $12.32 billion from radio stations, which includes national and local spot and digital, excluding network and off-air.

Key highlights from the report include:

• U.S. broadcast station industry is expected to reach $36.47 billion in total advertising revenue in 2022, up 12.9% from $32.31 billion in 2021, returning to pre-pandemic levels

• Over the five-year projection period 2022-2027, political advertising will be spent disproportionately on local stations in swing-state markets

• Spending in the 2022 midterm elections, spurred by the 50/50 split between the two parties in the U.S. Senate and Republicans looking to gain a majority in the House along with major gubernatorial races in swing states, is expected to reach $3.49 billion, up 15.0% from the last midterm elections in 2018

• Radio's lower ad cost, local audience and relatively high return on investment compared to other media will keep it relevant, although digital investments point to future growth opportunities with the spot ad market for radio expected to decline over the forecast period

• Radio station owners are continuing to invest in streaming, podcast and digital marketing initiatives, with digital revenues expected to rise to $1.73 billion by the end of 2027.

Radio ads are predominantly local and focused on the auto, retail, travel and entertainment categories, which were heavily impacted by the advertising pullback in 2020-21. Some markets were less impacted than others from masking and social distancing orders during the pandemic, and station owners in those areas are expected to fare better based on our market-level forecast.

In addition, Kagan says radio owners must compete with multiple streaming audio and on-demand options for music and talk, such as Spotify Technology and Pandora Media and overall radio listenership has lessened as a result of the new hybrid or permanent work-from-home economy, which has greatly reduced commuting hours during prime in-car radio time.

Radio's core local spot ad market is projected to grow by 5% to $8.83 billion in 2022 and by 3.0% to $9.10 billion in 2023, with growth rates leveling off and then slightly declining over the remaining forecast period to $9.03 billion by 2027. National radio ad revenues boosted by political are forecast to grow 3% to $2.07 billion in 2022 and by 1.5% to $2.11 billion in 2023, level off in 2024 and then start to decline by 1% to 2% over the remaining years in the forecast period to $2.00 billion by 2027.

Kagan reports that radio station owners are continuing to invest in streaming, podcast and digital marketing initiatives, with digital revenues expected to rise to $1.73 billion by the end of 2027. Off-air is forecast to grow 4% in 2022 and 3% in 2023 with the return of live events and should remain a solid segment for the radio industry long term reaching $2.42 billion by the end of 2027.

Total radio revenue, including national and local spot, digital, off-air and network revenue, is expected to be mostly flat at a five-year CAGR of 0.78% from an estimated $15.47 billion in 2022 to $16.09 billion by the end of 2027.