BIA Advisory Services has reduced its early second quarter 2020 forecast for U.S. local radio advertising due to the impact of the pandemic on the national economy. Its new revenue estimate is $12.8 billion, broken down to $11.4 billion for over-the-air revenue and $1.4 billion for digital revenue (including local advertising sold by streaming companies), compared with the $14.3 billion combined forecast earlier this year.
By comparison, in 2019 local radio stations generated $12.8 billion in over-the-air revenue and just over $1 billion in digital. This was a 1.6 percent decrease in total revenue from 2018. The 2020 revenue estimate indicates a 10.7 percent decrease in over the air advertising revenue from 2019. One area of growth for radio is in digital. BIA says that according to the latest Share of Ear® update from Edison Research, a portion of AM/FM radio listening online hit 10 percent for the first time in May.
“In 2018, we projected that radio’s digital platforms would reach $1 billion by 2019 and last year the industry hit this mark,” said Mark Fratrik, SVP/Chief Economist, BIA Advisory Services. “For 2020, our ad forecast shows that digital sales, including streaming, will stay steady. Then by 2021, radio online revenue will start to climb back up again. On the over-the-air side, we see a bigger COVID hit, with a steep drop in 2020 and some recovery back by 2021.”
BIA’s analysis finds that the following industries will spend the most on radio in 2020:
- Finance/Insurance $2 billion
- Retail $1.97 billion
- Automotive $1.5 billion
- Technology $1.3 billion
BIA notes that these industries may benefit from the continuing shift in radio listening from the car to the home as at-home audio environment features give consumers multiple opportunities to consume promotions. Streaming has become a major growth opportunity for broadcasters to maintain existing audiences and attract new, younger listeners. BIA’s revenue estimate drops to $12.5 billion when streaming ad revenue is not included.
“Audiences are spending more time on streaming and podcasting in ways they haven’t in pre-pandemic times,” said Rick Ducey, BIA Managing Director. “These new audio habits are likely to take root and grow over time and advertisers will look to all platforms to promote their message. Radio sellers who see and respond to the audience and advertiser acceleration to digital audio with new formats, content and appeal for different demo groups will see better than average performances.”
