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Future Recession Impact on Radio Advertising: Industries
Future Recession Impact on Radio Advertising: Industries
Statistics, projections, and trends from the United States were analyzed to determine which industries were most likely to maintain or increase their spending on radio advertising during the recession predicted to occur in 2020. The main industries found to have the best chance of continuing to invest in radio advertising at high levels during the recession are Politics, Retail, Cellular Providers, Insurance, and Pharmaceuticals.
POLITICS
- Political campaigns are a multi-billion dollar industry in the United States; the 2016 election alone cost an estimated $6.5 billion.
- In the course of political campaigns, candidates and supporters use various forms of advertising, including radio, to influence popular opinion of voters.
- The upcoming 2020 presidential election is anticipated to lead to significant increases in spending on radio advertising. For example, Los Angeles radio is expecting to book $17 million in 2020, compared to $14.6 million earned in 2018.
- Despite the predicted recession, this upswing in radio advertising spending is expected to last through 2020 and affect the nation as a whole.
RETAIL
- Retailers encompass both brick and mortar stores as well as widespread online sales operations. In 2018, retail was the largest spender on radio ads in the U.S., with spending totaling $502.8 million.
- Although some retailers are leaving radio advertisements behind in favor of digital platforms, there has recently been an increase in entirely new retailers who are choosing a radio marketing strategy. This includes local businesses that value the capability of radio to reach a targeted audience.
- In California, retail radio ad sales are projected to increase by approximately 7% by the beginning of 2020.
CELLULAR PROVIDERS
- Due to mergers and acquisitions, cellular providers are finding themselves in an increasingly competitive business climate.
- This competition is likely to drive cellular providers to reach for various advertising platforms, including radio, even with a recession on the horizon.
- The industry continues to come up with new and attractive products such as the 2020 iPhone, which fuels investment in radio advertisement.
- By the beginning of 2020, radio ad spending by cellular carriers in California is projected to grow by as much as 9.4%.
GROCERY
- The grocery industry continues to undergo significant changes such as increased competition from online retailers, food delivery services, and restaurants.
- This hyper competitive climate is leading to the expansion of the marketing reach of grocery stores to include radio.
- The Southern California Broadcasters Association (SCBA) is predicting this "explosive" category of radio ad revenue to grow by 5.7% by 2020.
PHARMACEUTICALS
- Pharmaceutical spending in the U.S. is the highest in the world, accounting for 30-40% of total world pharma revenue.
- Drug companies are continually increasing their total advertising budget, with a 70% increase in ad spending between 1997 and 2016.
- A new law that requires drug manufacturers to include the price of their medications in their TV ads is driving pharma companies to other means of advertisement, including radio to bypass the regulations.
- As one of the fastest growing categories, the SCBA is forecasting 14.2% growth in radio ad earnings from this industry.
RESEARCH STRATEGY
We searched business reports, trade articles, statistical reports, and industry analysis compilations to evaluate which industries are most likely to continue or increase their levels of spending on radio advertisements during the recession that is predicted to take place starting in 2020. Long-range numerical projections for radio ad spending in the later part of 2020 were not available. A growth prediction study conducted by the SCBA allowed us to obtain this information up to the beginning of 2020.