Future Recession Impact on Radio Advertising: Industries

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

RADIO ADVERTISING- USEFUL FINDINGS:

• According to Magna Advertising's forecast report, global radio advertising is expected to decline by -0.8% in 2019 and -1.3% in 2020.

• The report also reveals that in the United States, radio advertising is anticipated to decline by -2.6% in 2019 and -4.4% in 2020.

• Research conducted by Westwood One, a radio network, and Nielsen Catalina Solutions found that radio provided around $12 in sales for each dollar used for advertising.

• Jack Myers' report on advertising revenue projections (2015-2020) for both radio and other forms of media shows that terrestrial radio (non-digital advertising solely) is projected to remain relatively flat with an annual growth of about 0.6%.

• According to research from WideOrbit involving almost 9,000 professionals within the radio industry, between 2017-2018, there was a threefold rate of expansion in the number of ad buyers based in the United States that utilized programmatic to buy digital audio and radio advertising.

• Ed Levine, the CEO of Galaxy Media, opined that "radio needs to be set loose to compete with the two digital giants, which, being unregulated, have an unfair advantage that’s allowed them to siphon off radio’s ad dollars."

Research Strategy: