Recession Impact on Radio Advertising, Part 2

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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.
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Future Recession Impact on Radio Advertising: Companies

After an exhaustive search through credible sources, it appears that examples of 5-7 companies/organizations most likely to maintain or increase their radio advertising budgets during the predicted upcoming recession is unavailable in the public domain.

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.

Research Strategy:

Our research began by searching for information in different advertising/marketing industry reports. We looked for information on sites like Magna Global, eMarketer, among others. The idea behind this strategy was to find reports published by such sites that could have provided the radio advertising forecast, along with the names of some companies planning to use radio advertising in the future recession. With this strategy, we were able to find information on the advertising forecasts of different media channels like radio, TV, digital, etc., but there was no mention of companies using such media sources during the future recession. Also, the report we found on eMarketer was accessible upon subscription. We believed this strategy would work as these sites tend to publish advertising and marketing reports and could have provided relevant information.

Afterward, we explored for articles on the radio advertising segment. The idea here was to find news pieces on the radio advertising forecast that would include commentaries by industry experts, company spokespersons, etc., which could be used to devise the requested data. We looked for information on sites like Adweek, Adage, Mark Ramsey Media, among others. This strategy was not fruitful, as there were no useful articles or publications available. Instead, we found information on the benefits of radio advertising, growth forecast, etc. We believed this strategy would work as sites like these provide analyses on various industries and could have provided relevant information.

Next, we searched for companies that have invested the most in radio ads and then looked for statements and articles from them regarding their plans on advertising spending. We searched for various articles, media publications on sites such as Inside Radio, Marketing Week, The Drum, among others. Companies tend to make announcements or projections about future ad spending and break it down by type of advertising. Our primary focus was on radio advertising. We believed this strategy would work as these sites usually publish information on the latest marketing news, opinions, challenges of the marketing industry and may have published this information. However, this strategy did not work as the information found was about trends in radio advertising, projections, etc.

Due to the lack of relevant data, we were unable to satisfy the criteria for this request.
Sources
Sources