BIA Advisory

As the online radio audience continues to grow and broadcasters and web pureplays amp up investments in original digital audio content, advertisers are following the audience. The forthcoming Local Advertising Forecast from BIA Advisory Services calls for a 9.6% increase in ad spend for online radio in 2019, compared to 2018. BIA includes both AM/FM simulcasts and pureplays like Pandora and Spotify in its new forecast. Ad spend for over-the-air radio is forecast to dip 1.9% for a modest overall decline of 0.8%.

Radio’s share of the local ad pie in 2019 will total 10.0%, according to a preview of the latest BIA forecast. It predicts over-the-air radio will capture 8.9% of the local ad market with another 1.1% share attributed to online radio. “Traditional media will maintain noticeable share,” BIA senior economist Mark Fratrik said during the firm’s “Share Of Ad Wallet” webinar Thursday.

Over-the-air television will capture 11.8% of the local ad market next year, with another 0.9% coming from online television and cable getting 4.0%. Online/interactive will account for 14% of the local market.

Online/digital’s share of local advertising continues to increase substantially. Yet radio plays in that still-expanding arena. “Legacy traditional companies are becoming less traditional with each passing year," Fratrik said.

As stations finalize budgets for 2019, the new BIA forecast provides a roadmap for where the biggest opportunities await. Six key categories will account for 70% to 80% of total local advertising in 2019. Retail advertising tops the list with 19.2% of total local ad dollars and a 4.5% growth rate in 2019. Financial/insurance, a category with a lot of momentum at radio, is second with 12.0% market share and 6.5% growth rate, followed by general services advertising (11.7% share, 5.5% growth), automotive (11.6% share, 5.5% growth) and restaurants (11.3% share, 7.5% growth).

Looking ahead five years, BIA estimates the total local advertising market will grow to $160.8 billion by 2023. Online and mobile will continue to increase their shares in the market, while categories like print newspapers and magazines will decline. BIA forecasts smaller shares for some traditional media but the decline “is not uniform,” Fratrik said. Over-the-air radio will be 7.8% while online radio’s share will increase to 1.3%. The forecast calls for a similar pattern for television with over-the-air TV at 10.9% and online television ticking up to 1.3%. The new forecast calls for online/interactive to expand its local ad share to 17.5%.

Achieving success in 2019 will require five things, Fratrik said, all of which involve market intelligence and data, an over-riding theme at the 2018 Radio Show. The five growth requirements involve properly sizing up the local market; identifying the split between traditional and online advertising; building market by market forecasts that prioritize against local ad categories and revenue opportunities; delivering “tactical market assessments” to local sales teams; and arming local sellers with data and insights.

What BIA labels “digital leakage” is expected to continue as Google, Facebook and over-the-top video streaming services keep siphoning TV dollars. In addition, 2019 won’t have the windfall of election year spending or the infusion of Olympics advertising. Among other headwinds facing media companies in 2019 are brands cutting back on local media agencies and shifting spend to national platforms. But there are several tailwinds blowing in traditional media’s direction, including more solutions in the market for radio to show accountability, expanding revenue from digital platforms and opportunities to tap into the high growth mobile channel.

This story has been updated to correct the growth rates for over-the-air and online radio.