If radio is looking for revenue growth in 2020, Pierre Bouvard says there’s an expanding list of sources for new ad buys. After a decade of pouring dollars into digital, often times with diminishing results, the Chief Insights Officer at Cumulus Media and Westwood One says a reexamination of spending within several major national ad categories has put radio in a good position.
The parade is being led by Procter & Gamble, who by one tally were on pace to have spent more on national radio in 2019 than any other brand. “We followed consumers and where they are spending their time,” Chief Brand Officer Marc Pritchard explained on the latest episode of the Math & Magic: Stories from the Frontiers of Marketing podcast. As the top spender in the U.S. across all media, the moves by P&G are rippling through marketing circles and pushing others to give radio a fresh look.
Bouvard believes pharmaceutical ad spending could be the biggest story of the year for AM/FM radio. Already AbbVie and Pfizer are buying radio time. “There is a lot of interest among other pharmaceutical brands to use AM/FM radio to complement and supplement network television,” he said. In a blog post, Bouvard said the fact that P&G’s personal care brands like Prilosec OTC, Sinex, Pepto-Bismol, Metamucil, and NyQuil/Dayquil are already major network radio advertisers is not lost on other pharmaceutical brands.
It’s not just pharmaceutical companies where P&G is giving radio one of its strongest sales pitch points in a generation. Bouvard said other consumer packaged goods companies are expected to follow suit. Topping that list is Unilever, the parent of Breyers and Lipton to Dove and Jif. “As other brands wake up to what P&G is doing and see the success they are having, more CPG brands will flock to AM/FM radio,” predicted Bouvard.
Auto ‘Rediscovery’ Of Radio
The challenges the car industry experienced in 2019, as the pace of new vehicle sales slowed, helped compel automakers to review their marketing. And that led to what Bouvard said was a “rediscovery” of network radio among manufacturers – the so called “tier one” advertisers – to allocate more to radio. He expects network radio to gain greater importance to automakers as declining television viewership numbers make it not only difficult to reach car buyers but also further inflate TV costs.
The bulk of radio dollars continue to come from local dealers – the so-called “tier three” – and while they’ve been under orders from manufacturers to put more money into digital marketing, the moves by the automakers themselves could portend to a rolling back of those dictates. The realization that television’s big tent is shrinking and digital ad fraud is rampant is coming at a time when radio groups are investing more into providing the attribution data that advertisers have long craved. Hundreds of brands now measure the brand lift impact of their AM/FM radio campaigns on awareness, brand consideration, perceptions and purchase intent according to Bouvard, who points out companies like LeadsRx, Analytic Owl, Veritone, and C3 Metrics now quantify how AM/FM radio ads drive search and web site visitation. “The golden age of radio attribution is upon us,” he says.
The calendar will also work in radio’s favor in 2020—and not because the leap year brings an extra day’s worth of inventory to sell. Kantar Media has forecast a robust $6 billion will be spent on political advertising for the 2019-2020 election cycle. But that’s only for federal candidates and campaigns and doesn’t include Political Action Committees. And Kantar’s estimates are considered conservative as some forecasters have pegged the number closer to $10 billion.
Bouvard says if the lofty political ad spending predictions pan out, a sellout on local TV stations could push some categories into radio’s welcoming arms. “There are not enough local TV ads to satisfy the political demand that forecasters are predicting,” said Bouvard, predicting, “If political eats up the vast majority of local TV inventory in the last half of the year, brands will have to take a look at AM/FM radio – both local and network – to replace and generate the necessary reach.”
‘Another Big Year For Podcasting’
Even as broadcast radio revenue could see bigger gains in terms of sheer dollar growth, on a percent basis podcasting’s rate of increase is all but certain to be larger in 2020. Edison Research said last year that 32% of Americans consumed podcasts on a monthly basis, and Bouvard said if the same growth rate continues, it will push the monthly reach of podcasts to nearly four-in-ten Americans. “2020 will be another big year for podcasting,” he predicted.
Bouvard expects the coming months to bring several advancements for podcasters, noting there have been several major developments in podcast audience measurement in recent months. That includes the launch of several services that have not only monitored which shows people listen to, but also audience purchases and shopping behaviors. And like broadcast radio, there’s a greater emphasis on attribution with five companies – Chartable, Barometric, Podsights, LeadsRx and AnalyticOwl – measuring which podcast ads drive online search and advertiser site visits.
Podcast revenue has to date largely been driven by ad spending from direct-to-consumer marketing. While those brands have embraced on-demand audio, Bouvard said many are now getting priced out of Google and Facebook as cost per acquisition costs soar. He says the cost per acquisition for a $100-dollar product was $15 to $20 three or four years ago. Now it’s $40 to $50 to acquire that customer. Bouvard thinks that could open the door to another form of audio advertising: broadcast radio. “Given this paid social inflation, brands are turning to AM/FM radio realizing that it can drive both sales and build a DTC brand,” he said.
One podcast wild card for 2020 could be innovation scenarios, like Facebook launching an audio product that makes it possible to share and consume audio content into a news feed. Bouvard also thinks there are moves Google could take to make audio a bigger component of voice and text search while also making it easier for users of Android devices to discover and listen to podcasts.