Off-air and digital have been radio’s primary growth engines for the past three years. Continued progress in both spaces, broadcast analysts say, will require further leveraging of radio’s unique assets, such as the promotional wallop of its broadcast bullhorn, feet-on-the-street sellers and established relationships with local clients.
“Whether you call those assets into digital online activities or you parlay [them] into events, it’s just the way that broadcasters need to operate as they move forward,” says Mark Fratrik, senior VP/chief economist, BIA/Kelsey. “And some of them do it really well.”
Calling broadcast radio and digital “natural complements to each other,” Greater Media CEO Peter Smyth says his company has found a winning formula integrating the two for clients. “We have had increased success with an integrated approach, but we need to provide more strategic solutions for our advertisers,” Smyth says. “We will be increasing our digital assets as well as the data that we can provide to advertisers for targeting purposes.”
Some markets experienced flat or slightly down digital revenue growth in 2015, suggesting a larger online opportunity in 2016. But to say that digital accounts for only 3%-5% of total industry revenue is “incredibly misleading,” Fratrik says, because it overlooks the fact that several major groups, including Entercom, iHeartMedia and Townsquare Media, “have really made a commitment toward digital” and realize as much as 8%-10%-12% of their revenue from digital assets. “Many broadcasters recognize that’s the future,” Fratrik says. “While it still pales in comparison with over-the-air revenue, it works hand in hand with over-the-air.”
Although it’s important for radio to focus on increasing value from non-traditional revenue and digital, Connoisseur Media CEO Jeff Warshaw says there’s a caveat. “We shouldn’t make the mistake of thinking that an NTR or digital dollar is the same as a radio revenue dollar,” because those channels don’t produce the same margins as broadcast advertising does, he says. “From a cash flow perspective, it’s different.”
One of 2016’s biggest trends will be continued expansion of radio stations providing digital services to clients, such as website hosting, social media management and search engine optimization, Fratrik predicts. “It’s become second nature to many radio groups, they don’t even think of it as new anymore,” he says. “That trend will become more commonplace in 2016.”