H2-2019

Coming out of the Independence Day weekend, the calendar still says summer but media planners are already thinking back-to-school and, soon, the crucial holiday shopping season. As broadcasters polish their pitches for these sales tsunamis, industry leaders say the strong buzz around all things audio offers high hopes for the back half of the year.

“There’s a lot of advertiser interest in audio across all platforms, including some of radio’s traditional ad categories as well as some new ones,” Erica Farber, President & CEO of the Radio Advertising Bureau, tells Inside Radio. “We’re anticipating that we should have a solid, good second half of the year.”

Katz Radio Group President Christine Travaglini says she’s noticed a shift in interactions with buyers. Instead of the rep firm asking for meetings, it’s more often a matter of being asked by agencies and advertisers to bring audio-based info and ideas to them. “We have a big opportunity to use that momentum, and radio’s tremendous scale, to deliver creative solutions for advertisers,” she says.

Kevin Garrity, CEO of rep firm Gen Media Partners, uses the shopworn descriptor “cautiously optimistic” for his second half outlook. But with advertisers waiting until the last minute to place business, Garrity says it’s harder to get a good gauge on pacings. “Despite business being placed so close to start date, our pacing on the back half of the year looks healthy, and we’ve seen some nice activity.”

National radio business, in particular, is forecast to be strong in the second half. Core national spot is on a roll, with six consecutive quarters of positive growth at Katz, which represents most major radio groups. That momentum is expected to continue in the back half of the year. “We have big advertisers, including Geico, Walmart and P&G, spending more – and have new advertisers this year using radio,” Travaglini explains.

Gen Media Partners, which bills itself as “the largest independent radio representation firm in the U.S.," sees a flat national spot landscape.

“We’ve seen a bounce with some early political and issue spending that has masked the underperformance of the key categories and I would expect more of the same as we head into the end of the year,” Garrity assesses. He forecasts an uptick from retailers as they look to increase their spending based on the strength of the economy.

Much of the renewed interest in radio among advertisers has revolved around network radio, in part because of its reach and efficiencies and the excitement about the exploding podcast sector. “As advertisers look to get their message out in an environment that they can trust, I believe network radio will continue to play a key role,” Garrity says. Specifically, he points to automotive, insurance, telecoms and the emerging CBD category as network radio stalwarts.

Local business is likely to vary by market and by radio group. Yet Farber says the RAB is “hearing some great, strong stories.”

Retail Rockets To No. 1

As new entrants and changing consumer behaviors continue to disrupt reliable radio spenders, there is a changing of the guard among top spending ad categories. Tier One automakers have dialed back their radio spend but the airwaves remain crucially important to local dealers. The softening auto market allowed retail to rocket into first place in the first six months of the year with double digit growth, according to Katz. Heading into back-to-school and the holiday season, retail is poised to remain strong in the second half.

A voracious appetite for radio among quick serve restaurants won’t let up and industry leaders are optimistic that telecoms will come back into play. Among categories most primed for growth in the final six months of 2019 are: QSR, cable/satellite/broadcasting, consumer products, cosmetics, direct response, electronics, insurance, professional services, recruitment, investment firms/stocks/bonds, soft drinks/waters, retail, utilities, clothing and travel.

“We are seeing some growth in key categories, but there are significant headwinds dragging down traditional spenders, such as auto and auto-aftermarket, entertainment, various food products and supplements, medical services, and fuel/oil/gas,” Garrity says.

Consumer packaged goods spending remains on fire at the midway point of 2019. What has become radio’s fastest growing national category is on track to allocate more than $100 million to the medium this year, after spending only a few million dollars in 2016, according to Nielsen. At the same time, big billion dollars advertisers like Procter & Gamble and Walmart are expanding beyond just using network radio and adding national spot to their campaigns. Both accounts have active avails pending with Katz for third quarter. “Network still appears to be very strong and because of the success of that, several of these larger companies are also looking at national opportunities,” Farber notes.

The reasons for branching beyond the raw audience tonnage of network radio and into a more targeted spot campaign vary, depending on the advertiser’s goal and their footprint. Some national advertisers may want to heavy up in specific markets or across a region for a specific product launch. Others may be adding spot radio to test a concept or because of expanded distribution, Farber explains.

“Advertisers often use localized creative and promotions to extend the reach and impact of a network plan,” Travaglini offers. “Sometimes network accounts also find the need to market new stores or identify specific local competitive opportunities.”

Direct-to-consumer, a subset of the CPG category that typically slices out physical retail distributors, has relied heavily on advertising via social media. But as the red-hot sector continues to burgeon, some brands are turning to traditional media. And that’s benefitting radio, according to Farber and Travaglini.

Political, Pot And Gambling

With the first two debates among Democratic contenders for the White House now in the rear view mirror, attention is turning to the 2020 election cycle. Political advertising is expected to start earlier this go-round, with some spending occurring as early as fourth quarter of this year. “Based on what our partner at PQ Media provided, it’s still too early to tell what those dollars will look like but everything we’re hearing about political is that it is going to break all records for this upcoming 2020 election,” Farber says. “More money will be spent than we can even imagine.”

Among the category wildcards for the second half – and beyond – are a pair of nascent but highly controversial ones that continue to expand on a state by state basis: the legal cannabis market and sports betting. While caution remains the watchword for both, especially cannabis, broadcasters need to position themselves to swoop in should concerns about federal government ramifications abate in the future. “It’s going to be important for radio to be part of that story and not miss out,” Farber insists. In fact, some stations are running ads for CBD-based products, despite those concerns.

One reason advertisers are paying more attention to audio is the rapid growth of podcasting, streaming audio and the proliferation of smart speakers. Magna’s latest forecast projects podcast ad revenue will increase 29% in 2019. That’s four-times the 7% growth rate that it is forecasting for overall digital audio ad spending. While it varies by agency and sometimes even by advertiser, Travaglini says Katz is seeing more advertisers with audio budgets that include streaming and podcasting and those budgets are increasing at a faster rate. “Our focus is making sure the overall audio budget grows and advertisers have the biggest impact with their audio campaign across platforms,” she says.

And it’s not just major groups that have invested big bucks in podcasting that stand to gain. “I hear about it in all size markets,” Farber says. “Some are monetizing it and some are not but more and more people are jumping into it every day.”

With new platforms and innovation making audio hot again, Travaglini is bullish on the months ahead. “Audio has never had more momentum and our story is simple – audio is exploding, and radio is the indisputable leader in the space,” she says. “Radio is live and local, the least disrupted and the most resilient mass and targeted media marketing tool for advertisers to count on to deliver strong reach, impactful creative and results.” – Paul Heine