Look for two variables to shape radio’s revenue performance in 2017—the economy, which is showing positive signs and may get a boost from a pro-business President-elect Trump; and advertiser perceptions of radio. That’s the view from iHeartMedia chairman and CEO Bob Pittman, who is feeling “cautiously optimistic” about radio’s prospects in the year ahead.
While there’s much work to be done to turn around perceptions about the medium among CMOs, media planners and buyers, Pittman sees a renewed interest among agencies and advertisers who overlooked the medium and are now aiming for broader reach than broadcast TV’s shrinking audience and a fragmented digital marketplace can provide. “People are increasingly interested in radio, audio and sound and we are in a pretty good position,” Pittman told Inside Radio in an interview. “Agencies and advertisers who ignored radio for a while are back into, OK, tell me about radio and how can I use it again.”
It’s not only radio’s consistent 93% reach that’s causing marketers to take a second look. Broadcast radio time spent listening rose by two minutes, year-over-year, in third quarter 2016, according to Nielsen, while the industry posted double-digit streaming gains in every monthly webcast listening report last year, per Triton Digital.
Meanwhile, many advertisers are said to have over-invested in Facebook and Google and some have begun to slowly dial down their digital spends. “We have seen that pullback and the question people ask is what they are pulling back to,” Pittman says. “We in the radio industry have to make sure they pull back to radio and not back to TV.”
From a consumer standpoint, radio is in “spectacular shape,” Pittman insists, but its sales approach needs a refresh to synch up with how advertisers and agencies make their media buys nowadays. “We’re still selling radio advertising the way it was sold in 1980,” he contends. In the old model, media planners allocated bigger annual budgets to buyers who bought more radio, leaving broadcasters to fight over share. “Our biggest worry today is not fighting for share; our biggest worry is how big the radio pie is,” Pittman says.
To grow beyond the $17 billion radio’s been getting for years will require industry leaders to take their message higher up the advertising food chain, to those in charge of media investments, strategy and planning at agencies and advertisers. “[And] when they want to buy us, we have to prepare to sell to them the way they want to buy, which is increasingly on an electronic platform, infused with data.” Pittman is bullish on programmatic radio sales—not just to make radio buying and selling easier but to tap into richer digital advertising budgets. “The challenge for us is how much can we penetrate the digital buying and how can we get the advertising industry to think about radio as a digital player.”