The winds of change are blowing in audio’s favor but what’s worked in the past may no longer guarantee success in the future. Local advertising, long the industry’s bread and butter, remains a challenge heading into 2020. “Across the industry, local has obviously been the toughest category this year, and we’re not optimistic about a rebound in that channel in 2020,” says Mary Berner, CEO of Cumulus Media, who shared her outlook for the year ahead with Inside Radio for “Radio Industry Forecast – 2020,” a special series running all this week.
Meanwhile, what Berner calls “relative robustness” in national and network ad business will continue in 2020, both industrywide and for Cumulus, given the scale of its 428-station radio group and sister network Westwood One, which boasts nearly 8,000 affiliates.
Despite her concerns about local business, the year ahead “has a lot of potential, given the trends in audio right now,” Berner maintains. Political advertising “will provide a sizeable lift to the industry – potentially bigger than it’s ever been,” she predicts, adding that Cumulus is positioning itself to take advantage of what is expected to be record-setting presidential election year ad spending.
But more broadly, Cumulus and other groups that now operate across multiple audio platforms are able to generate more audience impressions that can be offered in a larger range of ad products to better serve client needs. “With time spent listening to audio projected to increase, thanks to new content like podcasting and new technology like voice activation and smart speakers, digital audio, in general, presents a real opportunity for the industry, and us, in 2020,” Berner says.
Digital Remains Growth Driver
Digital is expected to remain the industry’s primary growth driver in 2020. On third quarter earnings calls last week, multiple companies talked up double-digit increases in revenues tied to digital products, including Cumulus which posted a staggering 51% increase in digital revenues from streaming, local digital marketing services and podcasting. To maintain the growth trajectory, Berner says Cumulus will continue to invest in expanding its audiences, increasing sales capabilities and adding new products. In addition, a rising digital tide could lift all radio boats that have built out their digital audio platforms. “Since the market drivers continue to be strong, we just need to capture our fair share to deliver that growth,” she offers.
Radio is well-positioned to flourish in today’s audio business, she adds, in light of all the assets and capabilities companies have developed as broadcasters. “The way we look at it, radio gives us a strong base with its massive reach – virtually unchanged over the last few decades – that we can leverage with the multi-platform capabilities that we have and are developing to take advantage of the audience growth and new advertising opportunities that are presented by digitally distributed content,” she says.
As part of our weeklong “Radio Industry Forecast – 2020” series, we asked each participant what they believe the next digital game changer for radio will be. For Berner it’s the rapid expansion of voice interactive technology to numerous consumer touchpoints beyond just smart speakers. Just over one in five Americans 18+ (21%) own a smart speaker, or around 53 million people, according to the Spring 2019 edition of The Smart Audio Report from Edison Research and NPR. And a large numbers of Americans want to see that voice interactivity applied to other devices in and outside the home. Berner sees this as “profoundly disruptive technology” that represents “an important opportunity for radio. With AM/FM radio a leading category in smart speaker use today, we have a decent start from which to build new products for both our listeners and advertisers,” she says.
With TV audiences shrinking and digital media confronted with a range of issues, Berner believes more blue chip advertisers are rediscovering radio and this will lead to radio gaining a larger share of ad dollars. “You’re already starting to see the industry speak with one voice – highlighting radio’s tremendous ROI and ability to deliver multiple advertising products to advertisers in a coordinated way,” she notes. “As the industry drumbeat continues, we expect advertisers will respond – particularly in the face of brand safety concerns on the digital side and significant audience declines, and the CPM increases, that advertisers are facing when buying television.”
More from Radio Industry Forecast – 2020 in Friday morning’s Inside Radio.