Following a year of sequential improvement over pandemic-impacted 2020, industry leaders expect radio’s advertising recovery to continue in 2022, fueled in part by red-hot categories such as sports betting, political and recruitment. “We certainly expect the recovery to continue,” says Cumulus Media CEO Mary Berner, leading off Inside Radio’s week-long Radio Forecast – 2022 series.
Berner points to eMarketer’s recent forecast for radio to grow 6% in 2022, after a 12% increase in 2021. And to B. Riley Securities analyst Daniel Day’s call for sequential improvement in spot radio revenue, robust digital growth, and an improved outlook for political spending.
Beyond categories that have already recovered or were strengthened by the pandemic, Berner foresees growth from industries that are still struggling, although not until later in 2022. “Even now, the spend in certain advertiser categories – automotive, retail, entertainment, among others – continues to be affected by supply chain and labor supply issues that have been knock-on impacts of the pandemic,” she says. “So the recovery of just those categories represents a pretty material increment over this year’s levels.”
Berner also anticipates strong growth in professional services, telecom, financial services, travel, and auto aftermarket.
‘Breakout Year’ Ahead For Big Pharma
On the national and network side of the business, she predicts “a breakout year” for pharmaceutical advertisers “as these brands continue to discover radio. And financial services, insurance, recruitment, gasoline retailer and professional services, all of which have been strong in 2021, are on track for continued momentum,” she says.
Last week’s hotly contested Governor’s race in Virginia, where AdImpact says preliminary estimates show $66.31 million was spent on advertising in the Commonwealth, may be a precursor of what’s to come in next year’s midterm elections. “Given the array of competitive races, we think it could hit the top line at levels we typically see in presidential election years,” Berner says. And as hot as sports betting was in 2021, Berner believes it will heat up even more in 2022 as more states legalize online betting and “dozens of firms seek to build their brands and customer bases.”
Of course several industries that are advertising cornerstone for radio continue to struggle with pandemic-related aftershocks, like restaurants and entertainment. And despite a gradual recovery, “none of these categories are back to business as usual because of the labor supply and supply chain issues they’re contending with,” Berner points out. “So while we expect the rebound to continue, it may be a little bumpy.”
Auto Rebound In H2 2022
Then there’s auto. Once radio’s largest category, it has fallen from the top of the stack due to drastically depleted inventories. “What we’re hearing from dealers is that they’re not expecting to replenish their lots until the second half of the year, so we expect to see advertising from that category to be depressed until that time,” Berner says.
As the percentage of revenue derived from digital continues to rise across the radio industry, Berner sees continued growth ahead. “We see all our digital business lines – streaming, podcasting, and digital marketing services – continuing to grow next year,” she says. The company’s streaming shares have nearly doubled over the last four years. With podcasting in high demand among national advertisers, Cumulus is “well positioned to continue to prosper in this growing market,” Berner says. She also expects “strong growth” to continue from selling digital marketing services. “We have found a lot of success serving as a one-stop-marketing and media shop for our clients.”
After respected research firm WARC revealed a massive gap between audio usage and ad spending, Berner is hopeful that audio is poised for a second look by agencies and brands that have under-invested in the medium or flat-out ignored it. “I’m hopeful that this study, combined with the collapse of linear TV and the excitement over digital audio – which is causing many advertisers to rediscover the power of audio to connect with consumers – will cause the imbalance between share of consumer time spent and advertiser spend to narrow,” says Berner. “It only makes sense.”