Radio revenue over time

[b-turner]

I know radio advertising spending is down compared to the past. I'm just curious how revenue might compare to earlier decades.

For example, how was radio doing in 2000, say 2010 and 2019. Obviously 2020 is not normal. How substantial are those drops.

The other thing I'm curious about is opinions on how the pandemic may have changed consumer buying habits and business advertising models. I fear more of the advertising pie that went to online might not come back to radio once people return to more retail shopping versus online.

I'm simply asking to get a handle on things. I'm being told radio is down about 30% and then the next guy says 65% in the past 2 decades.

A friend of mine (and station broker) was telling me a great market may have done upwards to $2 or $2.50 per $1,000 in retail sales a decade back but now is doing good to hit $1.

Historically, a small market station I know well once did a good $45,000 a month back in the late 1980s. Today it's more like $20,000 or $25,000. In fact there are businesses that easily spent $1,000 a month plus back in the late 1980s but now spend about $200 or $300. If you run these figures on an inflation calculator it is really alarming.

A couple of stations have told me they actually have been dropping advertising rates to be more affordable to the bulk of potential advertisers.

I'd also add it is not just radio but small town weekly newspapers that have seen huge amounts of revenue dry up. Generally speaking the healthiest newspapers are the small town weeklies where they are the only source of local news. The big city papers are pretty much toast at this point but some have become diversified enough to bolster revenue with online presence.

 

[DavidEduardo]

I know radio advertising spending is down compared to the past. I'm just curious how revenue might compare to earlier decades.

I use the 2005 data to compare. That was pre-recession and after a decade of consolidation.

The recession was coupled with the introduction of the smartphone and the start of PPM in the 48 largest markets.

Radio came out of the recession about 30% off in billing... based on RAB numbers before they stopped issuing national data.

And in PPM markets, PUR ended up about 30% lower than in the diary.

Since then, inflation has reduced radio revenue further.

The range estimated for 2005 was between $19 and $21 billion.

Today, the various estimates show $11 to $13 billion. Inflation says that $1.35 in 2005 is equal to $1 today.

So in real dollars, radio is off between 50% and 60%.

Obviously, the data used to calculate inflation is based on consumer goods, not business. So we can "fudge" this data a bit.

 

[TheBigA]

So in real dollars, radio is off between 50% and 60%.

As a national industry number. Your actual local numbers may differ. There are likely many AM stations that have seen their revenue drop by more, and other stations have seen their numbers stay fairly constant. Even WTOP has seen its revenue numbers drop in the last ten years, just not by as much. However, if you compare their revenue now with the revenue their former frequency WFED 1500AM received, it would be fairly dramatic. Revenues there are probably off 90% or more from where they were as an all news station.

My other observation is this explains why radio staffing has dropped. There is a direct connection between revenue and staffing. If you're in a part of radio that has been largely unaffected, your staffing has been fairly constant.

 

[boombox4]

The other thing I'm curious about is opinions on how the pandemic may have changed consumer buying habits and business advertising models. I fear more of the advertising pie that went to online might not come back to radio once people return to more retail shopping versus online.

I'm simply asking to get a handle on things. I'm being told radio is down about 30% and then the next guy says 65% in the past 2 decades.

No expert here by any stretch, but the fact that a lot of brick and mortar businesses may go under over the next year won't help local radio any -- or online advertising, for that matter, should small businesses be using that option. I heard on the radio the other evening that 30% of restaurants in the US will probably shut their doors before 2020 is out.

Then you have these big corporations believing that a massive online presence such as FB (with one billion users worldwide) is worth ditching over political concerns. Not being privy to their decision making processes, I wonder if they're considering shrinking back on advertising everywhere for a while. I mean, if they think a massive reach medium like FB is worth tossing, how are they viewing other media with less reach?

 

[b-turner]

Excellent food for thought. I think the pandemic has thrown everybody under the bus. I do outside radio advertising sales. I can tell you most of my clients were just plain scared. Among their biggest worries was their employees: paying the and retaining them. As one owner put it to me, I finally assembled a great staff that liked their coworkers and were trained. They could handle any challenge. Then this virus shuts us down. I don't want to lose anybody but I don't know if I can continue to pay them. I'm not advertising. I'm just trying to keep my employees and my business afloat.

I think a good number of brick and mortar stores will close as well as a bunch of restaurants. I'm not sure business will come back for a few years. Many folks incurred debt during all of this and I feel many will be trying to get back to square one.

I'm seeing closures across most categories of business from a automobile dealer to a franchise chain restaurant and plenty of small retailers in the clothing and gift realms...generally places where buy things with surplus dollars you have.

I think we are looking at a few tough years as the retail and services sectors find their new sweet spots.