B-to-b media buyers stress that radio advertising is not for every marketer and that it works best for certain industries, such as finance, health care and telecom.
“A lot of b-to-b advertising is industrial, while a lot of radio is targeting general business owners,” said Kevin Arsham, trade media director of OMD and chairman of the American Association of Advertising Agencies' Business to Business Committee.
“If the business owner can't identify with what's being sold, then it's not targeting.”
Arsham added: “Radio advertising does allow for drama you're not going to get from TV, but what comes first is making sure [the ad is targeting] the right audience.”
Overall, radio ad revenue fell 2% last year to $21.3 billion, according to the Radio Advertising Bureau (RAB). Local radio ad revenue slid 2% to $15.1 billion, while national radio ad revenue dropped 6% to $3.3 billion. The radio industry's Internet and other off-air revenue rose 10% to nearly $1.7 billion. Network ad revenue grew 4% to $1.1 billion.
The RAB hopes that its recent decision to split its marketing division into two groups—a business development unit and a marketing/communications unit—will help dial up radio's overall share of advertising dollars.
“We want to bring more clarity to what we're doing on a day-to-day basis for our marketing efforts,” said Jeff Haley, president-CEO of the RAB. “It's a further refinement of our strategy and not a reaction to any outside influences.”
Leah Kamon, named senior VP-marketing and communications for the RAB, is helping to promote the Radio 2020 initiative, a collaborative effort of the RAB, National Association of Broadcasters and HD Radio Alliance, to promote terrestrial radio. This spring the three groups also launched “Radio Heard Here,” a new campaign designed to pump up the volume on radio's digital presence.
The U.S. now has more than 1,600 HD radio stations, according to iBiquity, which develops and licenses HD radio technology, or digital radio. Ten of the nation's largest radio broadcasters have committed $230 million this year to educate listeners about HD radio. The alliance members have already spent $480 million on this effort.
The RAB also recently named John Potter, previously VP-educational services, to the newly created position of VP-interactive revenue development. Potter's marching orders: Develop resources to help radio stations sell advertising against interactive content.
Haley said that rather than being a hindrance, the Web benefits radio by providing another stream for programming and offering media buyers more integrated marketing packages. He said satellite radio devotes just a “small piece” of its programming to advertising.
That may change in light of the U.S. Justice Department's decision in March to approve the merger of satellite radio companies XM and Sirius. The deal still needs approval from the Federal Communications Commission. XM and Sirius combined would have roughly 17 million subscribers. Both Sirius and XM carry Bloomberg Radio and CNBC.
“We anticipate more b-to-b dollars as we expand opportunities on our platform and build out Web extensions, podcasting, promotions and business seminars,” said D. Scott Karnedy, senior VP-sales and marketing solutions for XM Radio. “We're appealing to companies not looking to run the typical 30-second and 60-second radio spots and [who] want to engage with decision-makers through targeted information.”
Jim Doyle, a senior analyst at research company CL King & Associates, said that ultimately there may not be much competition for ad dollars between satellite radio and terrestrial radio.
“Although satellite radio and Internet radio have become larger, indirect competitors for terrestrial radio's audience, in which 80% of its ad revenue is local. [satellite radio's] forms of audio are national in scope and [attract] a much smaller audience,” he said. “An auto dealer in Dubuque or a b-to-b company in Dallas would have considerable ad waste using those national services versus local terrestrial radio with local-interest programming and popular, local, on-air talent.”