Radio is overshadowed on Madison Avenue by the higher visibility of TV and magazines. Yet U.S. radio ad sales will exceed $20 billion this year, making radio a bigger medium than network TV, cable TV or magazines. Radio companies, led by radio, outdoor and events powerhouse Clear Channel Communications, are in a stronger position than ever to serve advertisers with packages targeting specific audiences and regions.
The medium has its challenges, as our feature report today explains. Radio listeners have an array of alternatives, including satellite radio, digital cable audio and devices such as Apple's iPod. Advertisers have good reason to be wary of what happens to prices following a decade of radio consolidation that created an oligopoly of Clear Channel, Viacom's Infinity and a few other players.
While advertisers complain loudly about TV prices, note that Viacom keeps "only" 18¢ of every dollar of TV revenue (the operating profit from TV broadcast, local and syndication business in the first nine months of last year). Viacom made 7¢ on each revenue dollar from movies and other entertainment offerings, 12¢ on outdoor ads, a strong 39¢ from cable-and an astounding 47¢ from radio.
Advertisers should pay more attention to radio-to its power, potential and prices. But there is no denying that radio gets heard. Long after we've forgotten most of yesterday's Super Bowl commercials, a simple radio spot from Temerlin McClain will stick with us: Subarus go through snow.