Retail, Auto Increase Network Radio Use in First Quarter

RAB: But Local Spending Drops 6%, While National Down 11%

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NEW YORK ( -- The economic downturn of first-quarter 2008 proved to be more friend than foe to the struggling radio industry. Although overall ad revenue declined 5% year-over-year vs. first-quarter 2007 to $4.5 billion, spending from some of the most recession-stricken sectors was up significantly, according to a new revenue report from the Radio Advertising Bureau.

Network radio rose 7% to $274 million in the first quarter, thanks to major increases from retail (up 41.9%) and automotive (up 9.3%), according to TNS Media Intelligence data from the RAB report. Such major spikes are due to both categories' move toward more-efficient media buys in times of tightening marketing budgets.

Radio's better targeting
A scaleable, national radio buy is priced comparably to cable TV and offers greater ability to target ad messages to local markets than with most TV buys, Rex Conklin, media director of Wal-Mart Stores, said during a panel at the RAB Conference in February. "Particularly in a down economy, the advantages of radio are significant in that it's very local and very flexible, which is incredibly important, especially when you're talking about pricing," he said.

Also boosting their spending in local and national radio buys in the first quarter were insurance companies (up 24% to $170.1 million), professional services ($129.3 million) and beverages ($122.2 million), according to Miller, Kaplan, Arase & Co. data in the report. Political marketers added another $20 million to this quarter's tally.

Overall, local dipped 6% to $3.2 billion and national slid 11% to $649 million, as financial services and movie studios have decreased their radio spending.

Election offers hope
Still, that's an improvement from the last major economic recession of 2001, when local was down 4% and national decreased 19%, according to an April report from Wachovia radio analyst Marci Ryvicker. "Considering radio's fundamentals were much stronger during the last recession and a recovery did not occur until April of the following year, we don't expect there to be improvement in the sector's core business -- although we may see some lift in [the second quarter] due to political," Ms. Ryvicker wrote.

In a statement, Jeff Haley, president-CEO of the RAB, said, "Aggressive pursuit of brand extension opportunities, new programming formats and interactive on-demand experiences, maintains radio's relevance and provides advertisers a recession-resistant outlet to engage their consumers."
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