A Changing Business Landscape Means A Changing Ad Landscape — And New Opportunities For Radio.
A recent report by The New York Times focuses on the revival of guitar sales, a space that in recent years has seen its share of economic pain. And when the COVID-19 pandemic hit in March — and manufacturing facilities began to close — it seemed only logical that the industry’s fortunes were about to go from bad to worse.
But then something happened: People who were stuck sheltering in place decided they’d like to learn to play. Sales took off, factories eventually reopened, and suddenly business was booming.
“I would never have predicted that we would be looking at having a record year,” Andy Mooney, the CEO of Fender Musical Instruments Corporation, told the newspaper. “We’ve broken so many records. It will be the biggest year of sales volume in Fender history, record days of double-digit growth, e-commerce sales and beginner gear sales.”
The bicycle industry has experienced a similar twist of fate, although its sales began surging almost immediately when shelter-at-home orders took effect in the spring and consumers began identifying socially-distant ways to exercise.
While musical instruments and bicycle retailers aren’t among the ranks of radio’s top advertisers, the rags-to-riches story is one that’s echoing across many segments of the U.S. economy.
“As the pandemic continues its course through the economy and our daily lives, both have changed dramatically,” says Rick Ducey, the Managing Director of BIA Advisory Services. “On the economy side, businesses have been impacted by imposed closures, restricted operations, and swiftly changing consumer demand as shopping patterns adapted to new realities. In terms of our daily lives, with travel restrictions, social distancing, and more at-home time for work and personal time, we have evolved new media, shopping, and leisure time attitudes, preferences and behaviors.”
Of course, not every category has seen a tragic-to-magic evolution. Several categories were hot from the outset of the pandemic, and they still are.
Among the enduring consumer behaviors, according to Ducey: More time with hobbies (sales of puzzles were surging back in April); cooking (think meal kits and at-home gourmet meals as the restaurant industry takes a beating); and upgrading the Working From Home (WFH) infrastructure — which, despite slowing Q3 sales, was a bonanza for Best Buy in Q2.
There has also been a shortage of laptop computers, exacerbated by the fact that millions of U.S. schoolchildren are now studying at home as their parents work.
Ducey also noted sustained growth in the home & garden space, which Inside Radio reported last month with Home Depot’s blowout second quarter.
Corey Elliott, Executive Vice President of Local Market Intelligence at Borrell Associates, says the overall spending outlook at the local level for traditional radio shows a decline of about 25% this year compared with 2019. That result, Elliott said, is driven by the struggles of eating and drinking establishments (down 27%) and auto dealers (down 28%).
“The best news — if you can call it that — is that HVAC installation/repair is down only 14% and colleges/universities are down 17%,” he says.
New Business Opportunities
Despite the rocky economic terrain, there might be an opening for radio, Elliott says. Borrell’s latest survey of small- and medium-size local businesses, conducted in August, asked the following open-ended question: “What’s on your mind related to advertising/marketing right now?”
“Budget/cost” was the No. 1 answer at 19%, but right behind at 17% was “new methods of advertising.”
“I wonder how many media companies out there are putting efforts into finding new business,” Elliott said. “It is easy — and correct — to make sure your long-term clients are taken care of and that they tell their stories, but this seems to indicate that there are local businesses out there that would entertain a different approach. Now’s the time to help.”
Ducey said brands need to be flexible about how they advertise because algorithmically personalized shopping optimizations presented in online experiences expose consumers to fewer SKUs — and enhance the likelihood that they’ll embrace recommended choices.
“For media, generally we’re seeing more impressions in monetizable inventory,” he said. “For radio, in a WFH world, of course drive-time means something entirely different and is down. But podcasting is on a steep incline. Many of these consumer behaviors will outlast the pandemic and mean a new and lasting reality for media and advertisers.
“It’s a brave new world with more technologically savvy, adaptive and sophisticated consumers using new tools and approaches to managing their basic lives. It’s time to rethink what consumers are all about.”