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Ad Buyer Interest Said To Be Helping Give A Fresh Push To Local Radio’s Podcast Efforts.

The combination of worldwide reach and early adoption among national advertisers, often direct response brands, has kept podcasting from becoming a primary focus as local radio stations look to grow their digital revenue. But as podcasting grows, along with advertiser interest, Gordon Borrell, CEO of the media consultancy Borrell Associates, thinks that could change in the years to come.

“I have a suspicion that podcasting at the local level will mushroom in the coming years. We are already seeing the early signs of it. The fertilizer is generative AI,” Borrell says. “Companies are already approaching SMBs directly with opportunities to create blogs about teeth whitening, when to replace a roof, whether it's a good idea to sell your life insurance policy, etc. They're already moving them into videos. Audio-only is slower to develop because it's not as alluring as video. But audio listening detached from traditional radio programming will evolve just like video is evolving away from TV programming to streamed programs. It just needs time to get to the local level.”

The Radio Advertising Bureau and Borrell Associates teamed up to release their annual assessment of broadcasters’ digital efforts. It shows radio’s digital revenue grew 6.8% in 2023, reaching $1.9 billion and stealing market share from other local media competitors. Yet while podcasting is a big deal for some companies – it represented 37% of iHeartMedia’s revenue last year – the report shows that streaming audio represented less than 15% of digital revenue. And that includes not only podcasts, but also radio station online streams.

“There isn't much in the way of local podcast shows outside of some of the sports podcasts related to national-league teams in those cities,” Borrell says. But two-thirds (68%) of stations sell “digital services” to local businesses, including audio productions, which is typically streaming audio commercial spots, but it also includes podcast marketing.

The survey, which was conducted among 200 local ad agencies and 1,900 local advertisers in October and November, shows eight percent of direct ad buyers said they planned to start buying streaming audio/podcasting commercials in 2024. But interest is significantly higher among ad agencies where 42% of agencies said they will put more attention on streaming audio this year.

“If radio sellers are interested in pushing more podcast advertising – or generally, ‘streaming audio’ commercials – they should look to agencies, not direct buyers,” Borrell says. He points out only four other media had higher interest scores for 2024, including social media, search, and OTT/online video. “After years of slow to no movement in the interest of SMBs in podcast commercials, it's growing again,” Borrell says. But he worries that it may grow without much involvement from local radio stations, drawing a comparison to TV stations when streaming video services stole away the digital TV viewers or online websites snatched up the newspaper industry's biggest revenue stream, classified advertising.

Radio’s Digital Revenue Growing Overall

The RAB/Borrell annual digital revenue benchmarking report predicts the radio industry will see double-digit growth rates in digital ad sales during 2024, pushing revenue past the $2 billion mark as nearly one of every five dollars radio bills this year will come from digital sales. And it says digital sales since the pandemic have helped restore overall growth to the radio industry, delivering a positive compound annual growth rate of 6.4% since 2020 when combining digital and core radio revenue.

“What’s most impressive is that radio came out fighting for digital dollars when the pandemic hit and hasn’t let up for a second,” Borrell said. “The fact that they’ve stolen market share from competing media for the past four years is remarkable. They’re not quite owning the digital space yet, but they are well on their way.”

Streaming audio and video are the low-hanging-fruit. The survey says one in five (21%) of radio buyers bought streaming audio in 2023, investing an average $19,446 in the medium. That number is forecast to jump to 29% this year, in what Borrell says is the “first significant” growth in streaming audio uptake on a local level. The data also shows that among the radio buyers that already buy streaming audio, 13% plan to increase their online budget this year.

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