As Ad Recovery Continues, Industry Focuses On Keeping Radio Relevant During Unprecedented Disruption
As 2022 moves off the starting blocks, broadcasters are optimistic about the ongoing advertising recovery and the growing importance of audio to marketers in a world where many consumers look to free their eyeballs from screens and discover new content to fill their ears. In the first part of Inside Radio’s four-part Radio Outlook 2022 series, industry leaders unpack the business trends they see having the greatest impact on the audio universe in the year ahead.
With continued digital growth, an explosion in the sports betting and recruitment categories, live events slowly returning, and an influx of political dollars expected later in the year, broadcast executives see a strong year ahead. “I think that 2022 is bound to be a great year for radio,” says Ginny Morris, CEO at Hubbard Radio. “2021 got us much closer to 2019 billing levels and we hope to complete that journey in 2022.”
Getting back to pre-COVID revenues remains the Holy Grail this year, building on the sequential revenue growth of 2021 while keeping a keen eye on operating expenses. “We are approaching 2022 with optimism and we expect the recovery to continue,” says veteran audio ad exec Brian Benedik, who joined Audacy on Dec. 1, 2021 as Chief Revenue Officer. “While we have COVID-related issues to navigate, our portfolio of assets is diverse, and we see our partners leaning into us – and audio for that matter – in many ways.”
According to BIA’s updated 2022 local ad forecast, total radio revenues will climb to $13.54 billion this year, up 5.9% from $12.79 billion in 2021. That follows 16.0% growth in 2021 from the pandemic era low of $11.03 billion in 2020. While that adds up to a $2.5 billion recovery of lost revenue over two years, it will still fall short of the $14.16 billion radio did in pre-pandemic 2019.
To keep 2021’s upward trajectory going, broadcasters are finding the handful of big ad categories that floated their boat in the past can no longer get the job done on their own. Automotive, still reeling from supply chain disruptions and labor shortages, has cut spending dramatically, while blooming categories like sports betting and recruitment have picked up some of the slack.
“One of radio’s most significant growth categories in 2021, sportsbook advertising, will continue in 2022 as more states legalize online gambling,” says Christine Travaglini, President of rep firm Katz Radio Group. “Big brands understand that they need advertising to attract new customers and hold onto existing customers in a very competitive space. Their initial goals focus on getting consumers to download their app, which is currently how they determine their ROI.”
Other verticals to watch in 2022, industry leaders say, include recruitment, entertainment and events, home improvement, real estate, travel, financial, tech and telecom, healthcare, and the service industry.
While broadcasters expect their auto business to slowly bounce back in 2022, the consensus is the category won’t fully rebound until 2023. “We expect a full auto-recovery will not occur in 2022 but will improve and be stronger in the back half of 2022, with a full recovery anticipated in 2023,” says Travaglini. David Santrella, who advanced to CEO of Salem Media Group on Jan. 1, says auto dealers that stuck it out and kept marketing during the shutdowns have remained strong and will continue to be aggressive. “The real question mark is the dealers who sat it out during the shortage. Will they roar back or be cautious with their spending? Most are playing it close to the vest regarding 2022,” says Santrella.
Political is another 2022 wildcard. Broadcasters agree it will be robust and likely break records for a midterm election year. But which races will produce the biggest windfalls? “The midterms are bound to be very active but it’s too early to know which races will garner large volumes of dollars,” says Hubbard’s Morris. “I do believe that our industry is well positioned to do well in the tightest of races.” Audacy, too, is preparing for a spike in political ad sales, says Benedik. “There are clearly some big races upcoming in the 2022 midterms at the local, state and national level and we expect a record spend across OTA and digital channels,” he says.
Caution: Obstacles Ahead
While there is strong momentum in radio’s ad recovery, industry leaders are also focusing on initiatives that will keep the medium relevant during a time of unprecedented media disruption. “The ever-evolving dashboard will continue to be a challenge for our industry and we need to continue to make sure we look as good as we sound,” says Morris.
Benedik anticipates heightened focus on making audio content experiences more personalized. “With more control comes more user engagement,” he says.
On the sales front, Santrella sees new technologies, like automated prospecting and client communication, being used hand-in-hand with human-performed tasks, like customer care, problem solving and innovating. “It’s important to find the right balance between these two to provide your employees with workplace benefits comparable to competitors while still providing an environment where competition and innovation rule the day,” he says.
With “screen-free media” one of the hottest trends in advertising, Travaglini says marketers who shift budgets to audio will “see the value of audio’s reach, scale, and efficiencies – and the fact that radio delivers incremental reach and fuels the effectiveness of other media.” Audio also stands to gain as advertisers look for alternative ways to target as tracking cookies are phased out. “Audio provides unique contextual targeting strengths, allowing advertisers to target audiences in specific contexts and is a powerful and highly effective tool,” she says.