How can broadcast radio hold onto advertiser money? A new Borrell Associates survey suggests the answer lies online. It said that rather than cut audio advertising form their media plans, ad buyers want to place it digitally. That means tens of millions of additional ad dollars flowing into streaming audio and podcasting. And that is where broadcasters should focus some attention in order to capitalize on that shift.
Borrell’s survey of local advertisers finds local businesses plan to shift $156.2 million into digital audio in 2021. The dollars will largely come from the over-the-air radio budget. Borrell said it is not as simple as a dollar-for-dollar exchange, but it is close to the $179.2 million that buyers surveyed said they expect to cut out of their radio budgets in the year to come.
The numbers provide fresh validation to the digital investments that radio groups are making, even in a belt-tightening time like 2020. They also don’t have to wait until the New Year to see the results. iHeartMedia reported its podcast revenue grew 103% during the second quarter, compared to a year ago, making it by far the segment of the business that did the best during a period that was impacted by the coronavirus pandemic. “That shows no signs of slowing down,” COO/CFO Rich Bressler told an investor conference this month.
Bob Pittman, iHeart’s CEO, called podcasting “a tremendous growth area” that is attracting premium pricing. “It’s something advertisers want and come to us looking for,” he said.
Entercom, the parent of Cadence13 and Pineapple Street Studios, is also investing in podcasting and streaming radio. It reported its digital revenue grew 19% during the second quarter, despite the impact of the pandemic. “We’re going to continue to grow and capitalize on our position as a podcast publisher and are open to taking a broad mindset in terms of what is going to be the best opportunities for us to capitalize on this space, working across platforms with other players,” CEO David Field said.
That analog-to-digital shift isn’t unique to radio either. In fact, Borrell said it is even more pronounced for television. Streaming video and over-the-top (OTT) service ad budgets are projected to increase $1.4 billion in 2021 while broadcast TV’s allocation will shrink $1.1 billion, meaning digital will be a net positive for the video segment.
The Borrell survey is the first data release from its annual Local Advertiser Survey. The 2020 survey was fielded this year from August to October and included input from thousands of local marketers. Borrell said it plans to release topline data each week through the end of November.