Local radio digital revenue grew by a third last year as the ad market sprung back and broadcasters embraced their high-tech future. The Radio Advertising Bureau says local radio digital revenue totaled $1.5 billion, while the RAB’s 10th annual benchmarking report says digital sales are expected to grow another 22% this year, which would put local radio’s digital revenue at nearly $2 billion.
“What a remarkable year for digital sales,” the report says, pointing out that last year’s tally was not only an increase year-to-year but also a 50% gain on pre-pandemic levels. By year’s end, local digital sales represented 15.7% of total ad revenue, according to information collected for the RAB by Borrell Associates.
“We predicted that radio would hit a double by increasing sales 18%. They hit a triple – maybe even a home run,” said Gordon Borrell, CEO of Borrell Associates. “It’s quite impressive, especially when you see that little stat that shows how digitally-savvy radio sales reps are in the eyes of local advertisers.”
The annual report showed that the average station made $36,250 in digital revenue in 2021, and the average market cluster pulled in $1,642,931. But some did much better: top-performing market clusters made more than $10 million, even in some of the smaller markets.
“Years of honing strategies and sales training paid off in another way as well,” the report says. “Of all local media competitors, none possessed higher rankings than radio sales reps among 2,811 advertisers surveyed in 2021.” The data shows advertisers also rate radio sellers on par with or higher than competitors for digital expertise.
The numbers point to “another bountiful year” for digital sales, according to Borrell. In addition to the 22% projected growth rate, it also says digital is on track to make up 20% of total local advertising revenue in the coming year or two. “The radio industry seems to have finally found its digital mojo,” the report says.
Determination is one factor, but another is confidence in the product, and the survey of radio managers finds there is more of that. A quarter of station managers said they believe their digital strategies are “brilliant.” That is more than twice as many than felt that way a year ago. And they are no longer calling for more and better digital products to help them meet their digital budgets. Instead, radio managers are pushing to hire more digital-only sales reps. That is no surprise, since twice as many stations as last year say online-only reps are the best way to drive more sales, but managers also want to increase digital training for their existing sales teams.
“The findings from this report highlight the rewarded efforts of stations’ digital offerings to drive results for local advertisers,” said RAB President Erica Farber. “The focus on the importance of digital training has produced dividends for stations and sellers alike. RAB continues to provide business and professional development training that will help stations to super-serve their local businesses.”
The annual benchmarking report also offers some guidance for areas that could be improved in order to grow local radio’s revenue further. Despite impressive growth, it says the radio industry still captures a relatively small share of in-market digital sales revenue available to local media companies. In fact, 82% of radio advertisers buy digital advertising, but only 46% buy it from their radio rep.
Not all stations are fully tapping into podcast revenue, either. While 44% of stations have a local podcast, only 20% have one that produces revenue, according to the report.
Virtual events, an idea that was born of pandemic closures, may be falling by the wayside as in-person makes its comeback. The RAB says only 13% of stations surveyed said they are planning virtual events this year.
The 47-page analysis, which covers the activity of more than 3,000 radio stations, was compiled by Borrell Associates and is sponsored by Marketron. It leverages Borrell's database of ad revenue and expenses for more than 11,000 local online operations in the U.S. and Canada, including 3,645 local radio stations. It also tapped into a survey of 1,107 local radio advertisers. Borrell also conducted an online survey of 256 radio managers representing approximately 2,900 stations in December and January.
“The local radio salesperson is now the marketing expert in their community by bringing linear and digital solutions to advertisers that produce real, measurable results,” said Marketron Senior VP Todd Kalman. “In this report, you’ll find data and insights that position radio and digital together for new advertising opportunities in 2022.”
The 47-page report is being made available to RAB members. The trade group is also hosting a webinar on Wednesday, Feb. 16 detailing more of its findings. RAB members and survey participants can register for free here.