By the end of 2023, radio’s online revenue will have more than doubled in four years, growing from $1 billion in 2019 to a forecast of $2.1 billion in 2023. That’s the outlook from the Radio Advertising Bureau and Borrell Associates, which released their 11th annual digital benchmarking report Tuesday to RAB members. In 2022, radio’s digital sales clocked in at $1.8 billion for a 21.1% year-over-year increase. That means digital sales accounted for nearly one in five radio industry ad dollars.
Digital sales for radio are still heavily dependent on banner ads. Nearly two thirds of radio managers polled by Borrell for the RAB in December 2022 and January 2023 said it was their largest or second largest digital revenue driver. Streaming audio commercials were a distinct second with 23% indicating it was their largest or second largest digital revenue source.
But in something of a head-scratcher, video is quickly replacing streaming audio sales as the second-largest revenue driver with 21% putting it first or second in their hierarchy of digital billings. Video sales for radio are mostly in the form of re-selling OTT (over-the-top) video ad placements and providing video production services to local businesses, as radio continues to expand its menu of digital services beyond owned and operated digital assets. Roughly nine in ten radio stations (89%) are selling such video ad placements and services. And those not doing so said they planned to start this year.
“Digital continues to be the catalyst for growth in today’s environment. A solid foundation in digital is a key driver for today’s successful marketing professional,” said Erica Farber, RAB President and CEO. “As technology evolves, revenue and sales gains can only be obtained via digital services and training know-how.”
The annual report, sponsored by Marketron, showed that digital sales in 2022 comprised 19% of total ad revenue, representing between $85,064 for the average small-market station and $1.2 million for a station in a large market. For market clusters, averages ranged from $426,590 for the smallest markets to $4,967,440. About 3% of market clusters made more than $10 million in digital revenue.
Radio’s Digital Growth Trajectory
Since Borrell and the RAB began tracking digital revenues in 2013 it took six years to get to $1 billion. That milestone was achieved in 2019. Since then digital growth has accelerated, rising to $1.1 billion in 2020, before a COVID-triggered leap to $1.5 billion in 2021. Last year brought 20% growth to $1.8 billion with anticipated growth of 17% in 2023 to $2.1 billion.
Looked at another way, digital accounted for less than 4% of total radio industry revenue in 2013. By 2019 it shot up to 10%. This year it is forecast to represent 22%.
“It’s remarkable that the industry has grown digital revenue 80% in the past three years,” said Gordon Borrell, CEO of Borrell Associates. “If it hits $2 billion, as we’re forecasting, I think it marks the start of a new era where radio remains a solid core, but digital products become the industry’s most important growth engine.”
The report suggest there is still significant upside for the radio industry. Despite consistent double-digit growth rates, more than two-thirds of the average station’s radio customers are not yet buying digital advertising from that station. “What’s more remarkable is that businesses that purchase radio advertising are highly more likely than nonbuyers to purchase the types of digital products that stations sell,” the report says.
In 2022, digital revenue for eight publicly held radio companies averaged 13.3% of total ad revenue but represented 48.6% of top-line revenue growth.
Those who buy radio advertising are three times more likely to buy streaming audio and streaming video and nearly twice as likely as nonbuyers to purchase email sponsorships and banner advertising.
What will continue to spur the industry’s digital sales? While training remains the biggest need, one-third of managers now say that adding more digital-only sales reps is the key.
The data in “2022 Digital Sales Approach $2 Billion, Driving Half of Radio’s Growth” comes from a variety of sources including Borrell’s database of media ad revenue, local business ad expenditures, a survey of 851 radio ad buyers, and an online survey conducted in December 2022 and January 2023 of 169 respondents representing approximately 1,800 radio stations. This survey of radio managers asked about digital revenue sources, strategy, sales methods and other issues related to digital operations. Of the total respondents, 6% were owners, 58% were GMs or other senior-level executives, 28% were sales managers, 5% were sales reps and 2% were digital operations managers.
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