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Second Half Outlook: September Surge Expected In Multiple Categories.


With the second half now underway, broadcasters expect to see the ad recovery continue, though not at the robust pace experienced during the first half. Radio’s category mix is changing with the seasons and there is newfound optimism about the potential from a promising new category that may be on the horizon.


The macro-economic challenges the country is facing – record high inflation, increased interest rates – are causing financial headwinds, broadcasters say. “National business continues to break later, but we also do see our Q3 pipeline activity picking up,” says Christine Travaglini, President of Katz Radio Group. “August and September are pacing stronger than July.”


“The pace of business in H2 is positive but not as robust as H1,” says Beasley Media Group Chief Revenue Officer Tina Murley. “We do anticipate the pace to improve dramatically as we get closer to the general election.”


Murley and other radio execs also foresee a surge in ad revenue from sports betting and automotive to accompany the arrival of the NFL season in the fall, which will help radio sustain double-digit year-over-year growth.


Galaxy Media Group CEO Ed Levine says there has been “a noticeable slowdown” in third quarter pacing. Still, revenue remains ahead of last year after what Levine calls “an outstanding” first half. “July and August will be tough months that we are going to have to grind through,” Levine says.


Reshuffling Top Categories


While the recovery continues, the growth is coming from different sectors. In the first half it was concerts, festivals, events, home services, and medical that drove double-digit growth while foreign automotive, insurance, and wireless lagged behind, says Murley. “Growth in the second half of the year will come from political, automotive, medical, home improvement and legal.”


At Katz, which reps more than 4,000 radio stations, communications has already returned to the top-billing category, pacing up 26% in Q3. “Retail holds a solid second place, while healthcare continues to show growth and dining is also strong,” Travaglini says. “We anticipate entertainment and travel to improve with movie releases and vacation plans for summer spend.”


At Beasley, a pullback by large national insurance companies caused “local and regional independent insurance companies to increase market share,” Murley notes.


Countdown To Kickoff


Deep-pocketed sports books have been a boon to local radio in the past year. BIA Advisory Services forecasts $150 million will be spent by online gambling services on radio in 2022. Since sports gambling companies reserve their biggest ad allocations for the NFL season, station operators in the more than 30 states that have legalized sports wagering are eyeing a fall windfall. Levine says it has been “a tremendous boost to our first half revenue” with much more to come when football season arrives in September.


Central to radio’s ongoing pandemic recovery has been tapping into emerging and returning ad categories. At Katz, for example, “72% of our top 50 advertisers were spending more or new vs. 2021 – and we had over 1,100 advertisers – of which over 500 were not active a year ago,” says Travaglini.


Signs Of Auto Recovery


That’s helping to offset some of the lost revenue from the struggling auto industry. But Beasley is already seeing signs of a recovery. For second half, domestic auto is one of its biggest performers and foreign auto, while “still depressed,” is on track “to begin rebounding in late Q3/early Q4.” But auto still has “a long way to go to get back to 2019 levels. Murley says she expects auto spending to surpass 2021 levels by the end of 2022 and continue to rebound into 2023.


And there is another potentially massive category looming. An appropriations bill moving through Congress would prevent the FCC from taking administrative action against broadcasters that accept cannabis ads in states where it is legal. Since New York became the 15th state to legalize cannabis in March 2021, Galaxy stations “have dabbled on the edges” Levine says, driving listeners with generic messaging to its unregulated Twitch sites where it can promote local dispensaries. “This test has me convinced that we are looking at a new top ten category once the rules for cannabis become clear,” Levine says.


Political Aspirations


Meanwhile, with over 15 primaries before Labor Day, Travaglini believes political will be “very strong” in the second half. Thanks to an always-on political cycle, Levine says the category has become a bigger factor every year. “Down ballot races are more competitive and heated than ever before and that’s where we look to fish,” he says.


Murley also expects political will be a major factor. “Some of our markets have already surpassed the political forecast with much more to come. We expect this year’s mid-term election to more than eclipse 2018’s,” she says.

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