As major brands and ad agency giants pledge to increase their spending on Black-owned media outlets, Urban One stands to “benefit greatly” from the trend, CEO Alfred Liggins said Wednesday. “There is a very positive ad climate for African American-owned media companies,” he told analysts and investors during the company’s quarterly earnings call. Procter & Gamble and General Motors have publicly announced plans to up their diverse-owned media investments while agency holding companies GroupM and IPG Mediabrands have made similar commitments, as Inside Radio has reported.
“These are tailwinds that started in the aftermath of the protests over the George Floyd murder and the Black Lives Matter movement of last year,” Liggins explained. Since then he has fielded queries as to whether the pledges were a one-time thing or sustainable in the long-term. “All signs are pointing to continued momentum, larger commitments and a real desire to create a more equitable playing field as it pertains to media investments,” Liggins said.
Earlier this week GroupM formed the Media Inclusion Initiative, an integrated investment strategy to support and grow diverse-owned media companies and creators. The program includes a 2+% Pledge in which the agency group invites clients to invest at least two percent of their total annual media budgets in Black-owned media. IPG Mediabrands, home to such agencies as Magna, Initiative and Orion, committed to invest at least 5% of its ad budget in Black-owned media across all its clients by 2023. General Motors promised to increase spend with Black-owned media to 2% in 2021, 4% in 2022 and 8% by 2025 as part of what Global Chief Marketing Officer Deborah Wahl called “a transformation plan which is focused on driving economic empowerment and supporting a sustainable diverse owned media ecosystem.”
Liggins said he has been involved in “high level conversations” with agencies and corporations about their efforts. “I’m well aware of the intent and the commitment they’re laying out,” he continued. “It all starts at the top when the CEOs decided that this is a commitment they want to make to multicultural media and diverse-owned media and that’s a big statement.”
During the Q&A portion of the investor call, an analyst asked what the financial impact might be. Liggins said he wasn’t able to quantify the amount since it depends on how many agency clients participate and the sum total spend that the percentage targets are based on, which hasn’t been revealed. “It continues to be helpful. People are continuing to make commitments and that’s only good news for us,” he said.
‘Significant Rebound Activity’
Urban One reported a 3.6% decrease in revenue to $94.1 million in first quarter 2021, compared to $94.9 million in Q1 2020. Radio revenues fell 20.4% while core radio ad sales dropped 13.7% to around $33 million as trends improved sequentially each month during the quarter. Core radio billings in January were down 28.4% and February fell 19.9% before the trend turned positive with an 8.8% increase in March.
Liggins said he was “pretty happy” with the performance and is “very optimistic” about the rest of 2021 with “significant rebound activity” for second quarter in its radio division. Q2 is currently pacing up 70% over COVID-addled Q2 2020. Liggins said he expects ad bookings will continue to come in late and that the improvement pace will start to slow as the ad market normalizes. “You are seeing a robust economy, especially in our national facing businesses,” he said. Demand at Reach Media is so strong that the syndication unit is dealing with inventory problems and sell-outs, which are naturally causing rates to rise. Demand for digital advertising is also up. While local radio isn’t as robust, it is “absolutely improving,” he said.
CFO Peter Thompson said April radio revenues finished up 89%, May is pacing up 75% and June is +49%. “If I were calling it now I’d say mid-70s,” Thompson said when asked what the year-over-year percentage increase in revenues would be in Q2. Urban One said its radio target for full year 2021 is to come in somewhere between 2019 and 2020 levels.