2004 Radio Recovery To Be ‘Back-End Loaded’, Says Merrill Lynch
Despite having recently cut its 2003 radio advertising growth forecast, Merrill Lynch is confident that the the next twelve months will bring strong growth with revenues expected to increase by more than 8%.
Analysts are wont to conclude that the advertising slowdown of recent years has been more cyclical than secular in nature. With this in mind, Merrill is positive that strong growth of 8.1% remains a realistic possibility this year.
Researchers arrived at this figure by evaluating compund annual growth over the last five years to normalise for the dot.com bubble burst, the economic downturn of 2000, terrorist attacks in 2001 and the 2003 Iraqi war. The 2004 monthly spot radio revenue growth estimates result in 5.5% growth over the six-year period.
Merrill claims that the radio recovery will be “back-end loaded” (ie significant gains will occur towards the end of the year). Reasons given for this are: (i) Local advertisers are awaiting confirmation of an economic upturn; (ii) Year-on-year comparisons are easier after February 2004; (iii) Demand will peak in advance of the political spending deadline 60 days prior to the presidential election in November.
Although there are doubters, Merrill analysts feel that 8% growth is achievable and base their projections on encouraging economic indicators and improving radio pacing trends.
| US Radio Ad Revenue Growth Forecasts 2004 | |
| Month | Growth (%) |
| January | 2.0 |
| February | 3.0 |
| March | 9.0 |
| April | 7.0 |
| May | 6.8 |
| June | 7.0 |
| July | 4.0 |
| August | 10.1 |
| September | 11.0 |
| October | 11.0 |
| November | 14.0 |
| December | 9.0 |
| Full Year | 8.1 |
| Source: Merrill Lynch, January 2004 | |
