US Radio Advertising Update And Forecast

National revenues were up 8% in the first eight months of 2003 but local advertising accounts for around three-quarters of a station’s advertising income and growth in this area has been subdued at just 1%. However, following the late summer lull, the market is expected to pick up over the next few months.

“Radio continues to work its way through the erratic economy,” said Gary Fries, president and chief executive of the RAB. “While business is being placed very close to the start time, it appears that September will be a positive month and the remainder of the fourth quarter continues to strengthen.”

Longer-term index To put the intermediate and long-term growth of the US radio industry into perspective, the RAB compares figures to sales in a base year – 1998 – which is indexed to 100.

The local sales index for August was 127.2, the national was 127.9 and the combined local and national was 124.4. In the year-to-date, the local index was 134.5, the national was 143.3 and the combined was 136.4.

Analysts’ outlook The weakness of the local advertising market has prompted Merrill Lynch to cut its 2003 spot radio growth forecast from 2.8% to 2.5%, impacting on the market as a whole (see Forecasts). Apparently businesses are witholding advertising budgets until concrete of evidence of a local economic recovery is forthcoming.

Merrill agrees that September is looking better than August but radio advertising is cycling against “very difficult” national comparisons in the fourth quarter and without a pick-up in local, overall growth could soften until H1 2004.

Analysts are more optimistic about 2004 when the economic recovery should kick start growth in local advertising.