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Digital radio revenues up; terrestrial way down

Radio Advertising BureauIf you are looking for the bright spot in radio’s future, it’s streaming from a digital platform. The Radio Advertising Bureau’s report for this year’s second fiscal quarter makes this abundantly clear. Local and national over-the-air radio saw a 25% drop in revenue, while digital saw a ten percent boost. Digital radio’s revenue from advertising has grown from $180 million in 2007 to $298 million this year. And the Bureau projects continued growth to $908 million in 2013.

That’s in comparison to over-the-air radio, which lost almost a quarter of a billion in revenue in Q2. The Bureau’s analysis tries to put a brave spin on this, comparing that drop to Q1, when terrestrial truly and spectacularly tanked, revenue wise, declining by over half a billion bucks. “We are most likely past the Q1 low point for Radio revenues and are now on the rebound,” declared Jeff Haley, RAB’s President and CEO.

But the contrast between digital and terrestrial is pretty hard to ignore. “Digital will be an increasingly important sector as Radio continues to evolve into a cross-platform medium,” the report flatly notes. It’s unclear, however, to what degree terrestrial radio will participate in this cross platformness.

Abandoned in large part by the automobile industry, its most faithful remaining advertisers are now cheapo restaurants and fast food joints like Arbys, Dunkin Donuts, Romano’s Macaroni Grill, and Subway. “Even while they’re tightening their belts, Americans still want to reward themselves with a restaurant meal,” the report notes.

Coming in second to this slender reed are advertisers whose products will,  ironically, cause  consumers to listen to less terrestrial radio. AT&T and Verizon are pushing cell phone services hard on radio, RAB says, albeit less than in better times.  “Offsetting cutbacks by the two titans, a number of smaller carriers stepped up their spending to help buoy the category in Q2: Qwest Communications (+57%), Leap Wireless (+44%), Boost Mobile (+34%), US Cellular (+26%), and Metro PCS (+19%).”

All this, of course, will help terrestrial radio listeners discover apps like Slacker, Pandora,, and who knows what else at an ever faster rate. It’s difficult to see how terrestrial radio is going to recover from this recession in any condition comparable to its recent past.

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