Seeking Alpha
Profile| Send Message| ()  

Off-Air (non-spot) revenue has surpassed last year’s midyear forecast by the Radio Advertising Bureau [RAB], and is expected to approach $2B by the end of 2008 - nearly a full year ahead of the projected timeline, the RAB reported.

At 9% of radio’s total revenue, off-air is composed primarily of online activity, followed closely by experiential marketing partnerships. Off-air revenues in the first half of 2008 were up 12% from the year-earlier period - the only sector other than network (up 3%) to record gains:

click to enlarge

The greatest revenue decrease was for national (-11%), while overall radio revenues in the first half of the year were down 5%.

Exceeding expectations that were based on a compound annual growth rate [CAGR] of 10% from June 2005 to June 2007, off-air activity surged in late 2007 and has been increasing at a CAGR of 12.3% over the past two years.

click to enlarge

Jeff Haley, president and CEO of RAB noted:

Radio’s off-air platforms are realizing prosperity similar to that of other alternative forms of advertising. The industry’s investment in new technology and digital distribution channels has extended Radio to the Internet, mobile phones, navigation systems, and more. Combined with an enhanced on-air product and on-site experiential marketing, the result is a 360-degree experience for consumers with multiple touch point opportunities for advertisers.

Advertising: Leading Growth Categories

In the local and national sectors, radio’s Q2 and year-to-date revenue data revealed several well-performing areas even as total media spending cutbacks in key categories affected radio’s bottom line.

click to enlarge

  • Insurance advertisers increased spending an impressive 21.6% in the first half.
  • Professional-services spending also grew significantly, up 18.3%.
  • The department/discount stores/shopping centers category increased ad expenditures 10.2%, while the beverage category had a 7.6% increase.
  • Traditional top-spending industries hard hit by the economy include automotive, financial services, home furnishings/floor coverings, and home improvement stores.
  • The communications/cellular/utilities sector has been slowed down by market saturation (90%+ penetration), and customers not as willing to trade up to new equipment.
  • Residual fallout from the writers’ strike curtailed spending by TV networks/cable providers spending.

About the RAB report (pdf file): Local, National, and Off-Air revenues are based on a pool of more than 100 markets as reported by the accounting firm of Miller, Kaplan, Arase & Co. and extrapolated to the entire U.S. The methodology to derive the 2007 local, national, and Off-Air (non-spot) quarterly dollar amounts has been recalibrated and maintains previously reported quarterly total revenue while reflecting a shift in the dollars within the sectors. Network Revenue includes the top five Radio network companies. Non-Spot data has been collected and verified since January of 2002, and reported since September of 2004.

Source: Radio Industry: Off-Air Revenue Soars, Despite Overall Slump