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Friday, November 21, 2014

Expect 2015 To Be Flat


Wells Fargo analyst Marci Ryvicker has been forecasting for about a year now that until radio proves her wrong, it's going to be a flat industry. Ryvicker was not at Forecast Wednesday but other analysts and economic experts were, and they all echo Ryvicker's prediction. Radio will have a no-growth year in 2015. And for an industry that's been around for over 90 years, and is not the shiny new toy, maybe that's OK for now.

Forecasters who ran the 2015 economic numbers for radio expect the industry to be flat to down. Despite what appears to be a growing economy heading into 2015, most predictions and forecasts are for zero growth for radio. The radio industry currently takes in about $16 billion per year in advertising revenue, and that number has not moved up at all for years. At its peak, the figure was over $20 billion. On the bright side, everyone is predicting radio's digital revenue will continue to grow.

The digital expectations for growth in 2015 are in the double digits. But with that piece of the radio revenue total still being small, it's not enough to grow the industry in any significant way at this time. One economist said, "Digital audio is growing and that will spur interest in young people coming into radio. It will help stabilize radio as opposed to newspaper." One panelist mentioned, not too long ago, a Ford truck ad in the Wall Street Journal cost $300,000. That revenue is gone for the pape,r and, while the Wall Street Journal is now into radio, podcasting, and other types of media, that $300,000 ad cannot be replaced with a similar ad on any of those digital products.

Another interesting point brought out was how Ford has started to mandate that 25 percent of its co-op must be spent on digital. Where is that money going to come from? How will that affect radio? And will the other automakers follow Ford? Another very interesting point that was repeatedly mentioned at Forecast was that nobody has been able to answer the question of whether digital is working for advertisers. The only answer given was, "We don?t know."

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