Gene, thank you for publishing the story about the positive prospects for Radio ("For hurting radio, a glimmer of light" from today's MediaLife.com). I couldn't agree more. However (you knew there was a however coming), I disagree that it has been a dismal decade. During this decade Radio in Los Angeles(which usually reflects how the country fares) nearly doubled its revenue highs from the previous decade. We hit $1 billion four years ago, and stayed there until this this year. Seven of the last ten years posted positive gains, three of them double digit.

We expanded our brands onto the internet, bringing us a new revenue stream with huge potential upside. Remember our content translates to the internet without compromise. Every computer or wireless device is essentially also a radio. And then we have websites and the ability to build databases, and use all the developing revenue-related applications and devices that come with wireless access.

There are good reasons why 90%+ of the people continue to use radio every week, many driven by our unique content, which creates an emotional bond between the station brand and the listener.

Yes, Radio has a bright future.  Thank you for recognizing that.

Best regards,
Mary Beth

Radio has been hurting for years. The question is, how much longer?

Radio ad spending stagnated for much of this decade as some other media types soared, then tanked last year, according to new data from Radio Advertising Bureau, falling by 9 percent from 2007.

Forecasters are projecting a dismal 2009.

Yet unlike other media such as newspapers, which may never recover, those forecasters generally think radio will see ad spending begin trending up again around 2011.

Recovery will be slow, though, and when it comes radio will be a changed industry with a far bigger online presence than it has today.

What radio has going for it is a huge and stable audience, with some 90 percent of Americans listening at some point each week, and it’s also inexpensive relative to television.

No less important, media buyers say radio works for advertisers, reaching their targets and driving sales.

What's hurt radio, particularly now as the economy sinks, is its longtime heavy reliance on major ad categories like automotive. As those categories have suffered, so has radio. But it's also facing new, aggressive competitors like local cable television and local internet.

“A lot of this is the economy,” says Jon Swallen, senior vice president of research at ad-tracking firm TNS Media Intelligence. TNS estimates radio spending for January through November 2008 was down nearly 11 percent from the same time in 2007.

“Core advertising categories for radio happen to be categories that have been most dramatically affected by the economy. As a result, they have significantly cut their advertising budgets.”

Moreover, key ad categories such as financial services, traditionally local enterprises, are consolidating into national behemoths, and as they do so they're shifting their ad spending from local to national media.

Making matters even worse for radio, that far smaller share of their ad base consisting of small, local businesses--maybe 10 percent of total advertising revenue--is also feeling the hurt of the economy. Some will go out of business, pulling ad spending from radio, and others will increasingly use new media to target local consumers.

Radio’s hurt has been severe and it will continue to be.

Advertisers in 2008 spent just over $18 billion on radio, down 7 percent, according to UBS Investment Research.

UBS is predicting spending will slump 9 percent this year and dip 2.1 percent in 2010.

“We estimate around an 8 percent or 8.5 percent decline in 2008,” says Mark Fratrik, vice president of BIA Advisory Services. “And then in 2009, we see around a 10 percent decrease and then a much lower decrease in 2010. Then we see it turning positive in 2011 and beyond.”

Forecaster Jack Myers expects spending to tumble 10 percent this year, to $17.7 billion, and 6 percent in 2010, to just under $17 billion.

“The core issue is the dramatic declines in auto dealer spending,” says Myers. “Budgets are not just being cut back, they are being concentrated, and radio isn’t a primary medium. Same for financial services, real estate, personnel and retail.”

Meanwhile, the radio industry is adapting to these harsh realities.

Many stations are cutting costs by laying off employees and replacing local on-air personalities with nationally syndicated programs.

Still, most of the nearly 12,000 stations in this country are expected to survive the recession, although mergers and sales are likely, says Fratrik.

And most stations are beefing up their online presence with original content, including articles, online-only programs and streaming video. This will represent an increasingly important source of ad revenue.

“They are improving their online, which should help them,” says Fratrik. “And radio remains relevant – a good number of people continue to listen to the radio.”

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Editor's note: "To me the interesting note in the story is that so many people listen to radio. Unlike network TV and newspapers, radio is not losing audience. Also, advertisers think it works. Who could ask for more?" Media Life Magazine editor, Gene Ely

Media Life is a daily online newsmagazine for media planners and buyers with stories on all forms of ad-supported media. www.medialifemagazine.com