Contributors: Todd Kalman, SVP sales, Marketron, and Beth Osborne, director, marketing and content, Marketron
Now in its 12th year, the Borrell-RAB digital benchmarking for radio delivered intelligence and learnings for the local media sales industry. One of the most exciting revelations was that radio digital revenue increased by 6.8%, besting the overall market of 5.4%. Additionally, 21% of all radio station ad revenue is now in the digital bucket. We’re eager to dive deep into the findings to deliver analysis for the year ahead.
Radio Digital Dollars Projected to Hit $2B
Last year’s report forecast that 2023 would be the $2 billion year. It didn’t quite hit this mark, coming in at $1.9 billion. Saturation in the market and sellers still gaining the skills and confidence to sell digital were drivers. However, this small gap shouldn’t overshadow how far the local media industry has come. Some were skeptical about this projection, but the data in the report proves that the finish line of $2 billion is well within reach.
Radio Buyers Plan to Increase Spending, But Most Are Still Not Buying from Radio
Radio buyers’ opinions, motivations and needs are a defining section of the study. Most (70%) stated that they plan to increase digital ad spending in 2024, and 96% will continue to purchase radio spots.
Of the tactics that are the paving stones to growth, OTT and CTV are rapidly increasing. This sentiment holds true for the overall picture of local ad spend, where it’s the fastest-growing tactic. The study found that radio buyers are 3.5 times more likely to invest in streaming ads.
In addition to OTT/CTV, tactics driving spend include social media, paid search, display/programmatic, streaming audio and email marketing.
What remains a challenge is that 55% of radio advertisers aren’t buying digital from radio stations. The report offers a perspective on who these nonbuyers are and suggests that the trackability of campaign metrics and targeting capabilities are most important in swaying their decisions. For local media sales teams, this means having a third-party digital solution with transparent and detailed reporting and advanced targeting options that they can share with their advertisers to strengthen confidence in their digital offerings alongside linear spots.
How Station Managers View Their Digital Journey
The report also includes responses from station managers, revealing more insights. This group is optimistic, with 71% feeling positive about their digital strategy and 70% seeing digital revenue upticks in 2023.
They are also rethinking how they fuel growth. In this year’s findings, station managers prioritized hiring digital-only sellers as having the biggest potential impact. However, they still value regular training for all salespeople, and 48% conduct it weekly.
This trend in sales team makeup has been on the industry’s mind for some time. Finding the right balance and complementary skill sets in a sales department ensures that all sellers have the support they need. Digital advertising is an ever-changing environment, and many big changes are ahead, from the deprecation of third-party cookies to the infusion of cash into local markets related to the 2024 election.
Some Stations Have Dropped Digital
A surprising find from the survey is that only 77% of stations responding sell digital, down from 86% last year. In a year where every local advertising forecast shows significant increases, why would some stations shrink their portfolio? Local media companies sometimes get frustrated with ineffective technology and overcoming fierce competition. It doesn’t mean their digital story should be over.
If you’re in this group or considering joining it, take the time to go back to the keys to success — commitment from the top down, specialized and continuous training for sellers and the right technology to make the process simple and streamlined. We’ve seen many stations go from thinking digital wasn’t going to work to bringing in six- and seven-digit revenue from its sales.
Even if you’re in a smaller market, there is still much opportunity! In fact, the report noted that small stations had the highest digital revenue increases in 2023, at 10.6%!
Closing Thoughts on the Future of Digital and Radio
The digital market for radio is expanding, not contracting. The ability to package linear and digital into one campaign is a crucial differentiator. So is your market knowledge and local expertise. When you drive a strategy with these things in mind, the future of advertising sales isn’t in silos — it’s integrated and omnichannel. That’s the way advertisers see the best results, and you increase your share of wallet.
RAB members can view the entire report here.