Every indication in the ad game points to the perennially growing significance of digital. And radio is feeling the love as well; the industry’s digital ad revenue shot up 14% in 2016, continuing a multi-year, double-digit trend, according to a new report from BIA/Kelsey. Ad billings from radio’s online assets hit $811 million last year.Those assets include station apps, websites and social platforms.
The figure accounts for 6% of radio industry dollars, and while 6% represents only a small share of total industry billings, BIA senior VP and chief economist Mark Fratrik urges caution in ascribing the national number to individual companies. “There are a lot of companies who are much more active online and their share of company revenue attributable to digital is much higher,” he tellsInside Radio.
But in perhaps an even bigger indication of radio’s overall health, as digital continued to grow by leaps and bounds, over-the-air ad sales crept up 0.9% to roughly $14.1 billion. The increase was certainly modest, but it provides a psychological victory coming on the heels of three consecutive years of over-the-air revenue decreases ( -0.6% in 2013, -1.8% in 2014 and -1.6% in 2015, per BIA Kelsey).

The new radio financials are from the first-quarter edition of BIA/Kelsey’s 2017 Investing In Radio Market Report. The firm has been working to fill a void in radio’s annual revenue report card since the Radio Advertising Bureau completely stopped reporting industry revenues in 2016.
The outlook for 2017 looks similar, with over-the-air revenues expected to inch up 0.8% to total $14.9 billion, representing 10.5% of the $148.8 billion U.S. local advertising marketplace. Radio revenue from online assets is on track to climb 12% to $904 million.
Mirroring regional variations in the U.S. economy, the outlook is for slightly stronger growth in the Southwest and the West. “Where you have strong local economies, you can expect stronger growth in advertising revenue,” Fratrik says.
The combination of roughly 1% annual on-air growth with continued double-digital expansion in online ad sales are expected to cause radio to leapfrog past newspapers and become the fifth largest media category among local advertisers by 2021.
“In an age where consumers have many entertainment choices, local radio maintains its strength and popularity in the marketplace among national and local advertisers,” Fratrik says. “Going from sixth to fifth is encouraging, despite the fact that there are other media growing faster than radio. It’s still a very relevant part of media mixes for many advertisers, even after the onslaught of satellite radio and streaming services.”
BIA/Kelsey’s share of local ad spend shows direct mail will capture the largest portion of the local ad pie, cordoning off 24.9% of the $148.8 billion forecast to be spent in 2017. While not the sexiest media platform, direct mail is expansive, including catalogs, Val packs and every form of direct solicitation mailed to people’s homes. Over-the-air TV is second at 13.3%, followed by online/interactive (third at 12.5%) and a two-way tie between mobile and newspapers in fourth place with 10.8% Over-the air radio is sixth with 9.6% of local ad spend while radio online revenues, which include local online revenues from terrestrial and pureplay streaming studio services, will capture 0.9%.