One in a series this week delving into the recently released report “The Position of Local Radio Stations: Trends for 2016 & Beyond.”
A priority for local radio stations is to attract and retain audiences and advertisers. But local stations are finding that audiences and advertisers both have other opportunities available to them. These opportunities threaten local radio stations, and the threat will only increase in the future with greater accessibility of the internet and Wi-Fi, according to “The Position of Local Radio Stations: Trends for 2016 & Beyond” from research and advisory firm BIA/Kelsey.
Satellite audio services, internet-only streaming services and connected cars compete with over-the-air radio for audiences. Local radio stations face rivalry from SiriusXM satellite radio, where subscribers can listen to more than 100 audio programming streams. Subscriptions reached more than 30 million in 2015, up 8.4% over 2014.
While some local radio stations provide streaming radio services, market leader Pandora indicated total listener hours grew to 21.11 billion for 2015, up 5% over 2014. See Fig. 15 from the BIA/Kelsey report, which shows 2015 percentage increases for Pandora, Spotify and iHeartMedia.
According to the 2016 Arbitron-Edison Research Infinite Dial study, 8 percent of respondents said that they used online radio most often in their primary car, up 4% from 2014. This is an indication that the connected car is beginning to gain listeners, but a factor that could slow growth is that consumers tend to replace cars on a 7–11 year cycle.
Local radio stations compete with nearly a dozen other platforms for advertising revenue, from television, newspapers and direct mail to email, mobile and cable. Over-the-air radio is expected to garner a 9.7% share of available ad revenue with online radio advertising at 0.8% for 2016. But some of the new media opportunities are expected to grow at a fast rate over the next few years. Mobile, for example, currently at 8.8%, is expected to grow to 17.1% of all local advertising by 2020.
While the competition for audiences and advertisers presents challenges for local radio stations, they need to use their assets to capitalize on those challenges. Many stations are successful using their websites to provide entertainment and information while generating ad revenue. Many are streaming their programming. And a number of local radio stations have expanded into off-air events, conventions and sponsorship of local concerts.
The BIA/Kelsey report suggests that stations “should consider themselves as local media operations providing access to their local audiences through many different means, and selling that access to all their national, regional and local advertiser clients.”
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