Don’t Underestimate Radio’s Enduring Strengths

Despite its challenges, radio remains an important part of most advertising plans
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Despite its challenges, radio remains an important part of most advertising plans
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The author is senior vice president and chief economist at BIA/Kelsey.

Throughout nearly a century of operating, commercial radio has faced an array of challenges — from initially convincing local and national advertisers that airing audio advertisements would work, to combating over-the-air television and then cable television, to the most recent entry of online/digital audio consumer options.

Growing competition affects the public’s usage of local radio stations, and the stations also face increased challenges in the local advertising marketplace in which they operate. Smaller audiences and the slowing of over-the-air advertising revenue growth have led to decreases in the values of local radio stations and the public companies that own them.

Despite these challenges, radio is holding its own and maintaining a prominent position, both for listeners and advertisers, in the local marketplace. Radio serves as a megaphone to the local market and has an established relationship with its audience and advertisers.

To put the most recent local radio industry revenues in perspective: In the late 1990s and early 2000s, the local radio industry experienced substantial double-digit annual increases due in large part to the consolidation allowed under the new ownership rules. After those strong years, radio industry revenues grew slightly.

During the most recent recession starting in 2008–2009, radio revenues declined substantially, similar in size to those of other local media. In 2009 alone, radio station revenues declined by nearly 20 percent. The following year radio industry revenues recovered somewhat, growing by nearly $800 million (+5.5 percent).

Since then, total radio industry revenues have remained relatively constant, with over-the-air advertising revenues either holding steady or decreasing by a few percentages points. Online/digital revenues generated by local radio stations have shown much stronger growth, mitigating some of that decrease.

In a new report by BIA/Kelsey, “The Position of Local Radio Stations: Trends for 2016 & Beyond,” we examine the state of radio and reveal some of the top reasons radio is remaining relevant.

For example:

1. In the context of all local media that compete for advertising spending, radio ranks fifth, showcasing it is easily seen that radio is still an important part of an advertising mix.

2. Soft over-the-air revenues are being improved by growing online revenues because stations are offering more appealing digital offerings.

3. Over 34 percent of advertisers rate radio as “excellent” or “extraordinary,” as revealed by our most recent Local Commerce Monitor study of the advertising and marketing decisions of small and medium-sized businesses.

4. Local radio stations are trying to expand and improve the over-the-air reach of their signals through greater use of FM translators, the adoption of HD Radio services, and over-the-air reception on smartphones. They are also attempting to expand their listener base by streaming their own content over the Internet.

5. VIP industries like automobiles, finance and insurance and technology companies spend close to $6 billion collectively a year on radio advertising. 

Even with all these positives, certainly the local radio station industry is not in the same position as it was in prior years, and challenges remain ahead that the industry must stay attuned to. Competition continues to erode its place in the audio entertainment and information marketplace, as well as in local advertising. Yet radio remains an important part of most advertising plans.

With the correct attitude toward the new reality, strategic planning and a continued focus on delivering valuable digital offerings, local radio stations can prosper and thrive.

BIA/Kelsey’s report “The Position of Local Radio Stations: Trends for 2016 & Beyond” is an assessment of the industry intended for those focused on the trends and direction of local radio, including groups and financial institutions and companies building interactive digital solutions. It is available for purchase at, search “Local Radio.”