Report: Online Radio Advertising to Greatly Increase by 2009, Online Listeners Growing

According to a report by Borrell Associates, total advertising devoted to online radio Web sites will grow 56 percent annually over the next five years, reaching over $300 million by 2009. This year, a total of $30 million will be spent on banner ad placements and $4.5 million on streaming audio ads across online radio sites, which amounts to roughly to a combined $35 million or 0.3 percent of the $10.5 billion projected to be spent on Internet advertising in 2004.
Gordon Borrell, president of the Portsmouth, Va.-based company, says while that percentage indicates an online advertising channel only in its infancy, consistent growth in audience over the next five years is bound to significantly erode broadcasters’ traditional ad revenues. But, he added, online radio sites should not expect any sudden changes in ad revenue just yet.
“I don’t think there are amazing opportunities in online radio Web sites staring advertisers in the face right now,” said Borrell. “Traditionally, the audience gets there first. Almost half of the advertising we’re seeing now is national advertising. Local advertisers will hold off until the audience hits a critical mass of around 60 million, which we don’t see happening until 2009.”
The report also said the number of regular online radio listeners has grown to 20 million in 2004, more than 10 percent of the estimated U.S. Internet population of 189 million. Almost half tuned in for the first time in the last year. The overall audience, measured in cumulative unduplicated total audience, increased 40 percent from 2003-2004, with AOL, Yahoo!, Live365, Musicmatch and Virgin Radio at the forefront of the increase.
Traditional radio broadcasts have recorded dwindling listener numbers across all age categories since 1998, with the largest losses in the 18-34 age group – the same demographic that comprises the bulk of new online listeners.
The report further suggests that local broadcasters team with a major portal to succeed in simulcasting their content online.
For more information, visit www.borrellassociates.com/research.html.