The radio industry is evolving. Over-the-air radio stations, online stations and satellite radio are vying for your ad dollars.
Understanding the strengths and weaknesses can help you spend wisely. Used strategically radio can still deliver your ad messages to a large audience effectively.
Over-the-air radio stations often referred to as AM/FM radio are reporting an increase in ad spending of about 2.5% for 2011. While most of the major radio companies are saddled with huge debt, these modest gains will surely be accompanied by other cost-cutting measures.
A study by Edison Research revealed some interesting radio facts. AM/FM radio stations dropped from 96% penetration in 2001 to 93% in 2011. While losing audience, it still reaches a large population.
In 2010, the top revenue producing station was a “News” format in D.C. In fact, many of the top stations had a news or talk format. More music doesn’t seem to be adding to the bottom lines as much as more talking. Listeners prefer AM/FM stations for their local programming and commentary.
The median age of heavy radio users is 41 and 40% of AM/FM radio audiences are 25-54 years old. With the increased usage of Pandora and Spotify, the demographics will get older in the next few years.
The study also indicated that online radio stations were increasing in popularity. The use of online stations actually increased the time spent listening to AM/FM stations. While the number of listeners is smaller, these online stations are great for targeting younger audiences and reaching listeners that spend more time listening to a specific station. You can buy fewer spots since they don’t tune in and out as frequently.
These online stations can develop into very targeted platforms for advertising, while offering some unique visual elements lacking in terrestrial and satellite venues. Taking a page from the Pandora playbook, having users register can provide a wealth of demographic information that can be used to target your ads.
Last but not least is satellite radio. Sirius XM continues to build audiences and profits with this radio platform. On Monday, Sirius XM is expected to announce a net profit of $612 million (revenues are approximately $612 billion), up 18% from the same quarter last year.
Who said no one would pay for radio?
Relying heavily on the auto industry, (Subaru announced Sirius XM would be included in all its 2012 models), Sirius expects to see major increases in subscribers and profits in the next five years.
Satellite radio advertising is still not viable for local or smaller advertisers, but national and regional brands have used the medium effectively.
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