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RADIO POISED FOR GROWTH

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Title: RADIO POISED FOR GROWTH


1
RADIO COMPANY NAME
  • RADIO POISED FOR GROWTH

2
Investor Question 1.
  • Is Radio maintaining or gaining share of the ad
    pie?

3
Radio Revenue Trends
  • Recently, there has been much discussion about
    cable eroding Radios share.
  • In fact, there is no data to support a loss of
    revenue share in Radio -- to cable or anyone
    else.
  • Cables gains can be more directly attributed to
    losses by broadcast TV (-2.7 points) and by
    newspaper (-4.8).

4
Radio Revenue Trends
  • Long-term Since 1993 Radio has gained share --
    from 6.9 to 8.0 in 2003.

5
Trend Radio Revenue As Percent Of Total Ad
Dollars
  • RADIO ADVERTISING - TEN YEAR ANALYSIS
    (1993 2003)  (In Millions)
  • OF
  • YEAR VOLUME REVENUE TOTAL
  •  
  • 2003 245,477 19,603 8.0
  • 2002 236,875 19,409 8.2
  • 2001 231,287 18,369 7.9
  • 2000 243,680 19,817 8.1
  • 1999 222,308 17,681 8.0
  • 1998 201,594 15,430 7.7
  • 1997 187,529 13,794 7.4
  • 1996 175,230 12,412 7.1
  • 1995 160,920 11,470 7.1
  • 1994 150,030 10,652 7.1
  • 1993 138,080 9,568 6.9
  • Total Advertising Universal McCann
    reported by Robert J. Coen Radio Revenue RAB
    Data

6
Radio Revenue Trends
Radio, Cable and Internet were the only media to
sustain growth during this ten-year period.
Variations in radios share attributed to actual
Miller Kaplan revenue figure used in RAB Data.
7
Advertising Volume 1993-2003
8
Radio Revenue Trends
  • Note The revenue figures in this presentation do
    not include non-spot revenue, a significant
    revenue factor for many Radio companies.
  • If we were to include non-spot revenue

9
Radio Revenue Trends
  • Inclusion of non-spot revenue
  • 2003 revenues increase by 833 million.
  • Total revenue increases to 20,436 billion.
  • Revenue growth increases to 2 from 1.
  • Radios share of total revenue would be 8.3.

10
Radio Revenue Trends
  • Short-term Radio share has stabilized over the
    last three to five years.

11
Trend Radio Revenue As Percent Of Total Ad
Dollars
  • RADIO ADVERTISING THREE YEAR ANALYSIS
    (2001 2003)  (In Millions)
  • OF
  • YEAR VOLUME REVENUE TOTAL
  •  
  • 2003 245,477 19,603 8.0
  • 2002 236,875 19,409 8.2
  • 2001 231,287 18,369 7.9
  • Total Advertising Universal McCann
    reported by Robert J. Coen Radio Revenue RAB
    Data

12
Trend Radio Revenue As Percent Of Total Ad
Dollars
  • RADIO ADVERTISING - FIVE YEAR ANALYSIS
    (1999 2003)  (In Millions)
  • OF
  • YEAR VOLUME REVENUE TOTAL
  •  
  • 2003 245,477 19,603 8.0
  • 2002 236,875 19,409 8.2
  • 2001 231,287 18,369 7.9
  • 2000 243,680 19,817 8.1
  • 1999 222,308 17,681 8.0
  • Total Advertising Universal McCann reported by
    Robert J. Coen Radio Revenue RAB Data

13
Advertising Volume 1999-2003
14
Advertising Volume 2001-2003
15
Is New Media Challenging Traditional Media?
  • What about new medias impact
  • on traditional media like Radio?

16
Is New Media Challenging Traditional Media?
  • The most notable of new media, the Internet, was
    unable to sustain its predicted meteoric growth
    of the late 90s in a tougher and more
    challenging economic environment.

17
Is The Internet Challenging Radio?
  • The darling of media and marketing
    publications, Internets revenues are actually
    just now poised to recover from their year 2000
    share high of 2.7.
  • 2003 Internet revenue share was 2.3.

18
Five-YearInternet Share Trends
  • Internets Share of Revenues Slow Recovery
  • Year Volume Internet Revenue Share
  • 215,301 1,940 0.9
  • 243,680 6,507 2.7
  • 2001 231,287 5,645 2.4
  • 237,425 4,883 2.0
  • 249,156 5,615 2.3
  • SOURCE Robert J. Coen Universal McCann 2003
    figures are not final.

19
Radio IsPredominantly Local
  • Radio plays an increasingly important role to
    national advertisers. However, an analysis of its
    traditional revenue core points to further
    strengths.
  • Source for local revenue on the following slides
    Universal McCann as reported by Robert Coen  

20
Radios Local Share Grows
  • Local Revenue from 1993-2003
  • Total spending was up 60.5.
  • Radios share grew from 12.5 to 16.1.
  • Newspapers share declined 50.5 to 40.5.
  • Sources Universal McCann as reported by Robert
    Coen 

21
Local Strength is Long-Term
  • Local Revenue from 1993 to 2003
  • Radio increased 106.
  • Newspapers increased only 34.3.
  • Cable grew 206, but cable revenue was minimal to
    begin with.
  • 1993 Cable - 1.1 billion Radio -
    7.5 billion
  • Source Universal McCann as reported by Robert
    Coen

22
Q1. Radios Prospects
  • Our companys projections for Radio may be
    higher than others but the local advertising
    component cant be overlooked, or the fact that
    radio pitches a captive audience spending more
    time in cars, not less.
  • Peter Winkler
  • Managing Director
  • Price Waterhouse Cooper/Entertainment
    Media Practice

23
Investor Question 2.
  • Is Radio maintaining its listener base?

24
Q2 Audience Trends
  • Veronis Suhler Stevens 2004 edition of
    Communication Industry Forecast and Report
    presents Radio as the 1 single medium in Hours
    per Person Using Consumer Media at 1,013 hours
    in 2003.

25
Hours Per PersonUsing Media
26
Q2 Audience Trends
  • Radio listening, as stated by RADAR, has
    witnessed consistent increases in time spent with
    the medium, a pattern that Veronis Suhler
    projects will continue even as new media
    continues its growth.
  • RADAR includes non-rated C and D county
    listening, unlike statistics frequently quoted
    based on Arbitron continuously rated markets
    only.

27
Hours Per PersonUsing Media
28
Q2 Audience Trends
  • Factors like increased commute times, the number
    of people who commute by car alone, the effects
    of women in the workplace and the fact consumers
    are out of their homes 65 more than two decades
    ago all reinforce a positive outlook for Radio
    listening.

29
Q2 Audience Trends
  • Add to this the fact that Radio lends itself to
    simultaneous usage with other media and while
    performing a multitude of tasks and leisure
    activities at home or elsewhere.
  • It becomes clear why forecasters are bullish on
    Radio today and in the future.

30
Q2 Audience Trends
  • Even as Radio and other mature media lost some
    share to new media (Internet, electronic games,
    IPOD, DVRs), Radio displaced broadcast TVs rank
    in actual hours spent with media.
  • American consumers now spend over one quarter of
    their media time with Radio.
  • Veronis Suhler Stevens 2004 Communication
    Industry Forecast and Report

31
Q2 Audience Trends
  • Broadcast TVs missing young males
    (18-34-year-olds) has been a highly charged and
    well-publicized issue in the past year, adding to
    advertisers concerns as they approached the 04
    TV upfront.

32
Q2 Audience Trends
  • Radio tune-in, or cume, is stable 94-95 range.
  • High levels of tune-in indicate Radio is reaching
    the majority of the population each week the
    challenge is increasing TSL, especially in
    youth-oriented demos.
  • Source Arbitron Continuously measured markets

33
Q2 Audience Trends
  • The Radio industry is far from complacent,
    however, and continues to seek content and
    programming innovations that will engage its
    younger listening audience.

34
Investor Question 3.
  • Is clutter a serious problem for Radio?

35
Q3 Media Clutter
  •  Advertisers are struggling they need to break
    through to consumers on one hand and control ad
    expenses on the other.

36
Q3 Media Clutter
  • Clutter is a full media issue,not unique to
    Radio. Pressures have also come to bear on TV,
    print, and even the Internet.
  • No media sector is unaffected. Radio has
    responded proactively.

37
Q3 Media Clutter
  • Radios Dual-Edged Sword
  • Radio has a captive audience factor unlike
    other media, giving advertisers access to
    proximity to purchase messaging.

38
Q3 Media Clutter
  • Radios Dual-Edged Sword
  • That unique quality also makes commercials and
    spot loads more conspicuous than in other media.

39
Q3 Media Clutter
  • Radio spot loads are similar to or lower than
    television.
  • Newspaper editorial ad/content ratio is higher
    than electronic media.
  • Internet clutter is another source of advertiser
    and consumer irritation.

40
Q3. Media Clutter
  • In April, 2004, global media agency Mindshare
    released its most recent TV clutter study.
  • It states that in 2003 all three major networks
    broke the 15-minute barrier for non-program
    content in prime time.
  • Mindshare as quoted by Adweek, April 2004

41
Q3. Media Clutter
  • Over 60 of Internet users have a low tolerance
    for more than two ad units per Web page and hold
    less favorable opinions of the advertisers
    product when within a cluttered page.
  • Burst! Media 2004

42
Q3. Media Clutter
  • No significant studies regarding Radio clutter
    have been underwritten by the agency or
    advertising communities.

43
Q3. Media Clutter
  • However, lengthy Radio spot loads are a more
    recent phenomena than television clutter, coming
    into play in late 99 and 2000 during the dot-com
    boom.

44
Q3. Media Clutter
  • Spot loads went up a lot during the late 90s
    and not much at all since then. The clutter
    issue with Radio has been an overreaction by the
    ad community.
  • Jeff Smulyan, CEO, Emmis
  • RR,
    7/14/04

45
Q3 Media Clutter
  •  Numerous major Radio groups - Cox, Emmis,
    Entercom, Infinity, Greater Media, and
    Susquehanna among others
  • have maintained tighter spot loads standards
    since the mid to late 90s.

46
Q3 Media Clutter
  • Other groups most significantly Clear Channel
    recently committed to reduce spot loads and
    utilize innovative inventory management systems
    to maintain effective inventory and pricing.

47
Q3 Media Clutter
  •  
  •  
  • Clear Channel radio stations are significantly
    reducing the amount of commercial and
    promotional inventory carried. Weve heard
    listeners and advertisers and are improving the
    Radio experience for both.
  • John Hogan, CEO
    Clear Channel Radio
  • The New York
    Times, 7/19/04
  •  

48
Q3 Media Clutter
  •  
  • Weve been reducing inventory loads
    experimenting with reduced loads and putting more
    pressure on the inventory. And its paying off.
  • Joel Hollander, President/COO
  • Infinity Broadcasting,
  • RBR 7/21/04

49
Q3 Media Clutter
  •  
  •  
  • Our Company continues to be a low-inventory
    operator, and our primary focus is on renewing
    clients. We applaud the commitment of Radio
    companies to hold down spot loads.
  • Peter Smyth
  • President/CEO
  • Greater Media
  •  

50
Investor Question 4.
  • Can Radio companies work together to advance the
    Radio industry?

51
Radio Working Together
  • The Radio Industry has a long history of joint
    initiatives. The project with the most heritage
    is in its 14th consecutive year
  • The 100,000 Radio Mercury Awards - Over 30
    Radio companies since 1991 honoring the best in
    Radio commercial creative.

52
Radio Working Together
  • In recent years Radio companies have joined
    forces on the following initiatives
  •   Electronic Data Interface
  • American Association of Ad Agencies
  • The Radio Ad Effectiveness Lab
  • The Radio Growth Initiative Fund

53
Radio Working Together
  • Electronic Data Interface for Radio
  • (EDI)

The RAB/Radio EDI Task Force (2000) Over 50 radio
Companies, networks, reps, industry vendors and
media partners working together to Electronify
and enhance Radios back room processes.
54
Radio Working Together
  • Radio EDI
  • In April, 2004, the Radios national rep firms
    launched a joint EDI effort
  • RadioInvoice.com

55
Radio Working Together
  • RAB Board/AAAA Buying and Selling Task Force
    (2002)
  • Supported by the entire RAB Board of Directors,
    the task forces common goal is improved
    communication between Radio buyers and sellers,
    insuring that business processes are universal
    and sustainable.

56
Radio Working Together
  • The Radio Ad Effectiveness Lab
  • RAEL

Formed in 2001 Funded by the Radio Industry
57
Radio Working Together
  • The RAEL Mandate
  • Improve industry understanding of how Radio
    advertising works.
  • Increase advertiser/agency confidence in Radio as
    an advertising medium.

58
Radio Working Together
  • Since its inception, RAEL has published three
    White Papers, two client proprietary Case
    Studies, and a newly released Guide to
    Commercial Testing Services.

59
Radio Working Together
  • The Radio Growth Initiative Fund

A consortium of over 30 Radio companies is
underwriting a full marketing strategy on behalf
of the Radio industry.
60
The Radio Growth Initiative Fund
  • Growth Fund Commitments
  • 3 million on new consumer research through RAEL
    in 04-05 alone.
  • Enhanced direct contact with major advertisers
    and their agencies.
  • Ad campaigns targeting media decision makers.

61
Radio Working Together
  • Radio is pursuing Accountability with a
    Vengeance.
  • Robert Liodice, President
  • Association of National Advertisers
  • The Advertiser Magazine, 6/04

62
Radio Working Together
  • Putting the needs of the client first has long
    been a way of doing business for Susquehanna.
    This innovative Sales Performance Guarantee
    represents another tangible means for us to
    demonstrate that commitment to our valued clients
    and to our industry. David Kennedy
  • President/COO
  • Susquehanna Radio Corp.

63
Radio Working Together
  • I am very encouraged by the fundamental
    improvements that are starting to be made
    throughout much of the industry. We are raising
    the bar on customer service and accountability
    accelerating the rollout of HD Radio, launching
    new, innovative formats, and reducing commercial
    clutter. David Field
  • President/CEO
  • Entercom

64
Investor Question 5.
  • Is anybody saying anything good about Radio?

65
Bad News MakesGood Headlines!
  • Look beyond the headlines.
  • Radio has many fans extolling its strengths as an
    advertising medium.
  • Here are comments from just a few

66
Research Consultant Quote
  • Radio does drive sales case studies show
    markedly improved sales by adding Radio to the
    media plan or increasing Radio budgets.
  •   Sunil Garga, COO, Marketing Management
    Analytics, referring to MMA case studies
    on ROI.
  • Interep Symposium, 6/22/04

67
Advertiser Quotes
  • When you take advantage of Radios unique
    strengths efficiency, targetability and
    creative flexibility you can do anything from
    selling a specific product to building a brand.
    Radio gives us an unbeatable combination
    targetability and efficiency. 
  • Matthew J.
    Dee, Dir., Advertising

    Production
  • Wendys International

68
Advertiser Quotes
  • Pfizer is committed to using Radio as a medium
    to build our brands now and in the future. Radio
    helped build our brands into household names We
    match our brands with stations and programming
    that truly deliver the brands objective and
    target audience.
  •   Jeni Cramer, Media Manager, National Radio
  • Pfizer

69
Advertiser Quotes
  •  The cool thing about Radio is that it allows us
    to interact and connect to the consumer.
  •   Daryl Evans, VP of Advertising and
    Marketing Communications, Cingular Wireless

70
Advertiser Quotes
  • What I love about Radio is that its helped us
    achieve some really big results with not-so-big
    budgets. Radio has helped many of our clients
    grow into household names. When you do Radio
    right, its very sexy.
  •   Ernie Roth, President and Creative
    Director
  • Furman Roth Advertising
  •  
  •  
  •  

71
Advertiser Quote
  • Radio, we felt, allowed people to interpret
    their best picture, their own perfect image. We
    believed we could tap into the magic of our
    customers imagination without words.  
  • Radio hit the sweet spot
  •   Brad Flatoff, VP of Marketing Sargento
    Cheese

72
Advertiser Quotes
  • Radio is much more intimate than other media.
    It helps develop a personal relationship with the
    brand. It gives you
  • the time to do something wonderful. Its
    storytelling that draws you in.
  •   Robert Skollar, EVP
  • Executive Creative Director
  • Grey Worldwide

73
Advertiser Quotes
  • The first year we used Radio, its challenge was
    to equal what TV had produced the year before in
    the way of store traffic and Radio beat those
    numbers! The results were spectacular!
  • Michael Gretzinger, VP Management
    Supervisor, Daily Associates
  • (regarding El Pollo Loco restaurants)
  •  

74
Advertiser Quotes
Radio gives ATT the flexibility to blanket the
country while simultaneously pinpointing markets
with the strongest potential for ATT. Kare
n Milke Media Director ATT
75
Advertiser Quotes
Campbells soup success with radio drives home
the point that Radio can respond to events and
produce results. Thats the beauty of Radio --
you can get a message on the air quickly that is
relevant to the consumer TODAY. Kim
Vasey Senior Partner/Director of
Radio Mediaedgecia
76
Advertiser Quotes
I believe the antennae for Radio, as it applies
to the media mix, is about to go up. Dave
Leitner Segment Media Solutions SONY
77
Radio Poised for Growth
  • In summary, these documented facts refute the
    myths The Radio industry has been, is and will
    continue to be poised for growth and is a stable
    and integral force in the advertising and media
    industries.
  • Gary Fries
  • President/CEO
  • The Radio Advertising Bureau

78
Radio Poised for Growth
  • This presentation was compiled
  • for the investment community
  • by the Radio Advertising Bureau
  • on behalf of its member companies.
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